Manufacturing Activity in Central U.S. Shows Slight Improvement

The manufacturing sector in the central United States saw a slight increase in activity during the month of July, according to the Federal Reserve Bank of Kansas City. The Tenth District Manufacturing Survey's composite index rose to minus 11 in July, up from minus 12 in June. Although still below zero, indicating a contraction in activity compared to the previous month, this improvement was better than economists had expected.

Regional Overview

The survey assesses manufacturing activity in a specific region, including the western third of Missouri, all of Kansas, Colorado, Nebraska, Oklahoma, Wyoming, and the northern half of New Mexico. Durable goods experienced a slight easing in the pace of decline, while nondurable goods remained steady.

Production and New Orders

The production index declined to minus 20 in July, down from minus 10 in the previous month. Similarly, the new orders index fell to minus 20. Additionally, the shipments index dropped to minus 24, indicating a significant decrease in industrial orders.

Employment and Prices

Despite the challenging conditions, there was a positive sign in terms of employment. The employment index rose to 4, suggesting an improvement in firms' abilities to hire. However, uncertainty remained a major concern for businesses.

The cost of raw materials increased, as indicated by the rise in the index of prices paid from 4 to 9. On the other hand, the index of prices received for finished products fell to minus 7 from positive 3.

Outlook for the Future

Firms' short-term outlook showed little change. The future composite index, which measures the outlook for the next six months, remained flat at minus 2 in July. This is the lowest level since April 2020 and reflects ongoing uncertainty within the industry.

In conclusion, regional factory activity continued to decline in July, but there were some signs of stabilization and slight improvement. Production decreased moderately, while employment activity showed mild improvement and is expected to continue growing.