Manufacturing Activity in Central U.S. Slowed in September -- Kansas City Fed
By Xavier Fontdegloria
Activity in factories in the U.S. central region eased in
September, according to data from a survey compiled by the Federal
Reserve Bank of Kansas City released Thursday.
The Tenth District Manufacturing Survey's composite index fell
to 22 in September from 29 in August, below the 30 reading expected
by economists polled by The Wall Street Journal.
The indicator gauges manufacturing activity in firms located in
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 index has been in expansion territory since June
"The pace of regional factory activity growth eased slightly but
remained positive," said Chad Wilkerson, vice president and
economist at the Federal Reserve Bank of Kansas City.
The U.S. industrial sector is expanding, but widespread
supply-chain bottlenecks and labor shortages are constraining on
production and firms struggle to keep up with orders.
The Kansas City Fed indicator data contrasts with other regional
surveys gauging the manufacturing sector, which have shown signs of
activity picking up pace in September compared with August.
The expansion was supported by a faster increase in durable
goods, in particular primary metals, computer and electronic
products, and transportation equipment, while nondurable goods
manufacturing grew more modestly, the Kansas City Fed said.
The production index fell to 10 from 22 the previous month,
signaling that output continued to increase but at a slower
Demand showed signs of cooling. The volume of shipments index
declined to six from 25 the previous, while the volume of new
orders index decrease sharply to seven from 34.
The employment index fell slightly to 21 from 28, signaling that
companies continued to hire workers, although labor shortages
remained widespread. "Hiring and retaining low skilled workers has
never been this bad in company history," one of the respondents
Supply constrains showed no signs of abating. The supplier
delivery time index increased to 43 from 41 the previous, while the
raw materials inventory index rose sharply to 29.
"Many firms continued to report rapid increases in input prices,
difficulties hiring workers, and supply chain delays," Mr.
The index of prices paid for raw materials remained at a high
80, and the index of prices received for finished goods eased
slightly to 40 from 61.
"We are absorbing input increases where we can, however our
overall profit margin on finished products is suffering," another
Manufacturing firms were optimistic about the short-term
outlook. The future composite index, which relates to the outlook
in the next six months, was broadly unchanged at 35 in September.
Expectations for future production rose to 58, matching the survey
record last seen in 2003.
Write to Xavier Fontdegloria at email@example.com
(END) Dow Jones Newswires
September 23, 2021 11:42 ET (15:42 GMT)
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