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First Cut: Kansas City Manufacturing Index climbs to highest in four months, helped by firmer new orders

The Kansas City Fed’s Manufacturing Composite Index climbed to 10 in March, up from 1 in February. It was the highest in the past four months and may indicate that the stall in manufacturing activity late in 2018 is starting to pass. One hopeful sign was in the subindex for export orders which registered a positive 5 after three months of negatives. The level is more-or-less in line with most of 2018 and hints that at least some global demand is returning.

The index for the outlook for six months from now regained its upward momentum and rose to 22 in March from 13 in February. Comments from survey respondents suggest that most find conditions relatively good while still contending with workforce issues and improving efficiency.

The main index components showed a turnaround in new orders (4 in March after -10 in February) and a pick up in the volume of shipments (14 after -14) and production (17 after -4). The District’s manufacturing businesses continued to hire where they can find workers (14 after 10) and the workweek expanded once more (14 after 0).

The index for prices paid slipped further to 15 in March after 19 in February and reached its lowest since 16 in November 2016. Prices received also moderated (7 after 18).

The Kansas City-ISM equivalent index rose to 54.0 in March from 51.0 in February and was the highest in five months. The reading would suggest that the ISM Manufacturing Index could increase from the 54.2 reading in February when the report is released at 10:00 ET on Monday, April 1. However, this is one of the weaker correlations among the regional surveys of manufacturing conditions.


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