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Southeastern Manufacturing Survey

For Immediate Release: April 12, 2000

SOUTHEASTERN MANUFACTURING SURVEY IN MARCH:
CURRENT ACTIVITY MOSTLY SLUGGISH, CURRENT PRICES FIRM

According to the monthly survey of Southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, most current indicators of manufacturing activity in the region remained soft in March, continuing a pattern observed since the end of 1999. Most outlook indicators declined after strongly optimistic levels the previous two months. Current price indexes rose slightly from already high levels, but outlook price indexes slipped.

The current production index in March posted a moderate rise to 10.4 after a dip of nearly equal magnitude to 6.8 the prior month. These levels are notably soft compared with index levels seen throughout the fourth quarter of last year. The proportion of respondents reporting higher production rose to 37.9 percent in March from 32.9 percent while the proportion reporting lower production edged up to 27.5 percent from 26.1 percent in February. Other current activity indexes were soft. Shipments and new orders indexes were little changed at modestly positive levels while the backlogs index was down significantly after holding steady for five months. Both the material and the finished goods inventory indexes were soft in March.

On a positive note, notably higher numbers of Southeastern manufacturers reported that their industry improved nationally in March after a significant drop in February.

Outlook indexes mostly declined in March, following some weakening in February, but levels are generally in the moderate range. The outlook index for production fell to 23.4 in March from 35.9 in February. March's figure is in line with levels seen during the second half of last year but moderately below those observed during the first half of last year. Outlook indexes for shipments and for new orders posted similar declines but remained moderately strong. Southeastern manufacturers still anticipate maintaining a close watch on inventory levels even though outlook indexes for inventories were up marginally in March. The indexes for materials inventories and for finished goods inventories remained negative — somewhat lower than typical. Movement in the outlook index for capital expenditures was notable. This index in March was down sharply to its second lowest level for the series although it remained slightly positive.

Current price indexes rose somewhat in March, continuing a recent trend of relatively firm price indexes. The prices paid index in March was at its highest level since April 1995. The outlook indexes for prices received and for prices paid were down somewhat in March after high levels in January and February.

This press release also contains revised data for January 2000. January's revised data listed in last month's release did not include all of the returned surveys.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month

2000

March February (R) January (R)

Production 10.4 6.8 10.1
Shipments 6.0 5.5 9.4
New orders 6.0 7.8 13.1
Backlog of orders -9.9 3.0 2.8
Materials inventories -8.7 -11.0 1.7
Inventories of finished goods -13.3 6.7 3.7
Number of employees -8.3 0.1 -0.4
Average workweek 1.0 -0.1 11.2
Prices received 6.3 1.6 3.8
Prices paid 33.7 32.6 18.9
New export orders 1.5 8.1 0.0
Supplier delivery time 1.3 0.0 1.2
Industry business conditions 19.3 -0.5 11.3

Six Months From Now Versus Current Month

March February (R) January (R)

Production 23.4 35.9 34.8
Shipments 27.2 33.9 41.4
New orders 27.6 41.2 39.8
Backlog of orders 2.3 -1.6 3.7
Materials inventories -13.6 -16.7 -12.4
Inventories of finished goods -7.3 -10.1 0.0
Number of employees -0.2 4.0 5.3
Average workweek -8.5 -0.9 7.0
Prices received 27.6 30.9 35.6
Prices paid 26.4 43.1 41.2
Capital expenditures 3.7 17.9 19.8
New export orders 8.6 14.7 13.7
Supplier delivery time -3.8 0.0 -4.8
Industry business conditions 12.5 14.8 32.2

R=Revised

 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.

Chart 1
Chart 2
Summary of Southeastern Manufacturing Conditions: March 2000 Data