Manufacturing continues to contract in the region that includes Oklahoma, as federal fiscal policy uncertainty continued to weigh on factory owners, the Tenth District Federal Reserve Bank said Thursday.
However, January's monthly survey said manufacturers were optimistic about future production in the next several months.
“Regional factory activity has now edged down for four straight months, as fiscal policy uncertainty continues to weigh on firms' plans,” said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City.
“On the positive side, expectations for new orders rose quite a bit in January, but hiring and capital spending plans were only modestly positive.”
Manufacturers surveyed blamed federal lawmakers for their caution in hiring and spending plans.
“Many of our end users are not committing to contracts until they see Congress acting on spending and debt limit issues,” said one manufacturer in the bank's survey.
Another manufacturer said it remains cautious because of uncertain implementation of the Patient Protection and Affordable Care Act, while one with military contracts was worried about possible cuts to the Defense Department budget.
“The ‘fiscal cliff' was a short term issue — we make decisions looking at long-term trends,” said a more optimistic manufacturer. “It may have slowed some of our sales on a short-term basis, but it was probably just delaying sales that will be made later.”
The composite index for the manufacturing survey was down 2 points in January after being down 1 point in December and down 3 points in November, the bank said. The composite index is an average of the production, new orders, employment, supplier delivery time and raw materials inventory indexes.
The January manufacturing survey included 104 responses from plants in Oklahoma, Colorado, Kansas, Nebraska, Wyoming, northern New Mexico and western Missouri.