Kansas City Fed’s Manufacturing Survey for February (Text)Alex Tanzi
Following is the text from the Kansas City Fed’s Manufacturing Survey.
The Federal Reserve Bank of Kansas City released the February Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity was slightly positive, and although producers’ expectations moderated somewhat they remained at solid levels overall.
“The story in February was similar to January. Regional factory activity was held back somewhat by unusually harsh weather, but still managed to grow modestly.”
Growth in Tenth District manufacturing activity was slightly positive in February, and although producers’ expectations moderated somewhat they remained at solid levels overall. Several contacts continued to cite delays and slowdowns caused by severe winter weather issues. Price indexes were mostly stable or slightly lower.
The month-over-month composite index was 4 in February, similar to the reading of 5 in January and up from -3 in December. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing activity declined at non-durable goods-producing plants, particularly food and beverage, while production of durable goods products increased slightly. Other month-over-month indexes were mixed. The production index jumped from -8 to 3, and the shipments index also climbed higher. The order backlog and employment indexes decreased slightly, while the new orders index was unchanged. The raw materials inventory index increased for the second straight month, while the finished goods inventory index remained flat.
Most year-over-year factory indexes were relatively unchanged from last month. The composite year-over-year index remained stable at 8, while the production, shipments, and order backlog indexes inched higher. The new orders, employment, and capital expenditures indexes were mostly unchanged. The new orders for exports index fell back into negative territory, while both inventory indexes posted levels similar to last month.
Future factory indexes eased slightly from the historical highs reached in January but remained solid overall. The future composite index decreased from 26 to 11, and the future production, shipments, and new orders indexes also fell. The future employment index dropped from 29 to 6, and the future order backlog index edged lower. The future capital expenditures index eased from 26 to 24, and the future new orders for exports index moderated slightly. The future raw materials inventory index moved into negative territory, while the future finished good inventory index posted a positive number for the first time in five months.
Price indexes were mostly down or relatively stable in February. The month-over-month raw materials price index edged down from 19 to 16, while the finished goods price index was relatively unchanged. The year-over-year raw materials index fell slightly, while the finished goods price index was flat.
The future raw materials price index decreased from 47 to 35, and the future finished goods price index also eased somewhat, indicating fewer firms plan to pass recent cost increases through to customers.
“The weather is causing shipping delays. Customers claim the snow in their yards prevents them from taking delivery.”
“Very little capacity left to sell in 2014. Not a good situation for loyal customers wanting to buy more. Our basic business strategy was to fill the cupboard when opportunity knocked and we are there.”
“The market has not stabilized, so no major capital investments are being considered at this time.”
“We are beginning to see significant increases in the price for raw materials and delivery times continue to get stretched. Not all the increases in delivery times are due to weather.”
“We are finally seeing some improvement in business. We are hopeful it is going to stay up.”
“The cold and snow are having a very large negative effect.”
“It is much harder and more time consuming to finance capital expenditures.”
“We perceive market volatility as a set-up for poorer growth or drops in our economy. To this extent, we have concerns about making capital investments and will make purchasing decisions much more ‘on-time’ instead of forecasting spending out further.”
“While we are hoping for an improvement in business conditions, we continue to be troubled by over burdening regulations and the cost thereof, high taxes, and instability in the economy that is buoyed by artificially low interest rates.”
“Our sales continue to be flat to slightly down year over year. We must continue to find new customers or increase sales to existing ones in order to stay even. We are having moderate success at this.”
SOURCE: Federal Reserve Bank of Kansas City *T For Related News and Information: