The manufacturing index for the Fed's 10th District, which includes Kansas, Oklahoma, Colorado, Wyoming, Nebraska and parts of Missouri and New Mexico, rose from minus 10 in February to minus 5 in March.
While showing improvement from February, the index shows a decline from January, when the index measured minus 2.
The central bank for the 10th Federal Reserve District said the improvement for March "was largely concentrated in non-durable goods-producing plants, particularly food and chemicals."
The district's production index rose from minus 11 to minus 1. Indexes for shipments and new orders reached the break-even point of zero, the highest value for those indexes in seven months.
In contrast, the Fed said, the employment index for the region and the measure for new orders both fell.
"Our customers are preparing for the increased healthcare costs and higher petroleum costs. We have received notices preparing for large increases in raw material costs, and we have purchased more materials recently as a result. We have had an unusually good volume of business this winter but we are leery about the activity this summer," the report said using a quote taken from one of the monthly survey's respondents.