News

Manufacturing activity contracted modestly in the Tenth District in February, with the month-over-month composite index remaining unchanged at -5. Meanwhile, expectations for future activity 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, specifically food, chemicals and paper. Most month-over-month indexes were negative, apart from prices, inventories and supplier delivery times.

Production fell four points to -13, while new orders slipped from -6 to -7. Employment declined in February, falling from 1 to -14, as did the average employee workweek, turning negative from 1 to -9. The backlog of orders remained negative but improved slightly from -19 to -12. The year-over-year composite index for factory activity dipped from -9 to -18. Prices received and prices for raw materials increased both month-over-month and year-over-year in February.

In February, survey respondents were asked about their firms’ anticipated reactions to trade policy and their ability to pass along costs to consumers. Firms are split on how trade policy changes will impact their business, with 43% saying there will be no change to demand or revenues, while roughly one-quarter predict demand will be lower (26%) or higher (23%). Meanwhile, just 7% of firms believe demand will be lowered significantly, compared with 1% who think it will be improved substantially. Nearly 40% of firms expect to pass along 0–20% of costs to their customers, while 23% forecast to pass along 80–100% of costs.