Survey shows manufacturing increases in region

Manufacturing activity in the Oklahoma region increased over the past month and is expected to continue growing, according to a survey released Friday by the Federal Reserve Bank of Kansas City.

The survey of companies in the Fed’s Tenth District found the month-over-month composite index was 11 in June, up from 8 in May and 7 in April. The composite index is an average of the production, new orders, employment, supplier delivery time and raw materials indexes.

“It’s definitely a positive for the economy,” said Megan Williams, an associate economist who helped assemble the survey data. “We’ve seen state employment begin to increase, and we’ve seen various industries hiring, including energy and manufacturing.”

The survey is a diffusion index, which measures the percentage of firms expecting increases minus the percentage of those expecting decreases.

The year-over-year composite index rose to 28, up from 18 last month. The index is at its highest level since June 2011. The production, shipment and new orders indexes increased moderately.

“With the increase in energy activity happening in the state, manufacturers are getting more confident,” Williams said. “Their orders are increasing, which is a driver for confidence.”

While oil and natural gas activity has increased throughout Oklahoma and the region since the first of the year,

stalling oil prices in recent months have threatened the momentum.

“So far it has not shown any input, but that may take a while to trickle down,” Williams said. “We will be watching to see what affect this easing in oil prices will have on expectations and current manufacturing activity.”

The survey found that expectations for future factory activity generally remained strong, but the future composite index decreased to 25 from 30 last month. Future production, shipments, new orders and order backlog indexes also declined.

“Business remains very strong and our sales revenue is mostly constrained by serious lack of labor in all our manufacturing locations,” one survey participant stated in the survey.

Other participant comments reflect the uncertainty of the oil and natural gas industry.

“There is nothing that feels solid about the increase in activity we are seeing,” a participant stated. “Energy prices are lower than expected, customers are waiting until the last minute to place orders, and increased uncertainty in Washington, etc.”