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Manufacturing activity fell modestly in the Tenth District in May, with the month-over-month composite index up one point to -3. Meanwhile, expectations for future activity declined slightly but remained positive. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico. The month-over-month decrease in activity continued to be due primarily to declines in nondurable manufacturing, specifically food manufacturing, and durable manufacturing was largely unchanged. While production, shipments and new orders fell moderately in May, employment increased, inventories were flat and backlogs fell.

Production fell five points to -10, while new orders inched up from -11 to -9. New orders for exports decreased significantly from -10 to -21 over the month. Employment jumped in May, rising from -11 to 3, while the average employee workweek slipped further negative, decreasing from -6 to -9. The backlog of orders worsened from -20 to -23. The year-over-year composite index for factory activity ticked up from -8 to -5. Prices received and prices for raw materials decreased both month-over-month and year-over-year in May.

In May, survey respondents were asked about their firm’s hiring and capital expenditure plans. About half of firms (52%) reported that their plans have not changed from the beginning of the year, but 34% anticipate decreases and 14% expect increases. Similarly, more than half (60%) of firms have not changed their capital expenditure plans, while 30% predict decreases and 10% forecast increases. Additionally, firms were asked about how often they are changing prices. Roughly 40% reported they have not changed the frequency with which they change prices, but 37% indicated changing prices more often and 16% are changing prices much more often.