US DATA
Manufacturing activity in the Kansas City Fed's district picked up slightly in November, with the composite index rising to -2 from -4 (and contrary to an expected deterioration to -5). This was the second consecutive uptick in the composite index, which is an average of the main subindices (production, new orders, employment, supplier delivery time, and raw materials inventory indexes).
- The KC Fed's report notes a decline in nondurable goods manufacturing in November, with durable goods activity flat. Production and new orders fell, while employment was steady.
- As with the Philadelphia Fed counterpart survey earlier in the day, expectations for future activity rose: the future composite rose to 11 from 7, with stronger expectations for the next 6 months in future production and new orders, with employment and capex also expected to grow. This was the joint-highest expectations reading since August 2022 (it also printed 11 in September 2022 and January 2024).
- In contrast to other regional Fed indices however, KC Fed manufacturing price increases continue to cool: prices paid (5 vs 19 prior) and received (6 from 11 prior) both fell sequentially, with prices paid at a 13-month low. Expected prices paid fell to a 7-month low as well.
- As such, the signals sent from the regional Fed reports have been quite hard to parse: Empire had explosive current activity but softer expectations, Philly had soft current activity but soaring future expectations and higher expected inflation, while KC is similar to Philly except for the opposite move in inflation expectations.
- There's always volatility and divergence between the regional Fed surveys, but we suspect some of the findings are tied to business' reactions to the Nov 5 election.
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