KC Fed manufacturing activity, future expectations unchanged

Tenth District manufacturing activity was steady in May as expectations for future activity remained flat, according to the Federal Reserve Bank of Kansas City’s May manufacturing report

Raw materials prices have cooled, and prices for finished goods eased over both the last month and last year. The composite index, an average of the production, new orders, employment, supplier delivery time and raw materials inventory indexes, improved to -1 in May, a nine-point improvement from in April but a one-point fall from March. 

“The increase from last month was driven by both durable and non-durable goods, especially by paper, primary metal and miscellaneous durable goods manufacturing,” the Fed stated. “Month-over-month indexes were mixed. The production, volume of shipments, volume of new orders, number of employees and finished goods inventories indexes all increased closer to their March levels after a significant decline in April.”  

According to the report, indexes for the average employee workweek and new orders slightly fell this month as all year-over-year indexes increased or stayed near their year-ago readings. The future composite index was a “modestly positive” 2, according to the Fed. Contacts expected materials costs, selling prices and wages to increase at a similar or slower rate next year, according to the report. Firms reported varying abilities to pass through higher costs to customers.   

“Most indexes of expectations for activity in six months remained similar to last month, except for increases in new orders and backlog of orders and cooling in the price indexes,” the Fed stated.