Kansas City Fed Manufacturing Activity Increases in March
Manufacturing activity increased in the Tenth District in March, with the month-over-month composite index rising to 11 in March from 5 in February. Meanwhile, expectations for future activity improved 1 point to 16. The month-over-month activity gain was due to an increase in both durable and nondurable manufacturing. At the same time, the new orders index rose in March, and the employment index turned positive. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico.
The production and shipments indexes both increased, rising from 10 to 11 and from 11 to 20, respectively. Meanwhile, new orders jumped from 7 to 15. The employment index climbed from -6 to 7, while the average employee workweek ticked up from 6 to 7. The backlog of orders index increased 5 points to 13, its highest level in over a year. At the same time, the pace of growth for prices paid weakened and prices received strengthened, with raw materials prices decreasing 5 points to 37 and prices received ticking up 1 point to 19. Furthermore, the indexes for prices received and paid both decreased over the year, moving down to 52 and 72, respectively.
In March, survey respondents were asked special questions about expected changes in profit margins and product demand. Overall, 32% of firms reported that they expect their profit margins to increase over the next 12 months, while 44% predict a decline and 24% anticipate no change. Furthermore, 60% expect their product demand to be higher in 2026, 20% anticipate no change and 20% predict product demand will be lower than in 2025.