What can regional manufacturing surveys tell us? lessons from the Tenth District

Abstract

The Federal Reserve Bank of Kansas City conducts a monthly survey of over 100 manufacturers across the Tenth District. Other Federal Reserve Banks conduct similar surveys of manufacturers within their districts, as do a number of regional associations of purchasing managers. ; The increased attention paid to regional manufacturing surveys makes it important to know what kind of information these surveys provide. These surveys differ from other data sources by collecting only qualitative information, such as the direction of change in activity. The surveys could be useful either because they tell us something about regional manufacturing conditions, or because they signal something about manufacturing conditions in the nation as a whole. ; Another issue is whether the main contribution of the surveys is timely information about current conditions or accurate forecasts of future conditions. Finally, in deciding whether the surveys are worth the time and effort of conducting them, it is important to know whether they add any information beyond that contained in other publicly available data on the manufacturing sector—data such as industrial production and manufacturing employment. ; Keeton and Verba address these issues by examining the information content of the Kansas City Fed Manufacturing Survey. They conclude that the main value of the survey is providing information about current and future manufacturing conditions in the district, especially on variables such as production, orders, and capital spending, for which no independent data exist at the regional level The Kansas City Fed survey can also be a useful source of indirect information about national manufacturing conditions. In particular, results from the survey can be combined with similar information from other regions to obtain a more complete picture of national manufacturing activity than is available from other published data.Federal Reserve District, 10th