Manufacturing activity in central US accelerated in October – Kansas City Fed
By Xavier Fontdegloria
Factory activity in the central region of the United States accelerated in October from the previous month, according to data from a survey compiled by the Federal Reserve Bank of Kansas City released Thursday.
The Tenth District Manufacturing composite index rose to 31 in October from 22 in September, beating the forecast of 23.5 from economists polled by the Wall Street Journal.
The indicator measures manufacturing activity in companies located in the western third of Missouri, across Kansas, Colorado, Nebraska, Oklahoma and Wyoming, and the northern half of New Mexico. Values greater than zero suggest growth, while values less than zero indicate contraction.
“The activity of the regional factories has increased further,” said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City.
The US industrial sector is growing on strong demand, but companies are struggling to keep up with orders as supply chain bottlenecks limit production.
In the central US region, October’s growth was supported by increased activity in non-durable goods factories, particularly paper and printing production, chemicals manufacturing, and plastics. , said the Kansas City Fed.
The production index rose to 25 from 10 the previous month, suggesting an acceleration in production growth.
Demand has also accelerated. The shipments volume index fell from six to 28, while the new orders volume index fell from seven to 27 in the previous month.
The employment index edged up to 34 from 21 in September, signaling that companies added wages at a faster pace.
Supply constraints continued to be pervasive, with the Supplier Delivery Times Index hitting another high of 50, down from 43 in the previous month.
“We are currently seeing both increased demand and bottlenecks in the supply chain,” said one of the companies interviewed. “Meeting increased demand will make it extremely difficult to remove bottlenecks,” he said.
The monthly index of prices paid for raw materials set a new survey record in October at 87, and 99% of companies continued to report higher input prices than a year ago. The index of prices received for finished products increased from 40 to 47.
“There is no way to raise prices enough to offset the higher costs due to transport and labor shortages and increases in material costs,” another survey respondent said. .
Manufacturing companies remained optimistic about the near-term outlook. The Future Composite Index, which relates to the outlook for the next six months, remained broadly stable at 34. Expectations for future production have eased and more district manufacturing companies are seeing prices for materials and of finished products increase over the next six months.
Write to Xavier Fontdegloria at [email protected]