Tenth District manufacturing and expectations for future activity both decreased in October, according to a Federal Reserve Bank of Kansas City report.
The month-over-month composite index, an average of the production, new orders, employment, supplier delivery time and raw materials inventory indexes, was -7 in October, its lowest reading since May 2020 and down from 1 in September.
Year-over-year factory indexes continued falling in October, and the composite index fell six points to 24. The future composite index fell from 9 to -1 this month, due to expectations for new orders, order backlogs, employee workweek, new export orders, supplier delivery times and other components dropping into the negative territory.
The monthly index of raw materials prices reportedly slowed in October and continued to fall compared to a year ago. The monthly index of raw materials prices fell in October and was lower than a year ago. Finished goods price indexes fell from a month ago and are lower than year-ago levels. Price expectations slowed for future raw materials and finished goods.
“The slower pace in factory growth in October was driven by decreased activity in computer and electronic, wood, primary metals, and plastics and rubber manufacturing,” said Kansas City Fed Economist Chad Wilkerson. “Most month-over-month indexes decreased in October, except for supplier delivery time and finished goods inventories.”
Labor shortages continued to pose problems: Sixty-five percent of firms this month reported spending “significantly or slightly more in resources to training workers in order to meet skill requirements,” the Fed stated. Thirty-six percent of firms invested or planned to invest in automation.