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Southeastern Manufacturing Survey

For immediate release August 12, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN JULY:
PRODUCTION BOOSTS INVENTORIES; PRICES REBOUND

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 changed little in July. Current activity indexes for production and the number of employees moved up. Backlogs and export orders were down sharply. Outlook indexes generally increased, with both current and outlook price indexes rising sharply after weakness in June.

The current production index in July rebounded to 19.4 from 15.6 in June. Though the proportion of respondents reporting higher production actually slipped to 32.6 percent from 36.5 percent in June, the proportion indicating a decrease fell more, to 13.1 percent in July from 21.0 percent the prior month.

To some degree, some production gains may have replenished inventories. The finished goods inventories index rebounded moderately in July, staying at a positive level for the third consecutive month. The new orders index was steady and at a moderate level. The backlog orders index fell from improved and relatively high levels in May and June. In light of positive outlook indicators, current production and inventory index gains appear to be a reflection of manufacturers' sales expectations. On the downside, the index for new export orders fell for the second month in a row, now negative for two months in a row.

Outlook indexes generally posted gains in July. The outlook index for production crept up to 30.4 in July from 28.8 in June, remaining in a rather narrow range recorded since early 1998. Outlook indexes for shipments, new orders, backlogs, finished goods inventories, the number of employees, the average workweek and new orders for exports were up from June levels. The capital expenditures index slipped but remained at a moderate level. The outlook index for new export orders rose for the third month in a row, following notable weakness during the spring.

Both current and outlook price indexes rose sharply in July. The current prices received index increased to 6.8 in July from 2.7 in June, while the current prices paid index jumped to 23.3 in July from 2.7 in the prior month. Outlook prices received rebounded from moderate levels over the past six months. The outlook index for prices paid reached its highest level since mid-1997.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1999


July June (R) May

Production 19.4 15.6 18.0
Shipments 16.0 17.3 8.9
New orders 12.0 13.5 24.1
Backlog of orders -1.4 10.4 10.8
Materials inventories -1.2 -0.5 -1.9
Inventories of finished goods 7.8 3.0 6.9
Number of employees 8.0 2.2 5.3
Average workweek 5.1 7.7 4.4
Prices received 6.8 2.7 2.3
Prices paid 23.3 2.7 2.3
New export orders -8.3 -3.4 6.4
Supplier delivery time 5.6 5.6 1.2
Industry business conditions 15.2 12.5 9.6

Six Months From Now Versus Current Month

July June (R) May

Production 30.4 28.8 38.6
Shipments 33.5 29.7 40.4
New orders 33.6 24.3 27.8
Backlog of orders 15.5 4.9 4.0
Materials inventories -5.4 -0.9 -3.9
Inventories of finished goods -3.8 -5.1 3.4
Number of employees 7.0 3.9 5.6
Average workweek 3.7 -3.1 2.7
Prices received 26.7 16.1 18.3
Prices paid 30.6 16.3 15.7
Capital expenditures 18.2 21.0 19.7
New export orders 15.0 11.5 11.3
Supplier delivery time 1.4 0.0 0.0
Industry business conditions 28.0 29.0 27.5

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: July Data