FX.co ★ Kansas City Fed Manufacturing Activity Shrinks Faster

In May 2025, the Kansas City Fed's Manufacturing Production Index fell to -10, down from -5 in April, indicating a more pronounced contraction in manufacturing activity. This decline was largely attributed to weaker output in the nondurable goods sector, particularly within food manufacturing, while the production of durable goods remained relatively stable. Gains were observed in the metals and furniture sectors; however, these were counterbalanced by declines in electronics and transportation equipment. Key metrics such as production, shipments, and new orders experienced moderate declines. There was a notable drop in backlogs, suggesting a reduced workload in the future, although employment saw a slight increase and inventories remained unchanged. Most year-over-year metrics were negative, with the exceptions being prices, capital spending, and raw materials inventories. Output, workforce size, and hours worked continued to contract. Looking toward the future, the composite index edged down slightly from 6 to 5, reflecting a cautious optimism as expectations for production, orders, and shipments remained slightly positive.