Of the 12 Federal Reserve Regional Districts, five report monthly manufacturing data that provides a measurement of economic stability for the region as well as an overall measurement of how national trends affect the area. While each individual region’s data varies month to month, a longitudinal look at each region’s report over longer periods of time shows the trends are generally linked. Activity across regions typically remains within a relatively tight range with only occasional outliers. In February 2018, report numbers highlighted growth and an optimistic outlook for manufacturing in five regions.
- Dallas — Reporting growth in the region, the Dallas report points to an 11-point rise in the production index, a rising employment index, and an increased shipment index, suggesting an optimistic February overall. Compensation rose for about one-third of the firms while remaining constant for the rest. The general business activity index rose to 37.2, its highest measure in 12 years.
- Kansas City — The Kansas City region also reported optimism. The composite index, which is calculated using an average of multiple indexes, rose slightly. While the raw materials index fell, most others rose, remained constant, or increased.
- New York — Also reporting expansion, the New York region had slightly less positive numbers than some of the other regions with a five-point drop in the general business conditions index. Many individual indexes held steady with employment levels and the workweek index reporting slight rises.
- Richmond — The Richmond region reported “robust growth” in February. While the index measuring available skilled workers dropped, employment rose nevertheless. With increases in shipments as well as orders, the overall outlook for the region is optimistic with expectations for continued growth.
- Philadelphia — The Philadelphia regional report was similarly optimistic. The manufacturing activity index was up slightly with reported increases in new orders and employment. While deliveries slowed and unfilled orders increased, area manufacturing firms forecast a 3% overall price increase and 3% compensation increase over the next four quarters.
Let’s not forget Milwaukee
While a regional state report rather than a Federal Reserve index, Milwaukee manufacturers reported optimism with a substantial overall monthly increase of 12 points to 75.24 — its highest since “at least 2006.” In fact, the region has hit its highest overall index measure in more than a decade. Employment, production, and exports were all up.
The positive manufacturing trend is universal with every single region reporting increases for the month of February. Although some regions — Milwaukee and Dallas in particular — reported larger increases than others, overall the trend is consistent and points to a healthy manufacturing sector for the country as a whole. The Institute for Supply Management (ISM) Purchasing Managers Index (PMI), a national measure of manufacturing activity, also increased in February, reflecting the growth in these individual regions.