Kansas City Fed Mfg Survey: Activity Declines

Manufacturing activity in the Federal Reserve Bank of Kansas City's region "declined further in December, though by smaller amount than in October or November," according to the bank's monthly manufacturing survey, released Friday.

While expectations for production were more optimistic than in the prior survey, a growing percentage of companies said they anticipate employment reductions.

"We saw factory activity decline for the third straight month, which many firms blamed on the uncertainty created by the fiscal cliff talks," said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City. "Contacts still plan modest output expansion in the first half of 2012, but they now expect their employment to fall, before recovering later in the year."

The composite index narrowed to negative 2 in December from negative 6 in November, while the production index improved to negative 5 from negative 6, volume of shipments slipped to negative 8 from negative 3, and the volume of new orders index climbed to negative 8 from negative 14, and the backlog of orders index gained to negative 19 from negative 25. The new orders for exports index narrowed to negative 1 from negative 6, and the supplier delivery time index reversed to positive 3 from negative 2.

The number of employees index slipped to negative 3 from zero, while the average employee workweek index widened to negative 11 from negative 6. The prices received for finished product index grew to 7 from 3, while the prices paid for raw materials index increased to 34 from 23.

As for the inventories indexes, materials jumped to positive 1 from negative 7, while the finished goods fell to negative 1 from positive 9.

In comparison to the same month a year ago, the composite index dipped to 7 from 9, the production index sank to negative 3 from positive 4. The shipments index fell to 5 from 11, while the volume of new orders slid to 2 from 4, and the backlog of orders index remained at negative 7. The new orders for exports index narrowed to negative 4 from negative 5, and the supplier delivery time index increased to 9 from 7.

The number of employees index dropped to 13 from 22, while the average employee workweek index held at negative 8. The prices received for finished product index rose to 35 from 28 and the prices paid for raw materials dipped to 56 from 58. The capital expenditures index crept to 20 from 19.

As for the inventories indexes, materials climbed to 14 from 8, while the finished goods index gained to 17 from 11.

In projections for six months from now, the composite index inched up to 4 from 3, and the production index grew to 11 from 9. The shipments increased to 15 from 10, while new orders rose to 14 from 9, and the backlog of orders index fell to 2 from 4 The new orders for exports index slid to negative 4 from negative 2, and the supplier delivery time index reversed to positive 4 from negative 5.

The number of employees index fell to negative 6 from zero, while the average employee workweek index climbed to negative 7 from negative 8. The prices received for finished product index gained to 26 from 19, and the prices paid for raw materials rose to 59 from 41. The capital expenditures index was at 3, down from 8 the prior month.

As for the inventories indexes, materials fell to negative 3 from positive 2, while the finished goods index skidded to negative 4 from zero.

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

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