The Kansas City Fed Manufacturing Survey revealed regional activity rose modestly in May. The composite index came in at 11 this month, up from 8 in May and indicating continued expansion.
Here is an excerpt from the latest report:
The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Growth in the durable manufacturing sector was driven primarily by transportation equipment manufacturing, while growth in the nondurable manufacturing sector was driven by food manufacturing. All month over-month indexes were positive except for the inventory indexes. Production, new orders, and employment all saw higher readings than last month. The year-over-year composite index fell from 17 to 15, but all indexes were positive. Growth in new orders and production cooled to 19 and 20, respectively, while capital expenditures remained most steady at a reading of 2. Expectations for future activity remained expansionary with the composite index staying at 19.
Background on Kansas City Fed Manufacturing Survey
The Kansas City Fed Manufacturing Survey is a monthly survey of ~300 manufacturing plants that provides information on current manufacturing activity and future expectations in the tenth district (Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri). The composite manufacturing index is an average of indexes on production, new orders, employment, delivery time, and raw materials inventory. This is a diffusion index, meaning negative readings indicate contraction while positive ones indicate expansion. The survey offers clues on inflationary pressures and the pace of growth in the manufacturing sector for this region of the country and the accumulated results can help trace long-term trends.
