Federal Reserve Round-up for December

Kansas City—Tenth District

Manufacturing activity in the Tenth District fell slightly in December, according to the Federal Reserve Bank of Kansas City. The composite index registered -3, down from 7 in November and 6 in October 2012 and indicating contraction instead of growth. The slowdown in the Plains states was attributed to a number of factors including poor weather and fiscal and regulatory uncertainty.

The production index plummeted from 11 to -17 for the month with most indices that make up the composite index falling. Pricing month-over-month was mixed with raw material prices higher and finished prices lower. Production inventories fell to a negative index reading while finished goods inventories improved slightly. New orders for exports were down along with the index for employment.

Year-over-year indice readings also decreased except for employment and inventories which increased slightly.

The future composite indice rose two points to 14 showing a more restrained optimism for future manufacture activity.

The Federal Reserve Bank of Kansas City serves the Tenth District which includes the western third of Missouri, all of Kansas, Colorado, Nebraska, Oklahoma, Wyoming and the northern half of New Mexico.

Third District—Philadelphia

Manufacturing growth in Third District in December grew at a pace similar to November according to the Federal Reserve Bank of Philadelphia. The diffusion index of current activity registered 7.0, up from 6.5 in November, and has been positive for seven consecutive months.

Current shipments and new orders increased after falling in November. Demand for manufactured goods increased by 4 points on the new orders index while shipments rose 8 points to 13.3.

Employment levels were relatively flat, increasing by only 1 point compared to last month, although firms reported an increase in hours worked.

Input costs decreased in December with the prices paid index dropping 10 points. More firms reported higher selling prices moving the prices received index up 3 points to 12.9.

The six month outlook suggests activity has slowed since October but firms continue to be optimistic; nearly 57 of firms expecting an increase in activity over the next six months.

The Philadelphia Federal Reserve Bank serves the Third District which covers eastern Pennsylvania, southern New Jersey, and Delaware.

Second District—New York

The December Empire State Manufacturing Survey indicated disappointing manufacturing conditions for December. The survey by the Federal Reserve Bank of New York reported the general index at 1.0, up three points from November but indicating almost no change in activity for the month.

The new orders index rose slightly but stayed in negative territory at -3.5. The shipments index rose eight points to 7.7 percent. Backlogs declined significantly with the index for unfilled orders falling seven points to register -24.1, the lowest level since 2009. The inventory index plummeted 20 points to -21.7, indicating a sharp drop in inventories.

A moderate increase in input prices and a small increase in selling prices was indicated by a nearly flat reading of 15.7 for the prices paid index and an eight point rise to 14.7 for the prices paid index.

Employment levels were unchanged for the month with indications of shorter work hours.

The future outlook index was slightly less optimistic than November with all indices dropping except for the future price indices. The future prices paid index rose six points to 48.2 while the future prices received index jumped 11 points to 27.7.

In the supplementary questions, benefit costs were the biggest concern of New York manufacturers with lack of qualified workers emerging as the second greatest concern. Both were expected to be more of a problem a year from now.

The New York Federal Reserve Bank oversees the Second Federal Reserve District, which includes New York state, the 12 northern counties of New Jersey, Fairfield County in Connecticut, Puerto Rico and the U.S. Virgin Islands. Though it serves a geographically small area compared with those of other Federal Reserve Banks, the New York Fed is the largest Reserve Bank in terms of assets and volume of activity.