Economic Data and Growth

Manufacturing activity increased in the Tenth District in February, with the month-over-month composite index rising to 5 in February from 0 in January. Meanwhile, expectations for future activity jumped 8 points to 15. The month-over-month activity gain was due to an increase in durable manufacturing, which offset a decline in nondurable manufacturing. At the same time, the new orders index improved in February. The employment index was the only index to be negative this month. 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 production and shipments indexes turned positive, rising from -2 to 10 and from -2 to 11, respectively. Meanwhile, new orders jumped to 7, expanding for the first time since September. The employment index fell from 0 to -6, while the average employee workweek index ticked up from 4 to 6. The backlog of orders index turned positive for the first time in over a year, climbing from -11 to 8. At the same time, the pace of growth for prices paid and prices received both weakened slightly, with raw materials prices decreasing 2 points to 42 and prices received edging down 1 point to 18. On the other hand, over the year, the indexes for prices received and paid both increased, moving up to 58 and 81, respectively.

In February, survey respondents were asked special questions about their ability to pass through prices and the frequency of prices changes. Nearly one-third of the firms (30%) reported they are able to pass through only up to 20% of higher costs from inputs and labor. Additionally, 10% can pass through 20% to 40%, 15% are able to pass through 40% to 60%, 13% can pass through 60% to 80% and 28% said they can pass through 80% to 100% of the increased cost from inputs and labor. When asked about price changes, 12% of firms reported they are changing prices much more often than last year, 36% somewhat more often, 4% somewhat less often and 2% much less often. At the same time, 46% of firms reported no change in the frequency of price changes compared to last year.