The Federal Reserve Bank of Kansas City is headed by President Esther George, and she is the current policy hawk of 2013, after Richmond’s Jeff Lacker had been the big hawk in 2012. George may have a new feather in her cap about being so hawkish now that her regional KC Fed Manufacturing Index report has shown economic expansion for the first time in seven months while the prior reports had been recessionary.

Some of the data appears to be mixed in the report, but all in all it is considered to be expansionary rather than recessionary. May’s month-over-month composite manufacturing index was 2 in May, which is up from -5 in April and in March. The composite index is an average of the production, new orders, employment, supplier delivery time and raw materials inventory indexes as follows:

• Rising production came from both durable and nondurable goods-producing plants, with the biggest increase coming from machinery and metals manufacturing.
• The production index rose from 1 to 5.
• Shipments was at 8 and new orders came in at 6.
• The employment index fell from -3 to -7 in number of employees.
• The order backlog index was unchanged.
• The raw materials inventory index rebounded all the way to flat at 0 from -17.
• And backlog of orders was -8.

Keep in mind that this is just one region, but it is a wide regional footprint as the Federal Reserve Bank of Kansas City serves all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming. It also serves the western third of Missouri and the northern half of New Mexico.

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