By Ed Frankl

Factory activity in the central U.S. contracted for the fourth consecutive month in December, albeit only marginally and slower than recent months, as expectations for future output showed signs of improvement.

The Federal Reserve Bank of Kansas City said Thursday that the Tenth District manufacturing survey's composite index was minus one in December, up from minus two in November and minus eight in October. 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.

While factory activity dipped slightly, expectations for future activity rebounded, as sentiment for production and new orders improved and employment is expected to rise, the survey said. The measure of expectations for the next six months rose to a positive figure of six, in December, from minus one in November.

Indexes for production, shipments, and new orders indexes were all slightly negative in December, while employment activity rebounded, the Kansas City Fed said.

"We are hoping supply-chain issues improve and upward pressure on raw material prices eases. Our margins have taken some hits in order to maintain business," one respondent quoted in the survey said.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

December 21, 2023 11:36 ET (16:36 GMT)