Central U.S. Factory Activity Gained Pace in February — Kansas City Fed

Manufacturing activity in the central region of the U.S. accelerated in February compared with the previous month, according to a survey from the Federal Reserve Bank of Kansas City released Thursday.

The Tenth District manufacturing survey’s composite index rose to 29 in February from 24 in January, above the 25 consensus forecast from 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. A value greater than zero suggest growth.

“Regional factory activity continued to increase in February,” said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City.

Factory growth was led by machinery manufacturing, plastics, fabricated metal products, and especially transportation equipment, the report said.

The production index increased to 31 in February from 20 in January, signaling a sharp acceleration in output growth over the month.

Demand also gained momentum, according to the survey. The volume of shipments index rose to 24 in February from five in January, and the volume of new orders index increased to 32 from 14.

The employment index increased slightly to 26 in February from 24 the previous month, signaling that companies in the area continued to add staff to their payrolls.

Supply-side bottlenecks showed further signs of improvement, but only marginally, with the supplier delivery time index falling to 36 from 38 the prior month.

“Firms noted that supply-chain and shipping delays continue to cause issues,” Mr. Wilkerson said.

Prices pressures remained elevated in February. The index of prices paid for raw materials remained unchanged at a high 64, and the index of prices received for finished products edged down to 47 from 49.

“We continue to see higher prices on everything from supplies, energy, capital equipment, services, contractors and labor rates,” said one of the companies polled.

Companies remained optimistic when assessing their business’ short-term outlook. The future composite index, which relates to the outlook in the next six months, edged up to 38 from 37 the prior month. More firms expected increases in production, shipments and new orders, the report said.
Source: Dow Jones