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Southeastern Manufacturing Survey

For Immediate Release July 13, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN JUNE:
CURRENT ACTIVITY SOFTER; OUTLOOK MOSTLY STEADY

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current indicators for manufacturing activity in the region were mostly softer in June. Current activity indexes for production, new orders, finished goods inventories, number of employees and new orders for export were down from May but remained at moderate levels. The indexes for backlogs and the average employee workweek rose slightly. Outlook indicators were up marginally or held steady at moderate levels. Current price indexes were mixed, while outlook price indexes slipped.

The current production index in June declined for the third month in a row to 10.4 from 18.0 in May. For June, the proportion of respondents reporting higher production dropped to 33.0 percent from 38.8 percent the previous month. The proportion indicating a decrease rose to 22.7 percent from 20.8 percent in May.

The May boost in new orders was short-lived as the new orders index in June more than reversed May's gain. This index fell sharply to 6.6 in June from 24.1 in May and 17.9 in April. June's level was the lowest since December 1998. The backlogs index edged up, and the shipments index was little changed. New export orders have been volatile lately. This index was down in June, posting the first negative level since December 1998.

Current price indexes continued in the positive range after notable weakness in late 1998. The prices received index rose to 4.8 in June from 2.3 in May. The prices paid index slipped to 1.6 in June from 2.3 in May. At least three-fourths of the respondents, however, indicated no change in prices. Interestingly, the supplier delivery time index rose to its highest level since July 1998, suggesting a mild increase in difficulty in obtaining inputs.

Outlook indexes generally posted modest gains or were steady at moderately high levels, indicating expectations for healthy manufacturing activity later in 1999. The outlook index for production stood at 37.5 in June compared with 38.6 in May. Outlook indexes for new orders, backlogs, materials inventories, average workweek and new orders for exports were up compared with May. The capital expenditures index was up moderately, posting a second monthly gain. In contrast to current indexes, outlook price indexes slipped in June. Both outlook price indexes had seen a run-up in levels earlier in 1999.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1999


June May (R) April

Production 10.4 18.0 22.6
Shipments 10.1 8.9 13.4
New orders 6.6 24.1 17.9
Backlog of orders 13.4 10.8 4.0
Materials inventories -1.6 -1.9 -10.9
Inventories of finished goods 0.8 6.9 -10.5
Number of employees 3.6 5.3 7.5
Average workweek 6.2 4.4 7.0
Prices received 4.8 2.3 7.3
Prices paid 1.6 2.3 9.8
New export orders -3.9 6.4 0.0
Supplier delivery time 8.3 1.2 5.4
Industry business conditions 8.5 9.6 12.5

Six Months From Now Versus Current Month

June May (R) April

Production 37.5 38.6 37.8
Shipments 38.6 40.4 36.3
New orders 30.7 27.8 32.4
Backlog of orders 8.6 4.0 3.3
Materials inventories 3.9 -3.9 -8.1
Inventories of finished goods -0.6 3.4 -2.5
Number of employees 5.0 5.6 1.9
Average workweek 4.6 2.7 -4.8
Prices received 14.7 18.3 16.9
Prices paid 13.7 15.7 30.3
Capital expenditures 24.6 19.7 11.8
New export orders 17.0 11.3 3.1
Supplier delivery time -1.8 0.0 1.3
Industry business conditions 36.3 27.5 22.0

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
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Summary of Southeastern Manufacturing Conditions: June data