Survey of Tenth District Manufacturing 





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News Release
Federal Reserve Bank of Kansas City

Kansas City, Missouri 64198
Phone (816) 881-2683
Fax (816) 881-2569


FOR RELEASE Thursday, December 30, 2010
EMBARGOED FOR 11:00 A.M. EST
EMBARGOED FOR 11:00 A.M. EST

Tenth District manufacturing activity continued at a solid pace in December, and producers were increasingly optimistic about future activity. Price indexes in the survey rose further, with a marked increase in raw materials prices.

A summary of the December survey is attached to this press release. Results from past surveys and release dates for future surveys can be found at: http://www.kc.frb.org/mfgsurv/mfgmain.htm. For further information about the survey, contact Tim Todd, Public Affairs Department, (816) 881-2308.

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


Survey of Tenth District Manufacturing
Tenth District manufacturing activity continued at a solid pace in December, and producers were increasingly optimistic about future activity. Price indexes in the survey rose further, with a marked increase in raw materials prices.

The net percentage of firms reporting month-over-month increases in production in December was 21, unchanged from 21 in November and up from 10 in October (Tables 1 & 2, Chart). Specific industry activity was mixed, with the majority of durable firms reporting an increase in production while some nondurable firms noted a slight downturn. Most other month-over-month indicators improved somewhat from the previous month. The shipments and order backlog indexes climbed higher, and the new order index was basically flat. The employment index increased to its highest level in three years, while the new orders for exports index edged down from 11 to 7. The raw materials inventory index moved into positive territory, and the finished goods inventory index also inched higher.

Growth in year-over-year factory activity increased in December. The production index improved from 27 to 32, and the shipments, new orders, and order backlog indexes also edged up. The employment index rose for the second straight month to its highest level in nearly 3 years, and the capital expenditures index increased from 9 to 19. Both inventory indexes rose further from last month, after nearly two years of negative readings.

Future factory indexes improved considerably from the previous month. The future production index jumped from 23 to 41, and the future shipments, new orders, and order backlog indexes also rose. The future employment index increased from 13 to 27, and the future new orders for export index also edged higher. The future capital expenditures index improved from 12 to 22, a three-year high. The raw materials inventory index moved into positive territory for the first time since April, and the finished goods inventory index also increased from -5 to 0.

Price indexes continued to rise. The month-over-month finished goods price increased from 3 to 18, and the raw materials price index jumped from 35 to 54. The year-over-year finished goods price index climbed higher, and the raw materials price index edged up slightly from 62 to 67. The future raw materials price index recorded its highest level since mid-2008, and the future finished goods price index also increased, as slightly more firms plan to pass recent cost increases through to customers.

Table1      
Summary of Tenth District Manufacturing Conditions, December 2010
  December vs. November
(percent)1
December vs. Year Ago
(percent)1
Expected in Six Months
(percent)1
Plant Level Indicators
Increase No
Change
Decrease Diff
Index2
SA
Index3
Increase No
Change
Decrease Diff
Index2
Increase No
Change
Decrease Diff
Index2
SA
Index3
 
Production
38 33 27 11 21
55 21 23 32
56 27 15 40 41
Volume of shipments
37 31 28 8 20
57 15 24 33
54 23 19 35 33
Volume of new orders
34 38 25 9 24
52 24 21 31
47 33 17 29 28
Backlog of orders
26 46 24 2 12
41 34 21 20
37 41 18 18 16
Number of employees
23 59 15 7 14
40 31 27 12
41 42 15 25 27
Average employee workweek
24 57 16 7 12
38 39 20 18
31 47 20 11 11
Prices received for finished product
18 72 8 10 18
40 37 17 23
44 44 10 34 35
Prices paid for raw materials
44 50 2 41 54
75 14 7 67
72 22 2 69 73
Capital expenditures 
36 44 16 19
35 48 12 22 22
New orders for exports
9 71 6 2 7
17 62 7 10
21 61 3 17 16
Supplier delivery time
9 84 2 6 7
23 65 5 17
12 83 1 10 10
Inventories:   
     Materials
23 58 16 6 11
33 36 27 5
25 50 23 2 7
     Finished goods
22 54 18 3 5
30 41 24 6
19 53 21 -1 0


1Percentage may not add to 100 due to rounding.
2Diffusion Index. The diffusion index is calculated as the percentage of total respondents reporting increases minus the percentage reporting declines.
3Seasonally Adjusted Diffusion Index. The month vs. month and expected-in-six-months diffusion indexes are seasonally adjusted using Census X-12.
Note: The December survey included 108 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

Table2
Historical Manufacturing Survey Indexes
 Dec'09Jan'10Feb'10Mar'10Apr'10May'10Jun'10Jul'10Aug'10Sep'10Oct'10Nov'10Dec'10
Versus a Month Ago
(seasonally adjusted)
 
Production 7 13 19 18 24 5 3 14 0 14 10 21 21
Volume of shipments 3 9 14 17 27 -3 1 12 -6 15 6 12 20
Volume of new orders 0 9 11 12 15 -2 0 9-13 9 16 25 24
Backlog of orders -4 0 -5 7 11 -3 -9 -2-16 4 4 8 12
Number of employees -1 2 -4 3 5 1 -1 5 -2 -2 -1 10 14
Average employee workweek 0 4 -3 1 6 9 -2 1 -6 2 2 5 12
Prices received for finished product -1 0 0 5 5 -1-14 -9 -4 -1 2 3 18
Prices paid for raw materials 22 42 45 42 53 37 14 14 14 25 25 35 54
Capital expendituresn/an/an/an/an/an/an/an/an/an/an/an/an/a
New orders for exports 5 6 0 4 5 0 3 0 -1 10 0 11 7
Supplier delivery time 8 8 12 11 10 15 5 0 3 4 1 11 7
Inventories:      Materials-12 -7 -1 3 -7 6 -4 -1 6 -1-10 0 11
Inventories:      Finished goods -1 0 0 -7 -9 6 1 0 2 5-13 2 5

Versus a Year Ago
(not seasonally adjusted)
 
Production-30-10 -9 -1 14 16 9 25 18 22 7 27 32
Volume of shipments-31-10-11 -5 15 13 6 25 18 25 12 29 33
Volume of new orders-25-11 -8 -3 19 23 6 23 16 20 8 28 31
Backlog of orders-32-14-19-13 -3 0 -5 6 3 4 0 10 20
Number of employees-48-39-29-31-18-18-12-10 -8 -2 -8 6 12
Average employee workweek-32-20-11-10 -1 8 -4 5 9 6 -1 10 18
Prices received for finished product-10 -1 -4 7 7 9 9 7 7 11 18 15 23
Prices paid for raw materials 6 25 38 55 58 63 53 50 51 48 58 62 67
Capital expenditures-31-14-15 -8 -5 -5 -5 4 -9 0 0 9 19
New orders for exports 0 6 7 2 7 8 7 14 12 12 7 19 10
Supplier delivery time 0 -1 2 10 8 10 0 3 4 7 7 16 17
Inventories:      Materials-35-18-20-17-12-14-14 -9 -5 -3 -3 0 5
Inventories:      Finished goods-12-14-14-11 -9 -8 -4 -5 -8 -2 -7 0 6

Expected in Six Months
(seasonally adjusted)
 
Production 17 35 24 33 22 32 21 23 10 23 29 23 41
Volume of shipments 15 35 32 36 21 33 24 22 9 19 29 23 33
Volume of new orders 17 25 25 27 28 31 23 23 16 28 26 20 28
Backlog of orders 7 12 5 16 9 16 12 11 4 23 7 11 16
Number of employees 2 9 18 20 18 14 9 1 2 7 7 13 27
Average employee workweek 8 7 13 10 4 13 2 0 -2 6 1 0 11
Prices received for finished product 8 12 15 19 17 17 11 9 7 10 18 27 35
Prices paid for raw materials 31 60 59 55 61 45 40 26 30 40 47 61 73
Capital expenditures 0 14 3 5 11 5 -4 -3 -4 8 4 12 22
New orders for exports 11 13 12 5 11 7 5 5 7 12 14 15 16
Supplier delivery time 10 6 6 9 15 9 0 8 6 3 9 10 10
Inventories:      Materials -2 3 6 4 3-10-10 -8 -6 -2 -5 -1 7
Inventories:      Finished goods 2 2 1 -4 0 -6-11 -4 0 -3-16 -5 0



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