Regional manufacturing grows moderately, according to Federal Reserve Bank of KC report

Manufacturing activity in Oklahoma and regional states grew moderately in July, the Federal Reserve Bank of Kansas City said in a report Thursday.

However, several company representatives reported ongoing supply chain problems and razor-thin profit margins.

Expectations for future activity increased after dropping in June, the Fed said.

In July, the slower pace in factory growth than earlier in the year was driven by decreased in activity in electrical equipment, electronic products, primary metal, chemical manufacturing and food manufacturing.

Month-over-month indexes were mostly positive in July, the report said.

Indexes for production, shipments, new orders and order backlog increased from June’s readings, while inventory and supplier delivery time indexes decreased slightly.

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Year-over-year factory indexes increased; supplier delivery time index increased slightly compared to a year ago, along with the materials inventory, the Fed said.

However, indexes for finished goods and new orders for exports declined slightly compared to a year ago.

More firms expected increases in production, shipments, new orders, backlog of orders, employment, capital expenditures, supplier delivery times and materials inventories.

The survey included the following comments from company representatives. Their names and titles were not included in the report:

— “Increased ingredient cost, freight, utilities, insurance, packaging, labor, etc. have squeezed margins to nothing is left. Been very difficult to push price increases forward. Most ingredients have been contracted forward 6-9 months just to assure availability so no near-term relief.”

— “Higher interest rates seemingly have cooled off price increases for our raw materials, which is a welcome relief. Demand for our finished products is still high but might be decreasing recently.”

— “It appears consumers are starting to pull back spending wise. Next few months are critical. Costs still out-of-control. Need to stay aggressive on inflation.”

— “Supply chain issues persist. Costs on raw materials continue to escalate. We are unable to find reliable employees even with incentives, benefits, and substantial increases in starting pay.”

— “The availability of a consistent workforce is a huge concern. It’s so everywhere, not just in Kansas. We cannot run at the levels dictated by the demand for our products. As a result, we are not building a financially sound base as we should be at this level of demand.”

— “Wage inflation continues. We will be increasing all wages in the next 30 days to try to keep team members and attract more.”

The Federal Reserve Bank of Kansas City serves the 10th Federal Reserve District, encompassing the western third of Missouri; all of Oklahoma, Kansas, Colorado, Nebraska and Wyoming; and the northern half of New Mexico.

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