Manufacturing Slows in Kansas City Fed District

KANSAS CITY, MO - MARCH 07: Democratic Presidential Candidate former Vice President Joe Biden speaks to a full crowd during the Joe Biden Campaign Rally at the National World War I Museum and Memorial on March 7, 2020 in Kansas City, Missouri. (Photo by Kyle Rivas/Getty Images)
Photo by Kyle Rivas/Getty Images

First, New York. Then, Philadelphia. And now Kansas City.

The Kansas City Federal Reserve Bank said that the growth of manufacturing the central part of the U.S. slowed in November, making it the third regional Fed bank to report a post-election slowdown in manufacturing.

The Kansas City Fed’s Manufacturing Survey’s composite index came in at 11 in November, down from October’s 13 level. Economists expected the indicator to rise.

The index covers factory activity in the western third of Missouri, all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming, and the northern half of New Mexico. Scores above zero generally indicate expansion, while score below zero suggest contraction.

“While regional factories reported another month of growth, activity still has not returned to pre-Covid levels,” said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City.

Most of the indexes components remain in positive territory, including the gauges for production and new orders. Both, however, softened from the October measurement. All of the expectations metrics are in positive territory.

The employment index fell to 1 on a seasonally adjusted basis and hit negative territory on an unadjusted basis.

“A sizable share of firms said they cannot find skilled workers, but low sales growth and COVID-related uncertainty also restrained their hiring plans,” Wilkerson said.

The surge in infections may be weighing on business.

“The latest increase in positive COVID testing has affected our business more than any other month. We have added new restrictions,” one survey respondent said.

Politics was also cited as a drag.

“Without a clear direction of the government regulations… we are not planning any expansion for 2021,” a respondent said.

The survey was open for a six-day period from November 10-16.


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