Manufacturing activity in the Federal Reserve Bank of Kansas City's region "fell at a slower rate, but producers were considerably more optimistic about future months," according to the bank's monthly manufacturing survey, released Thursday.

"Factory activity rebounded somewhat in March, although overall levels still remain sluggish.  Contacts continued to cite uncertainty about healthcare costs and the overall economy as reasons for lower growth," said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City. "However, the outlook for future activity was notably more positive than in previous months."

The composite index narrowed to negative 5 in March from negative 10 in February, while the production index improved to negative 1 from negative 11, volume of shipments climbed to zero from negative 12, and the volume of new orders index surged to zero from negative 25, and the backlog of orders index crept to negative 16 from negative 18. The new orders for exports index widened to negative 7 from negative 1, and the supplier delivery time index inched up to negative 5 from negative 6.

The number of employees index declined to negative 15 from positive 2, while the average employee workweek index rebounded to negative 8 from negative 14. The prices received for finished product index fell to negative 1 from positive 5, while the prices paid for raw materials index decreased to 19 from 25.

As for the inventories indexes, materials gained to negative 2 from negative 8, while the finished goods rose to zero from negative 6.

In projections for six months from now, the composite index climbed to 14 from 4, and the production index soared to 26 from 12. The shipments rose to 26 from 14, while new orders doubled to 30 from 15, and the backlog of orders index grew to 16 from 5. The new orders for exports index rose to 11 from 1, and the supplier delivery time index increased to 3 from 1.

The number of employees index jumped to 12 from 2, while the average employee workweek index reversed to positive 9 from negative 3. The prices received for finished product index fell to 22 from 26, and the prices paid for raw materials dropped to 38 from 51. The capital expenditures index was at 21, up from 18 the prior month.

As for the inventories indexes, materials narrowed to negative 2 from negative 9, while the finished goods index rose to negative 6 from negative 13.

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

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