03:59 PM EDT, 03/27/2025 (MT Newswires) -- Manufacturing activity in the US Midwest region unexpectedly moved into a shallower-than-expected contraction this month, the Federal Reserve Bank of Kansas City reported Thursday.

The composite manufacturing index edged up to minus 2 in March from minus 5 in February. The consensus was for an index reading to remain unchanged at minus 5, according to in a survey compiled by Bloomberg.

"Regional factory activity decreased modestly in March, driven by declines in nondurable manufacturing," said Kansas City Fed survey manager Megan Williams. "Production was flat, but employment continued to decline, and nearly half of firms reported tighter profit margins in the past 12 months."

Within the nondurable sector, food, paper, and printing manufacturing was particularly down, the regional Fed said.

The production index rebounded to a 1 reading from minus 13 in February, while shipments improved to minus 4 from minus 11. New orders worsened to minus 12 from minus 7 month to month, the Kansas City Fed's data showed.

The outlook for activity expansion weakened.

Six months out, the seasonally adjusted composite index dipped to 10 in March from 14 in February. The future production index fell to 24 from 30, while shipments and new orders both dropped.

The current employment index improved sequentially to minus 4 this month from minus 14 in February, while employment expectations dipped to zero from 12.

Manufacturing in the Mid-Atlantic region fell into contraction territory in March as both shipments and new orders turned negative, data from the Federal Reserve Bank of Richmond showed Tuesday.