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Economy in Brief

Kansas City Federal Reserve Factory Index Weakens; Expectations Ease
by Tom Moeller  November 18, 2016

The Federal Reserve Bank of Kansas City reported that its index of regional manufacturing sector business activity declined to 1 during November from an unrevised 6 during each of the prior two months. That still represented improvement, however, versus negative readings registered early last year. New orders eased recently as have shipments. Production slackened while employment eased. The length of the employee workweek shortened and supplier delivery times fell. The rate of decline in finished goods prices slowed significantly, while raw materials prices increased at the quickest rate since Q3'14.

Expectations for business conditions in six months deteriorated m/m, although they remained in an upward trend. Expected shipments eased, but new orders expectation picked up. Employment expectations weakened sharply, but the expected workweek improved. Expected capital expenditures surged. Expectations for export orders were positive versus negative readings for all of 2015. The future inventories reading fell sharply. Expectations for finished goods prices continued to be positive. Expected raw materials prices also strengthened.

The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The survey included 94 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.

Kansas City Federal Reserve Manufacturing Survey (SA) Nov Oct Sep Nov '15 2015 2014 2013
Conditions Versus One Month Ago (% Balance) 1 6 6 -1 -5 7 0
   New Orders Volume 6 14 12 1 -8 7 1
   Number of Employees 1 7 -3 -9 -10 5 -2
   Production 9 18 15 0 -5 8 2
   Prices Received for Finished Product -2 -5 -7 -8 -5 5 4
Expected Conditions in Six Months 12 18 10 6 4 17 10
   New Orders Volume 27 16 24 17 11 26 18
   Number of Employees 5 21 14 9 6 18 9
   Production 24 32 15 10 11 28 20
   Prices Received for Finished Product 11 8 7 3 9 26 24
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