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Southeastern Manufacturing Survey

Embargoed until 10 a.m. May 13, 1997

SOUTHEASTERN MANUFACTURING IN APRIL:
CURRENT ACTIVITY REBOUNDS; PRICE INDEXES MOSTLY STEADY

Reports on manufacturing in the Southeast generally showed notable improvement in April over March figures and those seen over most of 1995 and 1996. According to the monthly survey conducted by the Federal Reserve Bank of Atlanta, the proportion of southeastern manufacturers reporting gains in production, shipments, new orders and backlogs rose significantly. Current-price indexes remained steady and moderate, while indexes of expected prices were mixed. The index for number of employees was little-changed. Manufacturers' expectations for activity generally increased somewhat or held steady at moderate levels.

In April, the proportion of survey respondents reporting increased production jumped to 37 from 29 in March. The production diffusion index rose from 10 in March to 18 in April--the highest level since December 1994. Shipments and new-orders indexes also showed significant increases, each rising more than 20 percentage points in April. The unfilled-orders index also showed a sizeable gain, rising from -11 in March to +9 in April--the highest level since October 1994. This 20.1 percentage point improvement for unfilled orders is the series' largest monthly improvement. Inventory indexes remain low--especially for materials.

Current-price indexes were little-changed in April, remaining at moderate levels compared with past surveys. More than three-fourths of the respondents reported no change in prices received for finished product, while about two-thirds reported no change in prices paid for raw materials.

Outlook indexes in April generally remained steady or showed notable improvement. The production-outlook index rose to 34 in April from 29 the prior month. About half of the respondents expect higher output in coming months. Indexes for new orders and backlog expectations rose slightly.

Expected-prices indexes were mixed. The index for expected-material prices declined in April to 31 after jumping to 40 the month before. A little less than half the respondents reported no change in expected-prices paid. The prices-received expectations index extended a string of increases to three months, rising to 25 in April from 22 in March. Thirty-six percent of respondents expect to receive higher prices in coming months, while 53 percent expect no change.

In summary, the April data portray a strengthening southeastern manufacturing sector with only mild price pressure. Forward momentum is healthy, as indicated by reports of new and unfilled orders and apparently lean inventories. Current and expected labor-market conditions remain mostly steady, with a modest share of producers expecting to add to their workforce in coming months.

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, or visit the U.S. Commerce Department's Economic Bulletin Board.

Summary of Southeastern Manufacturing Conditions: April 1997