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Southeastern Manufacturing Survey

For Immediate Release March 12, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN FEBRUARY: PRODUCTION CONTINUES REBOUND; OUTLOOK POSITIVE

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current indicators for manufacturing activity in the region continued to improve from weakness seen in the fall of 1998. There were current activity index gains in February for production, order backlogs, number of employees and the average workweek. Outlook indicators were mostly improved with notable gains in indexes for inventories and for capital expenditures. Current price indexes were mixed, while outlook price indexes were up notably but still in the moderate range.

The current production index in February rose to 18.0 from 14.2 in January. The production index has improved gradually over the past five months. For February, the proportion of respondents reporting higher production edged up to 34.5 percent from 32.5 percent the previous month, and the proportion indicating a decrease slipped to 16.6 percent from 18.3 percent.

Current indexes in general improved in February over January. The most notable improvement was a jump in backlogs. The new orders index slipped but remained at a moderate level after a surge in January, and shipments softened in February.

Current price indexes moved in opposite directions in February. The prices received index firmed to zero after several months deep in the negative range. The February figure was the first non-negative number since May 1998. The prices paid index, however, posted a sharp drop after three consecutive gains. February's prices paid index set a new series low. The supplier delivery time index edged down to zero — the lowest level since March 1996, indicating manufacturers are having little trouble obtaining supplies.

Outlook indexes generally were up in February. The outlook index for production nudged back up to 39.0 in February from 37.4 in January. The outlook indexes for both new orders and backlogs rebounded from a dip in January. Outlook indexes for both materials inventories and for finished goods inventories rose noticeably in February, suggesting that inventory building may be a key driver behind production in mid-1999. The outlook index for materials inventories set a series high, while that for finished goods was the first positive figure in 11 months. The outlook index for capital spending jumped sharply in February to 30.9 from the series low of 3.1 in January, suggesting a sharp reversal by some manufacturers for their plant's outlook. Outlook price indexes also were up notably. The outlook index for prices paid was at its highest since July 1997, likely reflecting manufacturers' beliefs that currently weak materials prices are not sustainable.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month

 
1999 1998

February January (R) December

Production 18.0 14.2 8.4
Shipments 15.8 16.4 16.4
New orders 8.3 15.7 4.7
Backlog of orders 11.2 0.5 0.3
Materials inventories 10.6 4.4 -4.5
Inventories of finished goods -3.9 7.2 -7.7
Number of employees 18.2 2.2 0.2
Average workweek 5.9 -3.7 2.2
Prices received 0.0 -2.4 -12.4
Prices paid -15.9 3.8 -4.4
New export orders 6.1 0.0 -8.1
Supplier delivery time 0.0 1.3 2.3
Industry business conditions 12.7 10.3 5.0

Six Months From Now Versus Current Month

February January (R) December

Production 39.0 37.4 39.1
Shipments 34.8 37.3 37.7
New orders 35.5 29.2 38.4
Backlog of orders 14.6 7.5 16.6
Materials inventories 9.8 1.1 -3.4
Inventories of finished goods 1.3 -6.0 -10.6
Number of employees -9.1 12.2 5.9
Average workweek -1.7 1.7 4.6
Prices received 18.0 10.0 7.8
Prices paid 30.0 15.8 10.3
Capital expenditures 30.9 3.1 18.5
New export orders 17.1 19.4 22.2
Supplier delivery time 0.0 -4.1 1.2
Industry business conditions 16.9 30.0 31.3

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: February 1999 data