Kansas City Fed Manufacturing Index Contracts At Slower Pace

Tenth District manufacturing activity continued to contract but at a slower pace in September, with the composite index bouncing back 4 points to minus 2, a point above the consensus forecast. Keeping the overall index in negative territory were continuing declines at durable goods plants, especially from decreases in nonmetallic mineral products, primary metal, computer & electronic products, and transportation equipment manufacturing.

The headline bounce reflected strong gains back into expansion in production, up 13 points to 11, and volume of shipments, up 16 points to 9. New orders remained in contraction but also posted a strong 13-point improvement to minus 3.

Capacity pressures remained very subdued, with backlog of orders unchanged at minus 19, though delivery times did rise 7 points to 1. Inventories of materials fell 8 points to minus 5 while inventories of finished goods were down 3 points to minus 9.

Employment continued to contract, with the number of employees down 6 points to minus 13. But the average workweek lengthened again and was up 3 points to 10.