US: Kansas City Fed Manufacturing Index

Fri Nov 17 10:00:00 CST 2017

Consensus Consensus Range Actual Previous
Level 23 20 to 24 16 23

Regional report after regional report say the same thing: manufacturing is growing solidly. Kansas City's composite index for November did ease by 7 points to 16 but the slowing is welcome news given the risk that rates of growth were becoming unsustainably hot. New orders are down 5 points but are still very strong at 22 as are backlogs at 12. Employment is at 16 and production at 15, again both strong. Price data continue to show elevated costs for inputs and emerging traction for selling prices. Inventories are building but at a slowing rate this month and delivery times are stabilizing, both indications of easing strains on the supply chain. This week's factory news was highlighted by Thursday's major gain for the manufacturing component of the industrial production report, results like this report which point to a strong and increasing contribution from manufacturing.

Market Consensus Before Announcement
New orders have been leading Kansas City's manufacturing index which in October jumped to 23 and a new expansion high. The Econoday consensus for November is 23.

The Kansas City Fed index offers a monthly assessment of change in the region's manufacturing sector. Positive readings indicate monthly growth and negative readings monthly contraction. Readings at zero indicate no change. The headline number is the composite index, an average of the production, new orders, employment, delivery time, and raw materials inventory indexes.

Investors track economic data like the Kansas City Survey of Manufacturers to understand the economic backdrop for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers a moderate growth environment that will not generate inflationary pressures. The survey gives a detailed look at Tenth District's manufacturing sector, how busy it is and where it is headed. Some of the survey indexes also provide insight on inflation pressuresâ€including prices paid, prices received, wages & benefits, and capacity utilization. The equity market is also sensitive to this report because it is an early clue on the nation's manufacturing sector, reported in advance of the ISM manufacturing index and often in advance of the NAPM-Chicago index.