The Federal Reserve Bank of Kansas City released the June Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity grew slightly after sharply decreasing for three straight months. Activity still remained well below year-ago levels, while expectations for future activity rebounded moderately.
“Regional factory activity expanded just slightly in June compared with a month ago, but was still well below year-ago levels,” said Wilkerson. “Of those surveyed, 76% of firms have taken advantage of emergency lending options, and expectations for future activity and employment levels have improved somewhat.”
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The month-over-month composite index was 1 in June, up considerably from -19 in May and a record low of 30 in April. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The improvement in activity was driven by nondurable goods plants, while durable goods factories, especially nonmetallic mineral products, primary metals, fabricated metals, and computer and electronics plants continued to decline. Month-over-month indexes were mixed. Production, shipments, new orders, and supplier delivery time indexes recovered to positive levels, while indexes for order backlog, employment, new orders for exports, and inventories remained negative. Year over-year factory indexes mostly remained highly negative in June, but the composite index moved up slightly from -35 to -29. The future composite index rose considerably in June, rebounding from -2 to 9.
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76% of factory contacts had applied for the Small Business Administration (SBA) Paycheck Protection Program since March 13, 2020 (up from 67% reported in April)
emphasis added
This suggests activity has bottomed, but this is just a slight increase off the bottom. Three-fourth of the companies surveyed are using the PPP – and that suggests further layoffs coming if activity doesn’t rebound.