What Is the Kansas City Fed Manufacturing Survey?
The Kansas City Fed Manufacturing Survey is a monthly survey that focuses on manufacturing activity in some states in the Midwest and West, and it measures sentiment and expectations among executives in the private sector.
The survey is formally known as the Tenth District Manufacturing Activity, which refers to the area overseen by the Federal Reserve Bank of Kansas City—one of 12 Reserve Banks under the Federal Reserve. The Tenth Federal Reserve District covers Colorado, Kansas, Nebraska, Oklahoma, Wyoming, 43 counties in western Missouri, and 14 counties in northern New Mexico.
The survey’s Kansas City Fed Manufacturing Index is similar to the Federal Reserve Bank of Richmond’s manufacturing index, which is a widely followed economic indicator on regional manufacturing. The Kansas City Fed survey monitors manufacturing plants based on geographic distribution, industry mix and size. The results are compiled as diffusion indexes.
Why Is the Kansas City Fed Manufacturing Survey Important?
The survey offers clues on inflationary pressures and the pace of growth in the manufacturing sector. Investors and analysts focus on the headline number of the Kansas City Fed’s composite manufacturing index, which is an average of indexes on production, new orders, employment, delivery time, and raw materials inventory. A reading greater than zero suggests expansion in manufacturing, while a reading of less than zero indicates contraction.
While the survey is released later in the month than the purchasing managers’ index and the Philadelphia Fed Index, it remains closely watched because it relies on answers provided by executives about their outlook on business conditions. That compares to other leading economic indicators, such as retail sales and auto sales, which are based on data in prices and units.
The Kansas City Fed says its manufacturing survey's accumulated results help trace longer-term trends. Survey results reveal changes in several indicators of manufacturing activity, including production and shipments, and identify changes in prices of raw materials and finished products, according to the regional Fed bank.
When Is the Kansas City Fed Manufacturing Survey Released?
The survey is released each month at 11 a.m. ET, typically toward the end of the month.
