By Xavier Fontdegloria

 

Factory activity in the central part of the U.S. grew solidly in June and expectations for the next six months increased to a record-high, data from a survey from the Federal Reserve Bank of Kansas City showed Thursday.

The Tenth District Manufacturing Survey's composite index was 27 in June, slightly up from 26 in May. Economists polled by The Wall Street Journal expected the indicator to come in at 24.

The index covers the western third of Missouri, all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming, and the northern half of New Mexico. Values greater than zero suggest growth, while values below zero indicate contraction. The indicator has been in expansion territory since June 2020.

"Regional factory activity rose again in June and expectations for future activity were the highest in survey history," said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City.

In June, manufacturing activity growth was driven by durable goods plants, particularly primary and fabricated metals, machinery, computer and electronic products, furniture, and transportation equipment manufacturing.

The month-over-month indexes for order backlog and employees grew, and supplier delivery time increased. Indexes for production and shipments slowed from record levels registered a few months ago.

The production index dropped to 30 from 32 the prior month, the volume of shipments eased to 20 from 29, and the volume of new orders fell to 22 from 35 the previous month.

The employment index increased to 26 from 20 in May.

The supplier delivery time index increased to 38 from 23 in the previous month, while the raw materials inventory index dropped slightly to 21 in June from 22 in May.

The prices paid for raw materials index eased somewhat to 79 from 86, while prices received for finished products index also softened to 48 from 51 the previous month.

"While the majority of firms continue to face increasing materials prices and labor shortages, many firms have also increased selling prices and capital expenditures for 2021," Mr. Wilkerson said.

Manufacturing firms expectations about the short-term outlook increased sharply. The future composite index, which relates to the outlook in the next six months, rose to 37 from 33 in May.

 

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

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(END) Dow Jones Newswires

June 24, 2021 11:34 ET (15:34 GMT)

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