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Southeastern Manufacturing Survey

For Immediate Release Jan. 13, 1998

SOUTHEASTERN MANUFACTURING SURVEY IN DECEMBER:
CURRENT ACTIVITY AND PRICES SOFT; OUTLOOK MODERATE

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current activity weakened somewhat in December from November. Indexes for output, shipments, new orders and the average workweek declined for the second consecutive month. The number of employees index rose slightly, as did the backlogs index. The weakening in current activity appears to be related to recent inventory increases and softness in shipments. Outlook activity indicators in general also edged down in December after moderate gains in November. Current price indexes fell substantially in December; outlook price indexes also weakened.

The production index in December declined to 2.4 from 7.0 in November. The proportion of respondents reporting higher production in December slipped to 31.2 percent from 34.0 percent in November, while the share reporting lower output rose to 28.8 percent from 26.9 percent the month before.

December weakness in production may be related to a reversal of recent strength in inventories. In December, the material inventories index fell to minus 5.8, reflecting the second decline after the series high in October. The finished goods inventories index also declined to 5.9 from 10.6 in November. The September through November index levels were only marginally below the series high set in July 1995 and were the strongest three consecutive months ever in the series.

Current price indexes fell to the lowest levels in a year. The current prices received index dropped to minus 10.3 in December from minus 1.8 in November. The prices paid index fell to 3.8 from 17.9 in November, reversing a slight upward pattern begun last July.

The production outlook index edged down to 33.7 in December from 36.1 the month before but remained well within the moderate range seen over the past few years. The outlook index for shipments was virtually unchanged, while indexes for new orders and backlogs declined. The backlog orders outlook index had been quite strong the prior three months. Inventory outlook indexes for both materials and finished goods were less negative than in November, further suggesting that any current inventory correction is minor. The outlook index for prices received for finished products was essentially unchanged in December at 15.8, while the prices paid outlook index dropped to 20.5 from 27.7 in November.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1997



December November (R) October

Production 2.4 7.0 16.2
Shipments 3.7 6.5 11.8
New orders 8.6 9.4 18.6
Backlog of orders -0.7 -3.4 7.1
Materials inventories -5.8 3.0 11.0
Inventories of finished goods 5.9 10.6 10.9
Number of employees 3.4 1.1 11.0
Average workweek -1.1 0.6 3.9
Prices received -10.3 -1.8 2.6
Prices paid 3.8 17.9 17.0
New export orders 4.1 -3.4 -1.1
Supplier delivery time 9.6 12.3 4.7
Industry business conditions 1.7 -2.2 16.5

Six Months From Now Versus Current Month


December November (R) October

Production 33.7 36.1 28.8
Shipments 37.9 38.7 28.6
New orders 31.3 37.0 31.8
Backlog of orders 5.5 17.9 15.3
Materials inventories -3.5 -6.7 -7.9
Inventories of finished goods -3.2 -9.8 -5.3
Number of employees 7.3 7.7 7.7
Average workweek 1.1 -0.4 -5.4
Prices received 15.8 16.0 17.7
Prices paid 20.5 27.7 26.5
Capital expenditures 20.1 25.3 21.4
New export orders 19.2 26.7 20.9
Supplier delivery time -5.0 -3.8 -1.9
Industry business conditions 23.3 22.5 20.4

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.