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Southeastern Manufacturing Survey

For Immediate Release Feb. 12, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN JANUARY: CURRENT ACTIVITY PICKS UP; OUTLOOK MIXED; PRICES FIRM SLIGHTLY

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current indicators for manufacturing activity in the region generally strengthened in January after several months of sluggishness. Outlook indicators were mixed but generally at moderately healthy levels. Price indexes — current and outlook — firmed somewhat after exhibiting some weakness in recent months. February's report of January data includes the release of just-revised seasonal factors for historical data covering 1992 through 1998.

The current production index in January rose to 14.2 from 8.4 in December. The production index had been soft over the prior months going back to September 1998. For January, the proportion of respondents reporting higher production actually slipped to 32.5 percent from 35.2 percent the previous month, but the proportion indicating a decrease dropped to 18.3 percent from 26.8 percent.

Other indicators of current activity showed signs of improvement. The new orders index was up moderately, while the shipments and backlogs indexes were steady after a noticeable increase in December. The number of employees index edged up, but the index for the average workweek slipped. Both the materials and the finished goods inventory indexes rose after several months of sluggishness. The new orders for export index moved up to the zero level after several months in negative territory.

Current indexes for prices received and for prices paid rose for the second and third consecutive month, respectively. Despite recent firming, both indexes remain at low levels. The prices received index is still in the negative range, where it has been for eight months. The prices paid index, however, posted the first positive number in ten months. The supplier delivery time index was little changed, with almost all respondents indicating no change in delivery conditions.

Changes in outlook indexes were mixed after notable improvement in December. The outlook index for production stood at 37.4 in January compared with 28.7 in November and 39.1 in December. The outlook indexes for shipments were little changed after gains in November and December. The outlook index for new orders, however, fell noticeably in January after a sizable jump in December. Also, the outlook index for backlogs slipped after two monthly gains. Signs of optimism by manufacturers include a gain in the outlook index for the number of employees. Outlook indexes for materials and finished goods inventories rose slightly after several weak months but remain low. One month into the new year, manufacturers may be re-evaluating expansion or upgrade needs. The outlook index for capital expenditures dropped from 18.5 in December to 3.1 in January, a series low. About half anticipate no change with the remainder about evenly divided between those expecting higher investment or those expecting lower investment in coming months. Outlook price indexes were up slightly but remained at low levels.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month

 
1999 1998

January December (R) November

Production 14.2 8.4 6.7
Shipments 16.4 16.4 7.5
New orders 15.7 4.7 5.5
Backlog of orders 0.5 0.3 -6.9
Materials inventories 4.4 -4.5 -3.7
Inventories of finished goods 7.2 -7.7 0.7
Number of employees 2.2 0.2 6.5
Average workweek -3.7 2.2 6.1
Prices received -2.4 -12.4 -17.2
Prices paid 3.8 -4.4 -14.1
New export orders 0.0 -8.1 -4.0
Supplier delivery time 1.3 2.3 4.5
Industry business conditions 10.3 5.0 -4.0

Six Months From Now Versus Current Month

January December (R) November

Production 37.4 39.1 28.7
Shipments 37.3 37.7 34.4
New orders 29.2 38.4 29.5
Backlog of orders 7.5 16.6 11.5
Materials inventories 1.1 -3.4 0.1
Inventories of finished goods -6.0 -10.6 -9.2
Number of employees 12.2 5.9 2.5
Average workweek 1.7 4.6 -2.9
Prices received 10.0 7.8 8.6
Prices paid 15.8 10.3 13.8
Capital expenditures 3.1 18.5 11.6
New export orders 19.4 22.2 17.3
Supplier delivery time -4.1 1.2 2.3
Industry business conditions 30.0 31.3 21.3

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.

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Summary of Southeastern Manufacturing Conditions: January 1999 data