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Southeastern Manufacturing Survey

For Immediate Release Jan. 12, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN DECEMBER: CURRENT ACTIVITY MODESTLY POSITIVE; OUTLOOK IMPROVES

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current indicators for manufacturing activity in the region remained mostly soft in December compared with early 1998. In contrast, most outlook indicators were up significantly, although much of the rebound may reflect unusually low current activity. Essentially, reports from southeastern manufacturers suggest continued sluggishness in the very near term with improvement anticipated some six months out. Price indexes — current and outlook — have been mixed in direction but still remain at subdued levels as notable over the second half of 1998.

The current production index in December edged up to 8.2, compared to a revised 6.7 in November. The levels of the current production index have been soft for four consecutive months following moderate strength during mid-1998. Nonetheless, production has slowly improved over the last few months from a recent low of minus 2.6 in September. For December, the proportion of respondents reporting higher production nudged up to 34.4 percent from 33.6 percent the previous month, while the proportion indicating a decrease edged down to 26.2 percent from 26.9 percent.

The one current activity index to show notable strength in December was the shipments index, coming off weak numbers for five consecutive months. The new orders index, however, fell slightly and now has been low for the past four months. Current indexes for materials inventories and finished goods inventories remained near zero. New export orders dropped notably, remaining in the negative range and near the series low. Indexes for both the number of employees and the employee average workweek slipped but remained marginally positive.

Current price indexes for materials and for finished goods rose slightly but remained quite subdued in negative territory. The supplier delivery time index declined in December after a modest drop the prior month, suggesting few supply-related price concerns.

Several outlook indexes were up sharply in December. The outlook index for production jumped to 40.3 from 28.7 in November. Outlook indexes for new orders and the employee workweek also were up significantly. Moderate gains were also seen in indexes for shipments, backlogs and the number of employees. Outlook indicators for materials and for finished goods inventories, however, edged down in December. Manufacturers continue to be cautious regarding inventory needs, apparently not anticipating a notable need to boost inventories for any rebound in demand. On a positive note, the outlook index for capital expenditures improved but remained moderate. Outlook price indexes were mixed in direction but remained at low levels.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1998


December November (R) October

Production 8.2 6.7 4.0
Shipments 17.0 7.5 5.0
New orders 3.1 5.3 2.2
Backlog of orders 0.5 -6.9 -6.7
Materials inventories -3.6 -3.6 -8.5
Inventories of finished goods -4.1 1.0 -4.6
Number of employees 1.5 5.5 2.5
Average workweek 1.2 5.9 1.2
Prices received -9.9 -17.2 -11.1
Prices paid -6.1 -14.1 -15.2
New export orders -10.5 -4.0 -12.4
Supplier delivery time 1.3 4.5 6.9
Industry business conditions 3.2 -4.2 -2.0

Six Months From Now Versus Current Month

December November (R) October

Production 40.3 28.7 27.7
Shipments 39.1 34.5 26.0
New orders 38.8 29.5 21.4
Backlog of orders 15.9 11.4 1.8
Materials inventories 0.0 0.5 1.4
Inventories of finished goods -9.9 -9.1 -4.8
Number of employees 5.1 2.4 13.8
Average workweek 5.7 -2.9 -0.8
Prices received 11.4 9.0 8.9
Prices paid 8.7 13.6 13.4
Capital expenditures 18.2 11.6 14.9
New export orders 21.5 17.3 9.5
Supplier delivery time 0.0 2.3 -7.0
Industry business conditions 33.1 20.7 12.0

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: December 1998 data