Tenth District Manufacturing Activity Grew Further in November
The Federal Reserve Bank of Kansas City released the November Manufacturing Survey. According to Cortney Cowley, assistant vice president and Oklahoma City Branch executive, the survey revealed that Tenth District manufacturing grew further, and expectations for future activity remained positive.
“Regional factory activity increased moderately in November,” said Cowley. “Employment growth ticked up this month, while price growth cooled.” Tenth District manufacturing activity grew further, and expectations for future activity remained positive. Price growth for finished products and raw materials eased
slightly from last month.
Factory Activity Grew Further
The month-over-month composite index was 8 in November and both durable and nondurable manufacturing activity increased. Growth in the nondurable manufacturing sector was driven primarily by food and printing manufacturing, while growth in the durable manufacturing sector was driven by machinery and furniture manufacturing.
Most month-over month indexes increased. The employment and shipment indexes grew moderately, however, the order backlog and material inventories indexes decreased slightly. The year-over-year indexes were mixed but most showed increases from last month, except supplier delivery time and material inventories. Expectations for future activity eased somewhat but remained positive. However, expectations for the new orders and
employment indexes increased from last month’s levels.
Special Questions
This month, contacts were asked special questions about changes in employment and wages. Half of firms expect to leave employment unchanged, 35% expect to increase employment, and 15% expect to decrease employment. Approximately a third of firms (34%) reported they will be increasing wages and salaries for existing employees by a similar amount as in the past few years, while 3% of firms plan to increase wages and salaries more than in the past few years for only selected job categories, 12% plan to increase more than in the past few years for most job categories, 29% plan to increase for existing employees by less than in the past few years, 2% of firms plan to leave wages and salaries unchanged for most existing employees, 1% of firms are cutting wages for some employees, and 1% do not plan to make any of the provided changes to wages and salaries.
Selected Manufacturing Comments
“Our business is heavily reliant on imported good (food) that cannot be grown in the US. We are currently growing due to our stronger financial position compared to competitors. Our position in the industry is also more reliant than some of our competitors on grocery and retail business, rather than food service. As consumers face challenging economic conditions, they tend to eat at home more, which also helps our business.”
“We lost orders from customers because they would not absorb any cost increases, nor pass them on to the end user. As a result, we had to do significant and painful layoffs – the first since the
pandemic.
“Our volume is higher than last month, but it is much lower than twelve months ago. Our products are very seasonal.”
“Very hard to find quality skilled workers that are interested in working versus just checking the application mark for their unemployment benefits.”
“Operating costs continue to rise.”
“Seeing stress signs of our customers being able to make payments on time.”
“Labor market is OK – particularly for unskilled labor. Thousands of times better than it was 3-5 years ago. Quality is still a crapshoot. You are going to pay for skilled labor – but – it is
available/accessible. Generally turnover is lower – more appreciation for “current” job at-the moment. Largest question marks we face are uncertainty on cost of goods, impacts of tariffs,
pricing/margin pressures and overhead costs particularly as it relates to costs associated with insurance, benefits and “support” manufacturing costs.”
The Federal Reserve Bank of Kansas City serves the Tenth Federal Reserve District, encompassing the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico. As part of the nation’s central bank, the Bank participates in setting national monetary policy, supervising and regulating numerous commercial banks and bank holding companies, and providing financial services to depository
institutions.