Manufacturing activity in the Kansas City region grew modestly in August, while expectations for future factory activity cooled and prices edged down.
The Kansas City Federal Reserve said Thursday the percentage of firms reporting month-over-month increases in production in August was 17, up from 11 in July but down from 23 in June. The improvement in August was broad-based, as production accelerated at both durable- and nondurable-goods-producing plants.
The year-over-year production index edged down for the third straight month, falling from 35 to 33, but was still generally high by historical standards. The future production index also experienced a moderate decline, falling from 37 to 27.
Other month-over-month indexes had mixed results, the KC Fed said; shipments rebounded after several months of decline, and new orders edged up after falling sharply the last two months.
However, the employment index fell, its first negative reading in a year and a half. In addition, inventory indexes fell slightly for the second straight month after experiencing a five-year high in June, and the order backlog index declined as well.
Plant managers’ expectations for future factory activity eased slightly in August, with most indexes falling after a sharp rebound last month. The future shipments index edged down from 45 to 31, and the future new orders index decreased from 35 to 22, although both indexes still remain strong by historical standards. In addition, future backlog, employment, and new orders indexes all fell slightly after increases in the previous month. The future capital expenditures index remained largely unchanged from July.
The price indexes in the survey all edged down or remained unchanged for the second straight month. The month-over-month raw materials price index was unchanged, while the finished goods price index moderated slightly from 21 to 17. The year-over-year price indexes both decreased, but still remain high by historical standards. The future raw materials price index eased from 61 to 58, while the future finished goods price index fell from 35 to 23, a two-year low.