US: Kansas City Fed Manufacturing Index

Thu Feb 22 10:00:00 CST 2018

Consensus Consensus Range Actual Previous
Level 16.5 14.0 to 18.0 17.0 16

Manufacturing activity in the Kansas City Fed's district posted very solid growth in February, with the composite score beating expectations by rising 1 point to 17. The production component of the index rose 5 points to 21, as factory activity increased particularly for the production of metals, machinery, and plastics. Strength was also registered in shipments, up 10 from the prior month to 24, and employment, with the number of employees component up 5 points to 23 and the average workweek up 9 points to 11. Both prices received and prices paid saw increases, but especially the latter, with the component jumping 16 points to 50.

Market Consensus Before Announcement
The Kansas City manufacturing report, like other regional reports, has held steady and strong, at a composite score of 16 in January with February's consensus at 16.5. New orders and backlogs were both very strong in January.

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.