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Southeastern Manufacturing Survey

Embargoed until 10 a.m. July 12, 1996**

SOUTHEASTERN MANUFACTURING IN JUNE:
CURRENT ACTIVITY DECLINED; OUTLOOK SLIPS

According to the monthly survey conducted by the Federal Reserve Bank of Atlanta, the share of southeastern manufacturers reporting gains in production fell in June after holding steady in May. Shipments behaved similarly, while new orders rose slightly from a month ago. More respondents reported increased order backlogs in June than in May. Outlook indicators generally declined moderately in June after rebounding somewhat in May. Both current price indexes declined slightly, while outlook price indexes were decidedly mixed.

In June the proportion of survey respondents reporting increased production declined to 30 percent from 34 percent in the previous month. At the same time, the number of respondents reporting a decline in production rose from 24 percent in May to 29 percent in June. Consequently, the diffusion index for production dropped to zero from positive 10 in May. The diffusion index for shipments also declined sharply, while the index for new orders rose slightly from its May level. Indexes for order backlogs and material inventories increased, climbing out of negative territory. The diffusion index for the number of employees edged up once again in June, while the diffusion index for the average employee workweek was little changed.

Small declines were registered in the diffusion index for both prices received and prices paid. More respondents reported no change in both price series than in the previous month.

Expectations for future manufacturing activity slipped in June. The production index moved down to 28 in June from 30 in May. Expectation indexes for shipments and backlogs slipped as well. The employment outlook index remained constant, while the average workweek index rose slightly. The index for expected finished goods prices jumped to its highest level since March 1995, but the expected materials prices index dropped to its lowest level in the four-and-a-half-year history of the survey.

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 the article by R. Mark Rogers "Tracking Manufacturing: The Survey of Southeastern Manufacturing Conditions," in the September/October 1992 issue of the Federal Reserve Bank of Atlanta's Economic Review.

**For reprints and historical data, see http://www.frbatlanta.org on the World-Wide Web or visit the U.S. Commerce Department's Economic Bulletin Board.

Summary of Southeastern Manufacturing Conditions: June 1996