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Factory Activity Remained Flat

Tenth District manufacturing activity remained essentially flat for the third month in a row, and expectations for future activity increased slightly (Chart 1, Tables 1 & 2). Monthly price indexes were mixed with an increase in materials prices but a slight decrease in finished goods prices. Expectations for future raw materials and finished goods prices remained similar to last month.

The month-over-month composite index was 0 in March, unchanged from 0 in February, and up slightly from -1 in January (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Nondurable goods plants reported decreased activity in March, especially printing, plastics, and chemical manufacturing, while food manufacturing increased. Month-over-month indexes continued to remain flat. Indexes for new orders, supplier delivery time, and materials inventories declined, while production, volume of shipments, and finished goods inventories increased slightly. Year-over-year factory indexes increased slightly, from a composite index of 5 to 6. The future composite index increased from 1 to 3 in March, with volume of new orders and capital expenditures indexes moving into positive territory.

Manufacturing Composite Indexes

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The month-over-month composite index was 0 in March, unchanged from 0 in February, and up slightly from -1 in January. Year-over-year factory indexes increased slightly, from a composite index of 5 to 6.
Date Vs. a Month Ago Vs. a Year Ago
Mar-22 32 57
Apr-22 22 54
May-22 21 54
Jun-22 11 35
Jul-22 13 46
Aug-22 5 36
Sep-22 4 30
Oct-22 -2 24
Nov-22 -2 19
Dec-22 -4 15
Jan-23 -1 4
Feb-23 0 5
Mar-23 0 6

Special Questions

This month contacts were asked special questions about profit margins and changing prices. In March, given current price pressures, 56% of firms reported a decrease in profit margins since the beginning of the year, while 26% of firms reported no change, and 18% of firms reported an increase (Chart 2). Compared to last year, 47% of firms reported changing prices more often, 28% of firms reported no change, and 24% reported changing prices less often (Chart 3).

Selected Manufacturing Comments

“For us in our little corner of the world inflation is still a huge issue. Some commodities are leveling off - but some are still very high and projected to go higher. Freight seems better. Access to labor is a little better. We will have to continue to appropriately raise prices throughout the year to try and build back profit margins.”

“Salaries and benefits have increased significantly over the past two years. Price increases have offset that. We need demand to stay strong, so prices stay in place. Increased capacity is being built internationally, which will impact demand in the long term.”

“Supply chain and labor costs are our biggest concerns.”

“Material and equipment availability is not getting better. I thought it would by now, but it's not. Not sure when that will change...if ever.”

“The two most common issues are related to supply chains from importing from China, delays, or supply and tightness of labor.”

“We are beginning to see some relief in the base commodity inputs - soybean oil, eggs, cardboard, etc. are starting to come down.”

Survey Data

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Chad Wilkerson

Senior Vice President and Oklahoma City Branch Executive

Chad Wilkerson serves as Oklahoma City Branch Executive and Senior Vice President of Community Development for the Federal Reserve Bank of Kansas City. Wilkerson has been with th…

Jannety Mosley

Senior Survey Analyst

Jannety Mosley is a Senior Survey Analyst in the Regional Affairs Department at the Oklahoma City Branch of the Federal Reserve Bank of Kansas City. In this role, she primarily s…