Factory Activity Was Unchanged
The month-over-month composite index was 0 in January, unchanged from 0 in December and down from 7 in November (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Nondurable manufacturing activity declined, while durable manufacturing activity grew slightly driven by nonmetallic mineral and metal manufacturing. The month-over-month indexes were mostly positive. The volume of new orders and employment indexes were unchanged from last month at 0. The year-over-year indexes remained mixed. Production grew slightly, but capital expenditures decreased from 14 to 4 and employment fell from -7 to -11. Expectations for future activity cooled but remained expansionary with the composite decreasing from 10 to 7. However, expectations for production and shipments increased from last month’s readings.
Manufacturing Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| 1/1/2025 | -5 | -9 |
| 2/1/2025 | -4 | -18 |
| 3/1/2025 | -1 | -7 |
| 4/1/2025 | -2 | -8 |
| 5/1/2025 | -3 | -5 |
| 6/1/2025 | -1 | -14 |
| 7/1/2025 | 1 | -5 |
| 8/1/2025 | 1 | -2 |
| 9/1/2025 | 3 | -7 |
| 10/1/2025 | 4 | -6 |
| 11/1/2025 | 7 | -1 |
| 12/1/2025 | 0 | -4 |
| 1/1/2026 | 0 | -4 |
Special Questions
This month, contacts were asked special questions about labor demand and factors negatively impacting business. Over half (57%) of firms reported there were little to no changes in labor demand in the past year, while 7% shifted demand towards different roles, 14% reduced labor demand, 17% of firms increased overall labor demand, and 6% of firms are still evaluating impacts (Chart 2). Firms were also asked about concerns they have in 2026. Over a third (39%) of firms reported they are concerned about domestic demand for goods/services negatively impacting their business, 8% reported they are concerned about availability of inputs, 3% reported they are concerned about credit access, and 2% are concerned about the borrowing rate. Approximately a quarter (24%) of firms reported they are concerned about geopolitical uncertainty, 21% are concerned about worker availability, and 3% are concerned about the tax rate (Chart 3).
Selected Manufacturing Comments
"We are very concerned about demand for our product.”
“January is typically a slow month for us over the past 17 years of business.”
“Past six months have been strong, and the near future appears to be headed in the same direction. Steady, sustainable growth.”
“Demand is lower.”
“Planning is very difficult with the constant changes.”
“Seeing stagnant to down results so far.”
“Our quote activity is up nicely, which indicates orders should soon be rising as well.”
“Uncertainty.”
Survey Data
The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.