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Southeastern Manufacturing Survey

For Immediate Release Dec. 12, 1997

SOUTHEASTERN MANUFACTURING SURVEY IN NOVEMBER:
CURRENT ACTIVITY SLOWS, WHILE OUTLOOK IMPROVES

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current activity slowed in November from October. Indexes for output, shipments, new orders, backlogs, number of employees and the average workweek declined. Outlook activity indicators in general rose moderately, suggesting that current weakness is temporary. There are some indications that inventories have been rebuilt and currently may be dampening output. Current price indexes moved in opposite directions in November, while outlook price indexes were steady at low levels relative to series highs.

The production index in November slipped to 11 from 16 in October. The proportion of respondents reporting higher production in November edged down to 35 percent from 37 percent the month before, while the share reporting lower output rose to 25 percent from 21 percent in October.

The new orders index dropped in November to 7 after strengthening moderately in September and October. The backlog index dropped noticeably to minus 5 from plus 7 in October.

In November, the material inventories index slipped to 7, but this decline followed the series high set in October. The finished goods inventories index was essentially unchanged at 11 in November from October and September figures. The last three months, however, have been only marginally below the series high set in July 1995 and have been the strongest three consecutive months ever in the series.

The current prices received index fell 6 points in November to minus 3. The prices paid index continued a mild upward trend begun last July. The supplier delivery time index jumped to 11 in November, indicating slowing in delivery time, which is sometimes associated with lesser availability of supplies.

The outlook production index rebounded somewhat in November to 35 from 29 in October. The rebound may reflect confidence that November's production weakness is temporary. Fifty-one percent of November's respondents expected higher output in coming months, while only 16 percent anticipated lower production.

Along with the outlook production index, outlook indexes for shipments, new orders and backlogs also improved. Both outlook inventory indexes declined moderately in November, suggesting that the current rate of inventory accumulation is not expected to last. Outlook indexes for prices were little changed in November at moderate levels.

The outlook for capital expenditures has been on an upward trend since the recent low of 14 in July 1997. This outlook index rose to 25 in November from 21 in October. For the latest month, 38 percent of the respondents anticipate higher capital expenditures within six months, while only 14 percent project lower expenditures.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1997



November October (R) September

Production 10.6 16.2 16.0
Shipments 7.1 11.8 18.2
New orders 7.3 18.6 17.8
Backlog of orders -5.2 7.1 6.1
Materials inventories 7.1 11.0 8.0
Inventories of finished goods 10.8 10.9 11.9
Number of employees 3.9 11.0 5.6
Average workweek 1.3 3.9 -0.5
Prices received -3.3 2.6 -6.7
Prices paid 18.0 17.0 12.2
New export orders -1.3 -1.1 11.1
Supplier delivery time 11.1 4.7 8.7
Industry business conditions -1.6 16.5 9.5

Six Months From Now Versus Current Month


November October (R) September

Production 34.5 28.8 43.4
Shipments 36.1 28.6 40.4
New orders 34.4 31.8 37.9
Backlog of orders 16.0 15.3 19.0
Materials inventories -9.4 -7.9 -5.9
Inventories of finished goods -10.0 -5.3 -4.6
Number of employees 6.5 7.7 9.3
Average workweek -3.0 -5.4 4.8
Prices received 16.4 17.7 22.4
Prices paid 27.4 26.5 24.2
Capital expenditures 24.9 21.4 23.5
New export orders 20.8 20.9 26.2
Supplier delivery time -2.3 -1.9 -1.0
Industry business conditions 20.8 20.4 32.8

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.