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Southeastern Manufacturing Survey

For immediate release Jan. 12, 2000

SOUTHEASTERN MANUFACTURING SURVEY IN DECEMBER:
PRODUCTION CONTINUES UPWARD MOMENTUM; PRICES MIXED

According to the monthly survey of Southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, most current indicators of manufacturing activity in the region continued the healthy levels of activity seen earlier in the fourth quarter of 1999. Most indicators of current activity edged up, leaving overall activity a bit stronger than during the most recent summer and fall months. Outlook indicators generally remained close to previous moderate levels with the exceptions of an increase in anticipated export orders and a weakening in projected capital expenditures. Current price indexes were mixed while outlook price indexes moderated after several months at higher than usual levels.

The current production index in December rose to 29.1 from 26.8 in November. The proportion of respondents reporting higher production actually edged down to 43.7 percent from 44.6 percent, but the proportion reporting lower production declined more, from 17.8 percent to 14.7 percent. Apparently on the strength of the national economy, the current production index has risen for four consecutive months and is at its highest level since October 1993. The shipments index edged down in December from November's series high but remained a close second. Nonetheless, production also appears to have been strong enough to ease some pressures on inventories; both the indexes for finished goods inventories and for materials inventories were up modestly after weaknesses in recent months.

Outlook indexes in December generally were little changed at more moderate levels, compared with the strong first half of 1999. The outlook index for production crept upward to 23.0 in December after a small increase to 22.3 in November. Outlook indexes for shipments and new orders were steady. The six months out index for backlogs, however, fell moderately but remained positive. Outlook indexes for materials and finished goods inventories increased moderately but remained near typical values, suggesting few inventory concerns. The most positive change in outlook indexes was in the new orders for the exports index that rose for the second straight month in December to its highest level in over two years. This rise is consistent with economic recovery abroad. The expectations index for capital expenditures, however, was down noticeably to its lowest level since January 1999.

On the price front, the current prices received index slipped in December after a boost in November. Since spring of 1999, the prices received index has been moderately higher than levels seen over the weak 1996–1998 period. The prices paid index rose slightly in December, following a dip in the prior month. This index has softened slightly over the past three months after relatively strong levels during the summer of 1999. The outlook indexes for prices received and for prices paid dropped sharply in December after five months of notably elevated levels.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1999


December November (R)
October

Production 29.1 26.8 20.3
Shipments 30.0 32.7 24.4
New orders 14.4 8.9 12.0
Backlog of orders 10.3 4.2 6.0
Materials inventories 10.0 7.0 -0.3
Inventories of finished goods 3.4 -5.5 -0.3
Number of employees 2.0 2.1 4.8
Average workweek 9.8 8.8 1.4
Prices received 4.5 9.0 4.9
Prices paid 19.1 16.9 18.3
New export orders 5.2 2.7 0.0
Supplier delivery time 6.0 11.4 8.9
Industry business conditions 16.6 19.6 14.4

Six Months From Now Versus Current Month

December November (R)
October

Production 23.0 22.3 22.1
Shipments 22.0 24.4 26.4
New orders 17.1 17.0 20.4
Backlog of orders 0.8 6.2 -11.3
Materials inventories -9.8 -13.7 -6.4
Inventories of finished goods -8.3 -13.9 -8.1
Number of employees 3.4 -5.5 4.2
Average workweek -6.1 -5.7 -5.5
Prices received 15.4 26.1 30.0
Prices paid 25.3 34.8 29.3
Capital expenditures 6.2 13.8 14.8
New export orders 23.7 8.1 9.0
Supplier delivery time -4.5 -8.1 0.0
Industry business conditions 16.6 18.7 17.0

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.

Chart 1
Chart 2
Summary of Southeastern Manufacturing Conditions: December 1999 Data