03:48 PM EDT, 06/27/2024 (MT Newswires) -- Manufacturing activity in the US Midwest region fell into deeper contraction territory in June as shipments swung negative and production skidded, the Federal Reserve Bank of Kansas City reported on Thursday.

The composite manufacturing index slid to minus 8 this month from minus 2 in May. The consensus was for a minus 5 print in a survey compiled by Bloomberg. The decline in activity was driven by paper, plastics, machinery, and transportation equipment manufacturing, the report showed.

"Regional factory activity continued to decline in June," Kansas City Fed Senior Vice President Chad Wilkerson said.

Shipments returned to negative territory at minus 1 in June from 8 the month prior, while the production index fell to minus 11 from minus 1. Volume of new orders held steady at minus 13 month over month, the Kansas City Fed said.

The employee index plunged to minus 11 this month after swinging positive in May at 9. "Employment levels dropped, but only about 10% of firms have laid off workers or plan to in the next six months," Wilkerson said.

The gauge for raw material prices eased to 9 in June from 19 while selling prices' eased to 3 from 7 month to month. "Price growth for both raw materials and finished products cooled somewhat this month," the regional Fed branch wrote in its report.

Six months out, the seasonally adjusted composite index ticked up one point to 7 this month. The future production and shipments indexes each dipped three points to 18 and 12, respectively. The new orders component plunged 10 points to 8.

Firms indicated that they expect prices to ease six months from now, while the forward-looking employment metric improved, according to the Fed branch's data.