US: Kansas City Fed Manufacturing Index

Thu Jan 25 10:00:00 CST 2018

Consensus Consensus Range Actual Previous Revised
Level 14 11 to 16 16 14 13

The Kansas City manufacturing report, like other regional reports, remains steady and strong, at a composite score of 16 in January vs a revised 13 in December. New orders are at 14 for a 3-point gain with backlogs rising sharply, up 12 points to 20. Employment is up 2 points to 18 with production steady at 16. Price data show increasing pressures for both inputs and, importantly, for selling prices as well. Inventories are also building which points to very healthy conditions for this report's sample.

Market Consensus Before Announcement
New orders and backlogs both slowed in December but manufacturing production in the Kansas City Fed's region accelerated strongly. Capacity measures showed pressure with hiring very solid. The Econoday consensus for January's Kansas City manufacturing index is for steady strength at 14.

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.