Tenth District manufacturing was unchanged this month as expectations for future activity slightly increased, according to August’s Federal Reserve Bank of Kansas City report.
Driven by increases in printing, wood production and furniture manufacturing, the monthly composite index, an average of the production, new orders, employment, supplier delivery time and raw materials inventory indexes, increased 11 points to zero this month, up from -12 in June.
Factory inventory fell further on an annual basis. Its composite index fell to -9 from -4 in July, which is still three points higher than its mark of -12 in June. Production remained flat, while new orders and materials inventory fell and capital expenditures growth slowed. The future composite index increased to 2 from -2 in July as firms expect production and new orders to grow in the next six months. District firms’ finished product prices continued to fall on a monthly basis as raw materials prices increased. Firms expect input and output price increases in the next six months.
“Month-over-month indexes were mixed, but all increased from previous readings except the number of employees which cooled slightly, and new orders for exports, which declined further,” the report stated. “The production and volume of shipments indexes increased significantly, while the materials inventory index continued to decrease as finished goods inventories picked up.”
Forty-four percent of firms reported having raised wages six to 10 percent in the last year, while 34 percent reported a less-than 5 percent increase. The majority of firms expect wages to rise less than 5 percent in the coming year. Nearly one-third reported that prices for their products or services increased by less than 5 percent, while slightly fewer reported 6-10 percent increases. Nearly half expect their prices to increase by less than five percent over the next 12 months, while 28 percent anticipate a 6-10 percent increase.