KANSAS CITY, Mo., May 12 (UPI) -- The Federal Reserve Bank of Kansas City said Monday manufacturing activity in the 10th Federal Reserve District improved slightly in April after slowing in March.
The regional Fed said production rose back to year-ago levels and capital expenditures were not as weak as in recent months. Expectations for future factory activity also remained quite high.
On the negative side, however, manufacturing employment continued to decline and expectations for future hiring were weaker than in previous surveys.
Production versus a month ago rose for the fourth straight month, but the monthly data is not seasonally adjusted, so caution must be taken in basing analyses on month-to-month comparisons.
The Federal Reserve Bank of Kansas City said the net percentage of firms reporting year-over-year increases in production rose to zero in April after falling to minus 4 in March.
The regional Fed said a few firms reported their business had improved since the fighting ended in Iraq, but most firms said the end of hostilities had yet to have any impact on factory activity.
The report showed production remained slightly above year-ago levels at durable goods-producing plants in the district but was still somewhat weaker than a year ago at non-durable goods-producing factories.
The Fed said, "Although sample sizes make it more difficult to draw firm conclusions about individual states, the data available suggest that production was at or above year-ago levels in all district states but Missouri."
Like production, the Fed said, "Several other year-over-year indexes of factory activity improved in April."
The shipments index returned to positive territory, and the new orders index edged higher. The capital expenditures index also rose nearly to zero after slumping in recent months.
On the other hand, the regional Fed said the employment and average workweek indexes became more negative in April.
"Indeed, the workweek index posted its lowest reading in nearly a year," the Fed said.
The indexes for inventories of both raw materials and finished goods also edged lower in April, but remained only slightly negative.
The Fed said the gap between the year-over-year price indexes narrowed slightly in April though many firms continued to have difficulties passing cost increases through to customers.
The raw materials price index edged down but remained close to its high readings from the past year, it said. The finished goods price index was still slightly negative but edged up in April to reach its highest level since early 2002.
The report also showed expectations for future factory activity remained quite high in April.
The future production, shipments, and new orders indexes were all in the mid-to high-30s, similar to their readings from the previous six months. Also, the future capital spending index reached its highest level since late 1999, though a large portion of firms still expect little change in expenditures over the next 6 months.
On the negative side, the Fed said future employment index fell to 5 in April following readings in the mid-teens during the first quarter.
"Firms expect the gap between raw materials price increases and finished goods price increases to diminish somewhat further in coming months," the Federal Reserve Bank of Kansas City said. "The future finished goods price index rose back above zero after dropping in March, while the future raw materials index was similar to the previous four surveys."
The Fed's latest survey included 82 responses from manufacturing plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.
