Kansas City Fed Manufacturing Misses Expectations, Still Contracting
The headline index rose to -5 from last month's brutal -10 reading.
Economists had predicted that it would rise to -3.
Any number below zero indicates contraction, so today's release indicates a continued slowdown, albeit less severe than it was last month.
The table below shows the changes in the sub-components that drove the move in the headline index.
Below are selected responses to the survey on the state of the regional economy:
“Until the final rules of our cost for healthcare are known, we are not hiring. The increased cost of unemployment benefits has also kept us from hiring.”
“Our customers continue to buy “as required”. They are not stocking anything.”
“The continued uncertainty resulting from macro-economic conditions and a lack of faith in the existing administration’s ability to recognize and appropriately respond to such conditions (deficit, federal spending, sequestration, etc.), has us continuing an exceptionally cautious path for investment and growth potential.”
“I see no potential increase in normal business until the economy improves.”
“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.”
“Technically skilled workers are seeing significantly greater pay raises than lower skilled (10 percent versus 2 percent).”
“The energy field in our area seems to have taken a lot of employees at higher wages.”
“Orders for new gas compressor packages continue to be strong and have been this way for many years. No downturn is in sight even with depressed commodity prices.”