Factories Report More Modest Growth in April
Tenth District manufacturing activity grew more modestly in April, and expectations for future activity eased slightly but remained mostly solid (Chart 1). Price indexes showed little change, with some slight upticks in month-over-month selling prices and future raw materials prices.
The month-over-month composite index was 5 in April, down slightly from 10 in March but higher than 1 in February (Table 1). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Growth eased slightly in factory production of both durable and nondurable goods, particularly food, machinery, electronic, and chemical products. Most month-over-month indexes slowed in April but remained positive, with production, shipments, order backlog, and employment all decreasing. In contrast, the new orders index edged higher from 4 to 10. Most year-over-year factory indexes fell in April, and the composite index eased from 27 to 22. The future composite index also moved lower from 22 to 11, as most future factory activity indexes eased somewhat.
This month, contacts were asked special questions about impacts from recent flooding or extreme weather. About 33 percent of manufacturing contacts indicated they have had some negative effects from weather, mostly due to delayed shipments, power outages, and staffing challenges (Chart 2). Firms were also asked if recent increases in interest rates had affected their capital spending plans (Chart 3). Over 87 percent of firms said their spending plans were unchanged, with approximately 9 percent noting some decreases in expenditures as a result of higher rates, while 4 percent of firms indicated an increase in capital spending due to elevated rates.
“Productivity, late deliveries and quality continues to be impacted negatively as a result of people shortages.”
“Record levels of demand in January thru April. Will be another strong year for sales if it continues.”
“Clearly a cooling in some business sectors, primarily consumer and industrial.”
“We have an aggressive capital plan and will continue to move at the speed provided by our results, which has been good for some time. We have begun to reduce our inventories and strengthen our balance sheet. We believe things will be good for some time, but the amount of political turmoil and anti-business sentiment presents a risk that cannot be ignored.”
“Labor is still a big issue for us. We lost a handful of workers who have gone to outside work, construction and lawn care as examples. Finding it hard to replace them.”
“Anytime there is inclement weather that causes us to shut down a shift and/or reduce hours on a shift, our productivity is impacted. We have lost 1,000 man hours due to bad weather and power outages.”
“Biggest challenge is finding qualified entry level employees. This could impact growth plans in the future.”
“We need good weather to catch up on installations.”