August 22, 2019 / 3:27 PM / 4 months ago

Kansas City factory index hits lowest since March 2016

Aug 22 (Reuters) - The Kansas City Federal Reserve said on Thursday its gauge on regional manufacturing activity fell deeper into negative territory to a level not seen in more than three years, because of worries about the U.S.-China trade conflict.

The regional central bank's composite manufacturing index fell to -6 in August, the most negative level since March 2016. It was -1 in July.

“Regional factory activity had its largest monthly drop in over three years, and over 55 percent of firms expect negative impacts from the latest round of U.S. tariffs on Chinese goods,” Kansas City Fed economist Chad Wilkerson said in a statement.

The data showed broad activity declines in durable and nondurable plants, in particular among primary metal, electrical equipment, appliances, paper, printing, and chemical manufacturing.

On Aug. 1, U.S. President Donald Trump vowed he would impose an additional 10% tariff on $300 billion worth of Chinese imports beginning Sept. 1 in a bid to pressure Beijing to reach a trade deal.

“However, even though many firms expect trade tensions to persist, expectations for future shipments and exports expanded slightly,” Wilkerson said.

The survey's six-month outlook gauge rose to 11 from 9 in July, while its shipment gauge fell to -7 from zero.

The Kansas City Fed serves Kansas, Colorado, Nebraska, Oklahoma and Wyoming, and parts of Missouri and New Mexico. (Reporting By Richard Leong Editing by Chizu Nomiyama)

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