Survey of Tenth District Manufacturing 


Printer friendly html or pdf
News Release
Federal Reserve Bank of Kansas City
Kansas City, Missouri 64198
Phone (816) 881-2683
Fax (816) 881-2569


FOR RELEASE Monday, January 10, 2005
EMBARGOED FOR 11:00 A.M. EST
FOR RELEASE MONDAY, JANUARY 10
EMBARGOED FOR 11 A.M. ET

Manufacturing activity in the Great Plains and Rocky Mountain region encompassed by Tenth Federal Reserve District strengthened in December and expectations for future production remained strong.

A summary of the December survey is attached to this press release.

The Tenth Federal Reserve District encompasses Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.

For more information about the monthly manufacturing survey, contact Chad Wilkerson, Economic Research Department, (816) 881-2869. The December manufacturing survey, as well as background information and results from past surveys, can be found on the Federal Reserve Bank of Kansas City’s web site, http://www.kc.frb.org

Survey of Tenth District Manufacturing
by Chad R. Wilkerson

Manufacturing activity in the Tenth Federal Reserve District strengthened in December. The year-over-year indexes for production, shipments, new orders, and employment were at or near all-time highs, and expectations for future production were as strong as in recent months. The year-over-year and future price indexes were largely unchanged and still near record highs. The month-over-month indexes in the survey were mixed in December. However, the monthly data are not seasonally adjusted, so caution must be taken in basing analyses on month-to-month comparisons. For example, the month-over-month production index’s lowest reading in each year since 2001 has been reached or matched in December.

The net percentage of firms reporting year-over-year production increases rose to 50 in December, up from 44 in November and just slightly below the all-time high of 51 reached in June 2004 (Tables 1 & 2). The moderate improvement came primarily at durable-goods-producing plants, as the production index for nondurable-goods-producing plants was up only slightly from November. While sample sizes make it more difficult to draw firm conclusions about individual states, the data available suggest that production remained well above year-ago levels in all district states.

Similar to the production indexes, many other year-over-year indexes of factory activity rose to or near all-time highs in December. The new orders index matched its record high of 52 from August 2004, and the shipments index rose from 47 to 53, only slightly below its August peak. The employment index edged up from 28 to 30, its highest reading since 1995, and the workweek index rose somewhat after easing in each of the previous five months. The new orders for exports index rose to 12, the highest level since early 2000. The capital spending index eased slightly but remained similar to readings in recent months.

The year-over-year price indexes were virtually unchanged from November. The raw materials price index edged up from 74 to 76, down only slightly from the all-time high of 82 reached in April and July 2004. The finished goods price index remained flat at 40, just slightly below the record high of 42 posted in July. The continued gap between the two price indexes suggests some firms still continue to have difficulties passing cost increases through to customers.

Plant managers’ expectations for future factory activity remain high. The six-month-ahead production index was 41, similar to its strong readings in each of the past five months. The future shipments and new orders indexes also remained above 40. The future employment and capital spending indexes edged down but remained around 20—--relatively high levels by historical standards. The future price indexes also eased slightly but remained similar to readings in recent months. Finally, the gap between the two future price indexes, after closing somewhat in November, remained virtually unchanged in December, suggesting little expected change in pricing power in the months ahead.

Table1      
Summary of Tenth District Manufacturing Conditions, December 2004
  December vs. November
(percent, not seasonally adjusted)		 December vs. Year Ago
(percent)		 Expected in Six Months
(percent, not seasonally adjusted)
Plant Level Indicators
Increase No
Change		 Decrease Index*
Increase No
Change		 Decrease Index*
Increase No
Change		 Decrease Index*
 
Production
33 34 31 2
64 20 14 50
53 33 12 41
Volume of shipments
32 32 33 -1
67 17 14 53
55 29 14 41
Volume of new orders
25 47 26 -1
64 21 12 52
52 37 9 43
Backlog of orders
20 49 27 -7
43 36 14 29
38 48 10 28
Number of employees
16 71 11 5
49 31 19 30
33 52 12 21
Average employee workweek
15 60 20 -5
31 58 8 23
25 61 10 15
Prices received for finished product
17 76 5 12
52 32 12 40
43 46 9 34
Prices paid for raw materials
41 51 6 35
80 14 4 76
64 27 8 56
Capital expenditures  
32 49 14 18
33 49 13 20
New orders for exports
9 80 3 6
20 63 8 12
18 67 6 12
Supplier delivery time
14 77 4 10
25 63 7 18
14 74 9 5
Inventories:      
     Materials
21 50 26 -5
32 43 22 10
25 47 26 -1
     Finished goods
21 49 23 -2
35 41 20 15
19 50 27 -8


* The diffusion index is calculated by subtracting the percentage of total respondents reporting decreases in a given indicator from the percentage of those reporting increases. Index values greater than zero generally suggest expansion, while values less than zero indicate contraction. When index values are closer to 100, the increases among respondents are more widespread. When index values are closer to -100, decreases are more widespread.
Note: The December survey included 110 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

Table2
Historical Manufacturing Survey Indexes
  Dec'03 Jan'04 Feb'04 Mar'04 Apr'04 May'04 Jun'04 Jul'04 Aug'04 Sep'04 Oct'04 Nov'04 Dec'04
Versus a Month Ago
(not seasonally adjusted)		  
Production 1 17 14 27 28 23 26 20 15 20 20 6 2
Volume of shipments 17 12 19 37 36 14 25 14 25 23 3 4 -1
Volume of new orders 19 21 5 29 34 20 23 21 15 19 18 8 -1
Backlog of orders 1 7 2 10 28 22 4 13 -6 7 3 -3 -7
Number of employees 12 9 7 15 14 18 16 11 12 13 22 4 5
Average employee workweek -4 9 6 11 17 15 16 21 17 6 12 5 -5
Prices received for finished product 3 9 5 17 28 22 9 16 14 16 15 9 12
Prices paid for raw materials 23 39 38 57 67 56 54 47 52 46 53 43 35
Capital expenditures n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
New orders for exports 7 9 0 5 9 0 1 1 -6 0 3 5 6
Supplier delivery time 10 4 6 15 27 16 6 16 17 22 13 10 10
Inventories:      Materials -4 9 11 3 15 13 -2 1 13 11 12 5 -5
Inventories:      Finished goods -3 -6 3 -6 1 9 0 4 11 6 17 1 -2

Versus a Year Ago		  
Production 35 24 27 31 43 35 51 46 50 48 41 44 50
Volume of shipments 29 27 32 34 45 39 46 49 55 51 42 47 53
Volume of new orders 45 30 38 29 52 45 47 51 52 50 42 44 52
Backlog of orders 28 22 25 21 31 33 28 37 27 31 23 30 29
Number of employees 3 -2 12 14 19 19 22 15 25 27 25 28 30
Average employee workweek 21 20 19 16 24 21 37 30 29 28 21 17 23
Prices received for finished product 2 8 11 19 37 34 34 42 37 38 41 40 40
Prices paid for raw materials 49 48 50 64 82 75 71 82 73 72 77 74 76
Capital expenditures 7 6 9 18 22 22 23 17 16 30 19 21 18
New orders for exports 5 8 7 10 9 3 2 5 8 7 6 8 12
Supplier delivery time 5 6 7 20 26 20 22 30 24 35 23 19 18
Inventories:      Materials 9 -5 3 6 5 16 9 6 17 19 20 18 10
Inventories:      Finished goods 12 -7 4 -5 -2 3 1 -3 9 13 12 16 15

Expected in Six Months
(not seasonally adjusted)		  
Production 49 33 43 40 46 36 48 40 39 39 39 38 41
Volume of shipments 45 39 42 45 53 35 44 36 40 38 35 43 41
Volume of new orders 45 38 39 36 46 28 47 36 39 38 37 44 43
Backlog of orders 25 25 23 25 26 17 29 16 9 17 20 26 28
Number of employees 17 12 13 19 28 18 16 15 30 23 26 23 21
Average employee workweek 19 9 10 7 12 5 13 18 14 8 8 6 15
Prices received for finished product 17 15 25 24 39 28 28 31 20 30 30 36 34
Prices paid for raw materials 35 42 48 55 65 57 49 61 55 54 59 59 56
Capital expenditures 16 16 23 22 34 25 23 18 19 25 25 24 20
New orders for exports 14 17 17 15 14 8 7 5 14 10 13 13 12
Supplier delivery time 2 3 5 14 11 13 1 11 14 14 16 8 5
Inventories:      Materials 4 -9 -6 1 1 5 -6 -2 11 -5 4 -1 -1
Inventories:      Finished goods 3 -12 -2 -10 -2 -2 2 0 9 4 0 1 -8



Federal Reserve Bank of Kansas City
Manufacturing Survey Home Page