Kansas Fed Manufacturing Index

The Kansas Fed Manufacturing Index is the headline composite index, an average of 5 survey parts, from the Survey of Tenth District Manufacturing. Its publisher, the Federal Reserve Bank of Kansas City, is 1 of 12 regional Federal Reserve Banks.

The survey covers history since 1994, ran quarterly before monthly publication since July 2001, and added the composite in January 2011. The monthly survey polls about 100 factory executives across 7 states: Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri. It measures sentiment through a diffusion index, the share reporting gains minus the share reporting losses, not physical output, dollars, national activity, or Kansas-only output.

The survey runs monthly, with replies collected over about 5 days around mid-month from roughly 100 plants. Results appear toward month-end at 11:00 AM ET with commentary, Chart 1, Table 1 of conditions, Table 2 of history, data, and dates. Only month-ago and 6-month-ahead indexes carry seasonal adjustment, a tweak removing normal seasonal swings, with new factors each January. Read the sign: above 0 means expansion, 0 means no change, and below 0 means contraction for both current and expected indexes.

The composite averages 5 equally weighted parts, each tracking 1 factory signal.

• Production: whether the plant's physical output rose or fell.
• Volume of new orders: incoming demand, the forward-looking piece.
• Number of employees: change in factory headcount.
• Supplier delivery time: speed of supplier deliveries, where slower scores higher.
• Inventories: materials: stocks of raw materials on hand.

Other published indicators include shipments, order backlogs, the workweek, prices, capital spending, and export orders.

On April 23, 2020 the month-over-month composite fell to -30, its lowest reading since 1994, down from -17 in March and +5 in February. Every month-over-month index fell except supplier delivery time, which rose as delivery slowdowns scored upward. The 6-month-ahead composite improved from -19 to -6 while the year-over-year composite fell from -14 to -30. Drops were steepest at durable-goods metals plants, while food and beverage plants also declined; monthly prices fell while firms expected a slight rise.

1. Diffusion index: Count the shares reporting an increase and a decrease. The index equals the first minus the second in points; for example, 38% minus 27% equals 11, or 21 after seasonal adjustment.
2. Seasonal adjustment: Seasonally adjust the month-ago and 6-month-ahead indexes with the Census seasonal program to remove normal seasonal swings. Leave year-ago comparisons unadjusted and refresh factors each January.
3. Composite index: Average the 5 adjusted parts and divide by 5. The result is the headline composite.