Input Stories

Manufacturing activity fell modestly in the Tenth District in March, with the month-over-month composite index decreasing to -2. Meanwhile, expectations for future activity cooled 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 was due primarily to declines in nondurable manufacturing. Most month-over-month indexes were negative, while improved from last month. Production was relatively flat, and the employee workweek, inventories for materials, prices received and input prices were positive. On the other hand, inventories for finished goods turned negative, declining 10 points from February.

Production rose 14 points to 1, while new orders slipped from -7 to -12. Employment increased in March, rising from -14 to -4, as did the average employee workweek, turning positive from -9 to 6. The backlog of orders remained negative but improved slightly from -12 to -6. The year-over-year composite index for factory activity edged up from -18 to -7. Prices received slipped from 17 to 15 month to month but remained the same year-over-year. Prices for raw materials increased from 38 to 42 in March and from 52 to 67 from a year ago.

In March, survey respondents were asked about their firms’ profit margins and strategy changes. Nearly half of firms reported decreased profit margins in the past 12 months, while 30% reported increased margins. In the next 12 months, 33% of firms anticipate growing margins, and 40% predict reductions. Amid continued uncertainty, 66% of firms say they are considering changes in strategy, management, sourcing of materials or pricing to adapt to economic conditions this year. Additionally, selected written comments highlight how businesses are still waiting for the full impact of tariffs to hit their operations, particularly increased input costs.