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Southeastern Manufacturing Survey

For immediate release Dec. 14, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN NOVEMBER:
YEAR-END BUMPS UP OUTPUT AND PRICES; OUTLOOK MODERATE

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current indicators of manufacturing activity in the region showed an increase in output and shipments as manufacturers worked to fill year-end needs of customers. Other current activity indicators also suggest that manufacturers experienced a modest increase in activity. The finished goods inventories index declined. Also, the supplier delivery time index rose notably, reflecting a modest increase in difficulty making timely deliveries. November's new orders index dipped. The latest softness in new orders followed healthier levels earlier in the fall. Backlogs also declined in November. Outlook indicators were mostly steady at moderate levels, although slippage was seen in some indexes. The two current price indexes moved in opposite directions in November while outlook price indexes were steady at recently elevated levels.

The current production index in November rose to 24.2 from 20.3 in October. The proportion of respondents reporting higher production slipped to 42.6 percent from 43.7 percent, but the proportion reporting lower production declined more, from 23.4 percent to 18.4 percent. The current production index has risen for three consecutive months. Despite recent output gains, strong shipments have kept inventories low. Notably, the finished goods inventories index declined in November and was negative for the third consecutive month. The material inventories index edged up following two negative months.

Outlook indexes generally were little changed in November at moderate levels. However, the outlook index for production rose to 25.6 in November after slipping to 22.1 in October. Outlook production indexes for the past three months have been moderately lower than the levels seen during the first half of 1999. Other outlook indicators suggest some moderation from the recent boost in current activity. The outlook new orders index remained soft, and the outlook index for the number of employees fell to its lowest level since April 1996. The outlook capital expenditures index declined but still remained modestly positive. The outlook supplier delivery time index fell sharply in November to its lowest level since July 1997. This decline suggests that the current increase in delivery times is temporary.

Price indexes remain at somewhat elevated levels — both for current and outlook indexes. The current prices received index rose in November to its highest level since July 1997. The prices paid index edged down but remained relatively high after a surge over the summer and early fall. The outlook indexes for prices received and prices paid were little changed and at levels notably higher than those during 1998.
Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1999
November October (R)
September
Production 24.2 20.3 11.5
Shipments 27.9 24.4 16.5
New orders 8.2 12.0 17.1
Backlog of orders 2.2 6.0 -7.5
Materials inventories 6.5 -0.3 -10.4
Inventories of finished goods -4.6 -0.3 -23.2
Number of employees 0.9 4.8 4.8
Average workweek 4.3 1.4 3.8
Prices received 10.7 4.9 8.0
Prices paid 17.1 18.3 27.0
New export orders 1.6 0.0 4.8
Supplier delivery time 12.2 8.9 0.0
Industry business conditions 21.7 14.4 11.1
Six Months From Now Versus Current Month
November October (R)
September
Production 25.6 22.1 25.3
Shipments 26.1 26.4 29.2
New orders 19.1 20.4 25.6
Backlog of orders 5.9 -11.3 2.9
Materials inventories -13.1 -6.4 1.9
Inventories of finished goods -18.2 -8.1 4.1
Number of employees -3.0 4.2 2.4
Average workweek -0.5 -5.5 -4.1
Prices received 29.2 30.0 26.6
Prices paid 29.9 29.3 31.4
Capital expenditures 9.0 14.8 17.6
New export orders 7.9 9.0 12.7
Supplier delivery time -8.2 0.0 -1.4
Industry business conditions 24.7 17.0 27.8
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.

Chart 1
Chart 2
Summary of Southeastern Manufacturing Conditions: November Data