Manufacturing activity expands at slower rate
August manufacturing activity expanded, but at a slower pace, in the region that includes Oklahoma, according to a survey released Thursday.
The rate regressed to the rates of growth that prevailed in late 2017 and early 2018, the survey said, while expectations remain solid.
“Our composite index came down a bit again in August,” Federal Reserve Bank of Kansas City Vice President and economist Chad Wilkerson said. “But the pace of growth in regional factories is still at the solid levels that prevailed in late 2017 and early 2018.”
The month-over-month composite index was 14 in August, down from 23 in July and 28 in June. This index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes in the Tenth District, which encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico.
Growth in factory activity remained relatively stable at nondurable goods plants, while durable goods activity slowed slightly, particularly for machinery, computers and electronics. The production, new orders, employment, and new orders for exports indexes all decreased modestly.
In contrast, the shipments index rose from 12 to 18 after falling considerably last month. The finished goods inventory index dipped slightly, while the raw material inventory index was unchanged.
Continued concerns about trade and tariffs have left industry officials with a mix of feelings regarding the future, according to the survey.
“Tariffs have hurt our industry,” a manufacturer said in the survey. “Material and component prices are up across the board. Everyone in the area is offering hiring bonuses to attract workers. In addition, our export demand is lower due to political reasons related to tariffs.”
“Tariffs and threats of tariffs is causing raw material increases that are eating away the benefit of a lower corporate tax rate,” another manufacturer said. “We are unable to pass along tariff-caused increases, for items under contract.”