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Southeastern Manufacturing Survey

Embargoed until 10 a.m. April 14, 1997

SOUTHEASTERN MANUFACTURING IN MARCH: CURRENT ACTIVITY MIXED; OUTLOOK MODERATE; PRICE EXPECTATIONS UP

Reports on manufacturing activity in the Southeast gave a mixed picture in March. Production seemed to continue its moderate pace. Although current price indexes also were moderate, expectations price indexes rose. According to the monthly survey conducted by the Federal Reserve Bank of Atlanta, the proportion of southeastern manufacturers reporting gains in production was little changed from February's figure. However, some slippage was seen in current indexes for shipments, new orders, and backlogs. Indexes for number of employees and average workweek rose marginally. Manufacturers' expectations for activity generally edged lower but remained within recent ranges.

In March the proportion of survey respondents reporting increased production edged down to 28 from 31 in February. However, the share reporting a production decline fell by 4 percentage points. As a result, the diffusion index for production rose slightly. The production index remains near levels seen over most of the past year. Shipments and new orders indexes fell noticeably following two relatively healthy months. Manufacturers continue a tight rein on inventories as the materials-inventories index fell to its lowest level in 3-1/2 years. Current labor indexes remained in a narrow range seen over most of the last year. Two-thirds of respondents reported no change in their work force in March, while the proportion with a gain in employees was about equal to that with a decline.

Current price indexes were mixed in March, coming off recent lows. The index for prices received rose to 3 in March from 1 in February, but about three-fourths of the respondents reported no change. The prices-paid diffusion index slipped to 15 in March from 18 in February.

Outlook indexes in March generally softened. The production outlook index was essentially unchanged at 32. About half of the respondents expect higher output in coming months. Indexes for new orders and backlog expectations remained close to levels recorded during the last year.

Expected-prices indexes rose in March, indicating a mild firming in price pressures. The expectations index for material prices jumped to 39 in March from 27 the month before. Almost half of respondents reported an increase in expected prices paid. The prices-received expectations index rose to 24 from 17 the month before. Thirty-two percent of respondents expect to receive higher prices in coming months while 59 percent expect no change.

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 "Tracking Manufacturing: The Survey of Southeastern Manufacturing Conditions." Click here for historical data, or visit the U.S. Commerce Department's Economic Bulletin Board.

Summary of Southeastern Manufacturing Conditions: March 1997