Kansas City Manufacturing Report Shows Slowing

Thursday's manufacturing PMI as well as last week's Philly Fed report both showed slowing in August, as does the Kansas City manufacturing index which came in at 14. This is 9 points below Econoday's consensus and the lowest reading of the year.

Orders slowed 12 points to 9 this month with backlogs still strong, down only 1 point to 8. Shipments slowed by 4 points to 18 with production down 12 points to 10. And hiring is also down 12 points to 14.

The workweek is up only 1 point this month, down from 14 in July. But slowing may be a plus for this sample given the risk that activity was becoming unsustainably strong. Delivery times continue to lengthen but to a lesser degree, at 19 vs 28 in July. Inventory growth is steady for raw materials and slowing slightly for finished goods. Price data are steady to lower at highly elevated rates.

Based on advance indications from small sample surveys like this report, August may prove to be relatively soft for the nation's factory sector giving manufacturers some needed breathing room to expand capacity.