Kansas City Fed's Factory Sector Index Steadies in June

• Growth stays just below its record.

• Component movement is mixed m/m.

• Expectations for six months ahead improve.

The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index edged up to 27 during June from 26 in May, remaining below April's record of 31. The headline figure compares to a reading of one a year earlier. The series dates back to July 2001.

The ISM-Adjusted Index (NSA) eased to 64.2 in June from 64.5 in May and remained below the record of 66.7 in April. The index remains well above the level of 50 which separates expansion from contraction.

The new orders index fell to 22 from 35. The shipments index fell to 20 from 29, continuing to unwind most of April's gain to 32, the highest level since June 2018. The order backlog measure rose to a firm 29. The employment measure recovered most of its May decline. The production series slipped m/m but remained strong y/y. The supplier delivery time index increased, indicating much slower product delivery speeds versus last month, as well as versus last year.

On the inflation front, the prices received index for finished products fell to 48 in June from its record 51 in May. It compared to the deflationary readings registered early last year. The raw materials index also eased to 79 from its record of 86 in May. It remained up from -16 in April of 2020.

The expectations-in-six months composite reading rose to a record 37 in June from 33 in May. It remained up sharply from nine in June of last year. Expected new orders, supplier delivery times and materials inventories led the gain while shipments and expected employment edged lower.

The expectations index for prices received fell m/m to 56, just below the record 60 in May. Expectations for raw materials prices also eased, but remained up sharply y/y.

The figures date back to July 2001. The composite index is an average of the production, new orders, employment, supplier delivery time and raw materials inventory indexes. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The survey covered plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.