A survey by the Federal Reserve Bank of Kansas City found manufacturing in Oklahoma and other states that make up the Tenth District fell at a faster pace this month.
Chad Wilkerson, the senior vice president at the bank said the survey also showed expectations for future activity were mostly flat or slightly positive.
“Regional factory activity declined at a slightly faster pace in December than the previous month,” said Wilkerson. “The index for raw materials prices also fell to its lowest level since July 2020.”
The slower pace in factory growth in December was driven by decreased activity in printing, wood products, machinery manufacturing, and food manufacturing. Month-over-month indexes were mostly negative in December.
In December, 43% of firms expected wages to rise faster compared to the past 12 months, while 23% of firms expected wages to rise at a similar rate and 35% of firms expected wages to rise more slowly. About 27% of all firms facing higher costs (inputs and labor) were able to pass through 80 to 100% of increased costs, while a quarter of firms could only pass through 0 to 20%.
Selected Manufacturing Comments
“All we have done over the last two years is increase costs. Pass through percentages averaged only 55% and we absorbed the remaining.”
“Costs of raw materials have risen at a rapid rate, but the possibility exists we have weathered the storm and these prices will begin to level out.”
“We are definitely seeing a decrease in customer demand for almost all our items. December has been extremely slow, and we fear a recession is under way.”
“Sales remain strong although softening a little. Workforce shortages continue with no end in sight. Parts shortages continue to limit production but slowly improving.”
“Everything in our world is still very aggressive – both cost wise and volume of business wise. We have seen some stabilizing on some commodities and freight – but other items are still climbing aggressively. Hard situation with how much we can really pass through to customers. Our profitability is not where it needs to be despite record sales and manufacturing volumes.”
The Tenth Federal Reserve District, headquartered in Kansas City, includes western Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado & northern New Mexico. The Kansas City Fed has branch locations in Denver, Omaha, and Oklahoma City.