Following is the text from the Kansas City Fed’s Manufacturing Survey.
Survey of Tenth District Manufacturing
Tenth District manufacturing activity continued to expand modestly in August. Producers were slightly less optimistic about future months, but were still positive overall. Price indexes eased from the previous month, but firms on net still planned to raise selling prices heading forward.
The month-over-month composite index was 3 in August, unchanged from 3 in July and down from 14 in June. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing activity slowed in nondurable goods factories, while growth in factory activity increased in durable goods producing plants, particularly for machinery, fabricated metal, and electronic equipment products. Other month-over-month indexes were mixed in August. The production index fell from 2 to -2, and the shipments index also moved into negative territory. However, the new orders index rebounded after dropping last month, and the employment and new orders for export indexes also rose. Both inventory indexes fell for the second straight month.
Most year-over-year factory indexes eased slightly, but remained at solid levels. The composite year-over-year index edged down from 24 to 21, and the production, new orders, shipments, and order backlog indexes also fell. The employment index edged lower from 24 to 23, but still remained at a fairly solid level. In contrast, the capital expenditures index increased from 8 to 13, and the new orders for exports index also moved up slightly. Both inventory indexes rose after falling in July.
Future factory indexes moderated somewhat in August, but producers still remained fairly optimistic about activity later this year. The future composite index eased from 14 to 9, and the future production and shipments indexes also fell. The future order backlog index moved into negative territory for the first time in two years, and the employment index decreased from 17 to 12. However, the future new orders index was unchanged, and the future capital expenditures index edged higher from 16 to 18. The future raw materials inventory index dropped from 4 to -6, and the future finished goods inventory index fell further.
Price indexes continued their downward trend, after stabilizing somewhat last month. The month-over-month raw materials price index decreased from 39 to 28, and the finished goods price index also fell. The year-over-year finished goods price index moved lower, and the raw materials price index eased from 84 to 77. The future raw materials price index edged down from 60 to 53, and the future finished goods price index posted its lowest level in nearly a year, indicating slightly fewer firms plan to pass recent cost increases through to customers.