The indicator measures the manufacturing activity of companies located in the western third of Missouri, across Kansas, Colorado, Nebraska, Oklahoma and Wyoming, and the northern half of New Mexico. Anything greater than zero suggests growth, while values ​​less than zero indicate contraction.

“Regional plant activity continued to grow but at a slower pace than in recent months,” said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City.

Growth in regional factories in November was driven by increased activity in durable goods factories, especially manufacturing machinery, electrical equipment, transportation equipment and furniture production, according to the report. .

The production index fell to 17 in November from 25 the month before, signaling an increase in production but at slightly lower levels.

Demand has shown signs of slowing down. The volume index for shipments fell sharply to two from 28 the month before, suggesting only a small increase in shipments. The new orders volume index fell into contracting territory to minus four, signaling a slight drop in orders.

The employment index fell to 27 from 34 in previous months, but companies in the sector still suggested adding wages.

Bottlenecks on the supply side showed no signs of abating, with the supplier lead time index dropping from 50 to 57 in the previous month.

“Many companies have reported further increases in material costs, and more contacts have reported delivery delays compared to a month and a year ago,” said Wilkerson. “Labor shortages remain a major obstacle to meeting the increased demand for goods. “

The commodity price index fell from a survey record to 65, but remained high, and almost all companies continued to report higher input prices than a year ago. The index of prices received for finished products increased from 57 to 55.

“The costs are out of control. We cannot do without cost increases,” said one of the companies interviewed.

Manufacturing companies remained optimistic about near-term business activity. The future composite index, which looks at the outlook for the next six months, was broadly stable at 35. Expectations for future prices eased somewhat, but most companies still expected prices for materials and materials to rise. of finished products over the next six months, according to the report. .

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com