By Joshua Kirby

Factory activity in the central U.S. contracted again in January and at a faster rate than previously, though firms expressed a brighter outlook for the coming months.

The Federal Reserve Bank of Kansas City said Thursday that the Tenth District manufacturing survey's composite index was minus nine in January, falling sharply from minus one in the last month of 2023. Any reading below zero suggests activity contracted from the previous month.

The Kansas City Fed survey gauges manufacturing activity in the western third of Missouri, all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming, and the northern half of New Mexico.

All components of activity fell on month, except prices, with production and new orders dropping at a faster rate than previously, while employment was largely stable.

Future expectations conversely ticked higher, with the future composite index increasing to 11 in January from five in December as firms see increased production and shipments in the next six months.

Uncertainty around inflation and demand continues to dog businesses in the region, one respondent said. "We are being optimistic and planning on growth, but we don't have the visible indicators to support that plan in the market today," the manufacturer said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

January 25, 2024 11:29 ET (16:29 GMT)