Manufacturing activity in the Federal Reserve Bank of Kansas City's region "remained modest, and producers were slightly more optimistic than a month ago," according to the bank's monthly manufacturing survey, released Thursday.

"We saw continued sluggish growth from factories in our region in July," said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City. "New orders fell for the third time in four months, as exports dropped, and food prices are expected to rise.  But firms continued to add to their workforces and anticipate increased capital spending heading forward."

The composite index increased to 5 in July from 3 in June, while the production index slumped to 2 from 12, volume of shipments dropped to negative 3 from positive 12, and the volume of new orders index improved to negative 4 from negative 7, and the backlog of orders index climbed to negative 10 from negative 18. The new orders for exports index slipped to negative 13 from negative 7, and the supplier delivery time index rose to 6 from 4.

The number of employees index doubled to 6 from 3, while the average employee workweek index improved to negative 3 from negative 4. The prices received for finished product index rose to zero from negative 4, while the prices paid for raw materials index increased to 18 from 7.

As for the inventories indexes, materials surged to 13 from 5, while the finished goods reversed to positive 9 from negative 2.

In comparison to the same month a year ago, the composite index slid to 20 from 24, the production index fell to 19 from 32. The shipments index dropped to 18 from 35, while the volume of new orders slid to 23 from 32, and the backlog of orders index plunged to 10 from 20. The new orders for exports index dipped to 2 from 4, and the supplier delivery time index held at 12.

The number of employees index slipped to 18 from 25, while the average employee workweek index dipped to 2 from 7. The prices received for finished product index rose to 35 from 19 and the prices paid for raw materials fell to 50 from 60. The capital expenditures index grew to 23 from 21.

As for the inventories indexes, materials jumped to 26 from 17, while the finished goods index climbed to 16 from 11.

In projections for six months from now, the composite index rose to 13 from 8, the production index remained at 22. The shipments held at 20, while new orders advanced to 22 from 12, and the backlog of orders index crept to positive 3 from negative 1. The new orders for exports index gained to 6 from 4, and the supplier delivery time index increased to 5 from 4.

The number of employees index grew to 16 from 13, while the average employee workweek index remained at negative 2. The prices received for finished product index climbed to 25 from 12, and the prices paid for raw materials rose to 50 from 40. The capital expenditures index was at 20, up from 17 the prior month.

As for the inventories indexes, materials rose to negative 1 from negative 11, while the finished goods index improved to positive 5 from negative 8.

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

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