Kansas City Fed Manufacturing Survey: May 2011

The Federal Reserve Bank of Kansas City, like other district FRBs (New York, Philadelphia, Richmond and Dallas), tracks its region’s manufacturing activity by surveying a number of important indicators such as general activity, production, shipments, orders, employment and prices for raw materials and finished products.

The latest results are indicating that the manufacturing expansion slowed significantly falling to a near contraction level of 1 from a level of 14 a month earlier while the employee index declined to 9 and the prices paid for raw materials declined to 54.

The most notable declines leading the weakness were seen in the volume and backlog of orders and volume of shipments and the production index.

It's important to note that these declines are largely consistent with similar trends seen in other regional manufacturing surveys including the Philly Fed Business Outlook Survey and the Richmond Feds Survey of Manufacturing.

The following chart plots the seasonally adjusted Composite index since 2001 with the solid red line indicating the threshold between expansion and contraction.