Manufacturing activity in the Kansas City region cooled this month, but expectations for future activity surged. A reading on new orders also fell sharply.
The Federal Reserve Bank of Kansas City said Thursday its manufacturing index eased to 8 this month, down from 18 in February. The bank said production decelerated at most durable-goods-producing plants in March, but especially among producers of machinery and high-tech equipment, which had posted strong gains in February.
The shipments index dropped sharply from 20 to 0, its lowest level in over a year, and the new orders, order backlog, and employment indexes also fell markedly. The new orders for exports index decreased from 7 to -2, a two-year low, and the average employee workweek index declined to its lowest level in over four years.
The raw materials inventory index fell from 13 to 9, but the finished goods inventory index climbed to 7 after contracting for five straight months.
Meanwhile, most other indexes of future factory activity increased. The future shipments index more than doubled, from 21 to 44, and the future new orders, order backlog, and employment indexes also recorded solid gains.
The Kansas City Fed said the month-over-month raw materials price index rose slightly, from 37 to 38, while the finished goods price index dropped from 15 to 3, a two-year low.