Central U.S. Manufacturing Activity Picks Up as Firms' Mood Improves

By Joshua Kirby

Factory activity in the central U.S. was largely stable this month, reversing previous months' declines.

The Federal Reserve Bank of Kansas City said Thursday that the Tenth District manufacturing survey's composite index improved to minus two in May from minus eight in April, with the gauge of production over the last month rising considerably.

The Kansas City Fed survey measures manufacturing activity in the western third of Missouri, all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming, and the northern half of New Mexico.

Most components of the index improved over the month, with employment increasing and production flat. New orders fell, but factories set out a more optimistic view of the coming months, notably on production and jobs.

With inflation still running high, a little less than a third of central U.S. firms surveyed said they could pass all or most of their higher costs onto customers. About half see wages rising at their current rates over the next year, rather than accelerating.

"We anticipate costs...to continue to climb," one respondent firm said.

"It has been hard to pass through all cost increases, but we will have to be relatively aggressive in passing through cost increases due to margin compression a couple of years ago," the manufacturer said.

The pickup in the region's factories comes after the country as a whole showed accelerating activity in private-sector activity, according to business surveys also published Thursday.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

May 23, 2024 11:22 ET (15:22 GMT)

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