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Southeastern Manufacturing Survey

Embargoed until 10 a.m. April 12, 1996**

SOUTHEASTERN MANUFACTURERS IN MARCH:
ACTIVITY AND PRICES REMAIN SOFT; OUTLOOK EDGES UP

According to the monthly survey conducted by the Federal Reserve Bank of Atlanta, the share of southeastern manufacturers reporting gains in production fell in March for the second month in a row. The share reporting higher shipments also fell. However, there were noticeably fewer reports of declines in new orders and backlogs than in February. Outlook indicators were also mixed as reports of expected production and shipments were up for the second month in a row, but expected new orders and backlogs slipped yet remained positive. Price indexes--current and expectations--generally declined, remaining near or at series lows.

In March, the proportion of survey respondents reporting increased production edged down to 24 percent from February's 26 percent, while the share of reported declines fell to 31 percent from 33 percent the month before. Consequently, the diffusion index for production was flat at minus 7. The index for new orders was less negative in March at minus 5, compared with minus 15 the month before. Indexes for both the number of employees and for the average work week improved but remained slightly negative.

Current price diffusion indexes declined in March. The diffusion index for prices received for finished products fell to a negative 16 in March from a minus 11 the month before. March's index is the lowest since January 1992 when the series began. The prices paid index declined to a new series low at minus 5 from minus 2 in February. The supplier delivery index improved slightly in March but remained very low; most respondents saw no change.

Expectations for future manufacturing activity were mixed. The production index rose for the second consecutive month with 50 percent of respondents expecting higher output in six months, compared with 47 percent in February. The output diffusion index in March stood at 30, compared with 28 in February. Expectations for new orders, backlogs, and employment slipped after improving in February. The index for capital investment plans rebounded somewhat in March but remained near the series low set the month before. Expectations price indexes showed little price pressure as the prices paid series fell to a series low, and the prices received index rose only slightly, remaining near January's series low.

NOTE: The Atlanta Fed's survey covers the Sixth Federal Reserve District, which includes Alabama, Florida, and Georgia, and portions of Louisiana, Mississippi, and Tennessee. The plants surveyed represent a cross-section of industries in the region. For background on the Survey of Southeastern Manufacturing Conditions, see the article by R. Mark Rogers, "Tracking Manufacturing: The Survey of Southeastern Manufacturing Conditions," in the September/October 1992 issue of the Federal Reserve Bank of Atlanta's Economic Review.

**For reprints and historical data, see: http://www.frbatlanta.org on the World-Wide Web or visit the U.S. Commerce Department's Economic Bulletin Board.

Summary of Southeastern Manufacturing Conditions: March 1996