US: Kansas City Fed Manufacturing Index

Thu Mar 22 10:00:00 CDT 2018

Actual Previous
Level 17 17

Among the regional manufacturing surveys, Kansas City is in the middle of the pack which nevertheless still translates to very strong growth. The composite index is unchanged this month at 17 though a dip in new orders, down 1, does stand out. Yet backlogs keep building to a very strong 14 and employment is soaring, up 3 points to 26. The workweek is up, deliveries are slowing sharply, and input costs are highly elevated which are all indications of rising pressure on the supply chain and potential capacity stress.

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.