Kansas City Fed Manufacturing Stays in the Red, but Marks 2 Months of Improvements

The markets had a busy Thursday, digesting a disappointment from the Bank of Japan without any new quantitative easing gravy train money. Then there was the first-quarter report on gross domestic product (GDP), followed by the routine weekly jobless claims. Now we have one more regional report, from the Kansas City Federal Reserve, with its Manufacturing Index for the month of April.

The Kansas City Fed Manufacturing Index came in at −4 for April. This may represent contraction, but is less negative than the −6 reading seen in March and much “less-bad” than the −12 reading from February. The measurement between growth and contraction here is just like other Federal Reserve manufacturing index reports: below zero is contraction, above zero is growth.

The 10th Federal Reserve District is not the most important to the financial markets at all. That being said, there has been a mixed slate of regional Fed data on the more live readings in April. It also is important for the economists and investors to get any data they can for after the first-quarter GDP to see how they will predict GDP growth in the second quarter and for all of 2016.

One additional reason to watch this report is that the Kansas City Fed’s regional president is Esther George. Wednesday’s FOMC vote had only one vote calling for a rate hike — it was Esther George. She voted to raise fed funds up to a range of 0.50% to 0.75%, versus the leave-alone target range of 0.25% to 0.50% that was maintained.

The 10th Federal Reserve District has a large geographic footprint, covering all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming, as well as the western third of Missouri and the northern half of New Mexico.