The Kansas City Manufacturing Survey, conducted by the Federal Reserve Bank of Kansas City, is an economic indicator that measures the performance of the manufacturing sector in the Tenth Federal Reserve District.
This region encompasses Kansas, Colorado, Nebraska, Oklahoma, Wyoming, the western third of Missouri, and the northern half of New Mexico.
The survey provides crucial insights into the manufacturing sector’s health and growth prospects in the Tenth District, making it a critical tool for economists, policymakers, and investors.
What is the Kansas City Manufacturing Survey?
The Kansas City Manufacturing Survey is a monthly report that assesses the state of the manufacturing sector in the Tenth Federal Reserve District.
The survey gathers information on a variety of factors, including production, employment, prices, and expectations for future business conditions.
By analyzing this data, the survey offers a snapshot of the region’s manufacturing activity and its potential impact on the broader economy.
The survey has been conducted since 1955 and its results are released on the first business day of each month
Methodology
The Kansas City Manufacturing Survey is based on responses from about 100 manufacturing firms located in the Tenth District.
The survey measures a variety of indicators of manufacturing activity, including production, employment, new orders, prices, and inventories.
The survey participants are asked to provide information on various aspects of their businesses, including:
- Production: The level of output and the rate of change in production compared to the previous month.
- New Orders: The volume of new orders received and the rate of change compared to the previous month.
- Employment: The number of employees and the rate of change in employment levels compared to the previous month.
- Prices: The prices of raw materials and finished goods, as well as the rate of change compared to the previous month.
- Expectations: The outlook for future business conditions, including production, new orders, employment, and prices.
Survey participants are asked to report changes in each category on a scale of positive, negative, or unchanged. The responses are then aggregated, and a diffusion index is calculated for each category.
The index values range from 0 to 100, with a value above 50 indicating expansion and a value below 50 signaling contraction.
Why is the Kansas City Manufacturing Survey important?
The Kansas City Manufacturing Survey plays a vital role in understanding regional economic trends for several reasons:
- Economic Assessment: The survey provides an accurate and timely assessment of the manufacturing sector’s health in the Tenth District, helping economists, policymakers, and investors gauge the region’s economic strength and make informed decisions.
- Policy Decisions: The survey’s results can inform monetary and fiscal policy decisions by providing insights into the manufacturing sector’s current performance and future outlook. For instance, if the survey indicates a contraction in manufacturing activity, policymakers may consider implementing expansionary policies to stimulate growth.
- Investment Strategies: Investors can use the Kansas City Manufacturing Survey to guide their investment decisions, as the report provides information about the manufacturing sector’s current and near-term trajectory. By understanding the regional economic climate, investors can adjust their portfolios to take advantage of growth opportunities or protect against potential downturns.
Summary
The Kansas City Manufacturing Survey is a key economic indicator that provides valuable insights into the manufacturing sector’s performance and growth prospects in the Tenth Federal Reserve District.
The survey is conducted by the Federal Reserve Bank of Kansas City and is based on a sample of about 100 manufacturing firms in the district.
By gathering and analyzing data from manufacturing firms in the region, the survey offers a snapshot of the sector’s health and its potential impact on the broader economy.
Economists, policymakers, and investors can use the Kansas City Manufacturing Survey to better understand regional economic trends and make informed decisions about policy and investment strategies.