Manufacturing activity still slow in Oklahoma, region
Manufacturing activity in Oklahoma and throughout the region continued to slow in April even as producers’ expectations improved, according to the April Manufacturing Survey released Thursday by the Federal Reserve Bank of Kansas City.
The month-overmonth composite index was -4 in April, up from -6 in March and -12 in February. The composite index is an average of the production, new orders, employment, supplier delivery time and raw materials inventory indexes.
“Factories reported a modest decline in activity in April, but expectations for future activity increased to their highest reading of the year,” said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City’s branch in Oklahoma City.
The survey found an increase since March in nondurable goods production, particularly for food, paper and plastics. Durable goods production such as metals and machinery remained negative. Production, shipments and new orders for exports were negative but unchanged, and the order backlog index fell to -18 from -15 previously.
Year-over-year factory indexes were mixed, but generally remained weak. The composite year-overyear index was flat at -19, while the production and shipments indexes showed slight improvements.
Survey respondents blamed at least some of the manufacturing slowdown on the struggling oil and natural gas industry.
“Business continues to be very soft for manufacturers servicing the oil and gas industry in Oklahoma,” one respondent said. “No expectation for improvement in the next 12 to 19 months.”
While current production continued to show softness, manufacturers’ expectations about the future improved significantly. The future composite index jumped to 10, up from -2 last month, while future production, shipments and new orders indexes also showed strength.
The future order backlog index improved to -1, up from -10, while the future raw materials inventory index increased to -5 from -13 previously.
“We are in a seasonal downturn,” a survey respondent said. “We expect increased activity over remaining months of the year.”
Others, however, said the still-struggling oil and natural gas business likely will continue to weigh on the manufacturing industry.
“New orders have increased mainly due to customers securing pricing for the remainder of the year,” one respondent said. “Major oil and gas customers continue to have declining economic conditions.”