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Southeastern Manufacturing Survey

For Immediate Release June 14, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN MAY:
CURRENT ACTIVITY MIXED; EXPORTS MAY BE TURNING UP

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 mixed in May with production softer but orders stronger than in April. New orders for export rose in May after several months of little change. Generally, outlook indicators were improved slightly. Current price indexes were down in May after notable increases in April. Outlook price indexes for prices received and prices paid moved in opposite directions.

The current production index in May moved down to 17.1 from 22.6 in April. For May, the proportion of respondents reporting higher production dropped to 37.6 percent from 42.9 percent the previous month. The proportion indicating a decrease edged up to 20.6 percent from 20.3 percent in April.

The current production index has slipped back to the sluggish levels seen earlier in the year, but improvement in orders indexes suggests the output index may improve in the near term. The new orders index rose to 21.9 in May from 17.9 in April. This index has been on a clear upward trend since September 1998 and is at its highest level since March 1998. The backlogs index also was up in May and was at its highest level since October 1994. The current activity index for new orders for exports rose to 6.7 from zero in April. This index has been out of the negative range since January 1999 after four consecutive negative figures from September 1998 through December 1998.

Inventory indexes for material goods and for finished goods both rose in May, following a string of negative months. The material goods index rose from minus 10.9 in April to zero in May, while the finished goods inventory index jumped from minus 10.5 to plus 8.1. Current activity indexes for shipments, the number of employees and the average workweek declined marginally.

Current price indexes dropped in May after notable increases in April. The prices received index was 1.2 in May, compared with 7.3 in April and minus 5.6 in March. The prices paid index stood at 2.4 in May, compared with 9.8 in April and minus 2.3 in March. For both indexes, most respondents indicated no change in prices.

Generally, outlook indexes improved slightly, remaining at moderate levels. The outlook index for production edged up to 39.3 in May from 37.8 in April. Outlook indexes for shipments, materials inventories, finished goods inventories, number of employees, average workweek and new orders for exports also were up slightly. The outlook index for prices paid dropped in May after a sharp increase in April — largely reflecting oil price volatility. The outlook index for prices received, however, was up slightly in May to its highest level since September 1997.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1999


May April (R) March

Production 17.1 22.6 28.3
Shipments 8.4 13.4 28.1
New orders 21.9 17.9 18.3
Backlog of orders 11.3 4.0 9.9
Materials inventories 0.0 –10.9 –0.7
Inventories of finished goods 8.1 –10.5 –9.5
Number of employees 6.7 7.5 10.3
Average workweek 6.3 7.0 7.5
Prices received 1.2 7.3 –5.6
Prices paid 2.4 9.8 –2.3
New export orders 6.7 0.0 4.6
Supplier delivery time 1.3 5.4 1.2
Industry business conditions 9.1 12.5 14.1

Six Months From Now Versus Current Month

May April (R) March

Production 39.3 37.8 33.6
Shipments 41.1 36.3 34.3
New orders 28.3 32.4 29.7
Backlog of orders 2.5 3.3 0.0
Materials inventories –6.3 –8.1 1.4
Inventories of finished goods 1.9 –2.5 –2.9
Number of employees 6.4 1.9 11.8
Average workweek 5.3 –4.8 3.3
Prices received 19.8 16.9 16.9
Prices paid 12.2 30.3 13.8
Capital expenditures 15.5 11.8 13.5
New export orders 9.1 3.1 7.0
Supplier delivery time 0.0 1.3 0.0
Industry business conditions 25.9 22.0 25.9

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: May data