Kansas City Fed Manufacturing Index Unchanged
by:Sandy Batten
|in:Economy in Brief
Summary
- Factory growth was unchanged in December from November.
- Supplier delivery times slowed sharply from November's record high, but remained elevated.
- Pace of price increases slowed.
The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index was unchanged at 24 in December after having reached a record high of 31 in October. The series dates back to July 2001. The ISM-Adjusted Index (NSA) fell to 59.1 in December from 60.3 in November and 65.3 in October, but still well above the break-even level of 50 that separates expansion from contraction.
The new orders index rebounded to 27 in December from -4 in November, recouping all of its November decline. The shipments index increased to 20 from 2 in November. Supplier delivery times retreated to 44 from the record high of 57 reached in November, indicating that while deliveries remain very slow, their pace has moderated. The production index fell again in December to 10 from 17 in November and 25 in October. The order backlog measure edged up to 13 from 10 in November.
The employment measure declined for the second consecutive month—to 18 from 27 in November and the record level of 34 reached in October. The workweek index slid further to 8 from 10 in November and 15 in October. The high was reached in July at 31. The special questions in this survey centered on labor costs. Lack of available labor was the top risk facing respondents. For 2022, nearly 70% of firms are planning to increase wages between 2% and 6%, and no firms expected wages to decrease. Additionally, over 85% of firms expected a more than 2% increase in other labor costs, such as benefits, training, and time off.
Inflation pressures remained elevated but eased a bit in December. The prices received index for finished products fell to 43 from 50 in November, the first decline in three months and well below the record level of 61 in August. The raw materials index eased further to a still very high level of 73 in December from 77 in November and the record of 87 in October.
The expectations reading for six months ahead fell to 25 from 35 in November with expectations for all major categories posting declines. This was the largest monthly decline in expectations since March 2020.
The latest survey was conducted in the five-day period from December 8 to December 13 and included 96 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.
The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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