Manufacturing activity in the Kansas City region cooled in September, though plant managers generally remain upbeat about future prospects, the Kansas City Federal Reserve said Thursday.
The bank also said that materials price pressures eased, but finished goods price increases were expected to continue. Overall activity remained well above year-ago levels.
The net percentage of firms reporting month-over-month increases in production in September was 6, down from 17 in August and the lowest reading in over a year. The slower growth was due to weaker growth among nondurable-goods producing plants, as a similar share of durable goods producers as in recent months reported production increases.
The year-over-year production index was unchanged at 33. The future production index was also largely unchanged, edging down from 27 to 25. Although sample sizes make it difficult to draw firm conclusions about individual states, the data available suggest that production was flat to down slightly in Colorado, western Missouri, Oklahoma, and Wyoming but still well above year-ago levels in all district states.
Other month-over-month indexes of factory activity were somewhat mixed compared with August. Like the production index, the shipments and new orders indexes were both down moderately but still positive. On the other hand, the backlog and employment indexes both rebounded after dropping in August. The inventory indexes also rose after edging down a month ago.
Meanwhile, the U.S. economy grew at a slower pace in the second quarter than originally estimated, thanks in large part to softer inventory building by businesses and a cooling housing market.
The Commerce Department said Thursday its final reading on second-quarter gross domestic product - the value of all goods and services produced within in the U.S. - came in at 2.6 percent, lower than the 2.9 percent posted a month ago and well shy of the 5.6 surge in the first quarter.
Business inventories increased by $53.7 billion, which was much stronger than in the first quarter ($41.2 billion) but came in below the earlier estimate of $58.7 billion for the second quarter.
Final sales of computers contributed 0.04 percentage point to the second-quarter growth in real GDP after contributing 0.07 percentage point to the first-quarter growth. Motor vehicle output subtracted 0.31 percentage point from the second-quarter growth in real GDP after contributing 0.12 percentage point to the first-quarter growth.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 4.0 percent in the second quarter, the same as in the preliminary estimate; this index increased 2.7 percent in the first quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 2.9 percent in the second quarter, compared with an increase of 3.0 percent in the first.