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Southeastern Manufacturing Survey

For Immediate Release May 12, 1998

SOUTHEASTERN MANUFACTURING SURVEY IN APRIL:
CURRENT ACTIVITY MIXED; OUTLOOK MODERATE; PRICES WEAK

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, the indexes for output and shipments rebounded strongly from March levels, while new orders and backlogs fell. Inventory indexes jumped in April. Employment indicators were little changed from March. Both current price indexes turned negative again, and supplier delivery time fell somewhat. Indicators of future activity dropped in April.

The production index in April rose to 26.0 from a revised 17.0 in March. April's output index is the highest level since March 1994. The proportion of respondents reporting higher production in April grew to 46.3 from 38.3 the previous month, while the number of respondents reporting declines was little changed, slipping from 21.4 in March to 20.2 in April.

The new orders index slipped from its recent high of 25.2 in March to 18.4 in April. The shipment index rose for the fourth consecutive month and has been quite healthy since February. In turn, the backlogs index turned negative again after reaching positive territory in March. Indexes for both material inventories and finished goods inventories increased significantly in April following weak numbers in prior months. Current employment indexes were little changed from last month and remained near series highs.

Both current price indexes turned negative. The current prices received index fell to minus 1.1 after reaching 5.3 in March. The current prices paid index also fell to minus 1.1 in April after climbing to 4.4 the previous month. The prices paid series has been low over the past three months after reaching its first-ever negative value in February. This series began January 1992. The supplier delivery time index declined to 5.7 from 9.1 the prior month.

All activity outlook indexes — except new export orders — dropped significantly in April. April's outlook production index of 29.1 was the lowest since October 1997. Current inventory indexes rose sharply, while outlook inventory indexes fell noticeably. Some manufacturers appear to believe that April's strong current production figure is related to boosting recently low inventories and may not be sustainable after manufacturers have made these inventory adjustments.

In addition to weakness in current price indexes, outlook indexes for prices for finished products, prices for raw materials and supplier delivery time declined from last month's survey values. Overall, this month's report indicates that there is marginally less price pressure than in recent months.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1998


April March (R) February

Production 26.0 17.0 23.0
Shipments 24.7 22.8 18.0
New orders 18.4 25.2 12.9
Backlog of orders -3.4 4.6 -0.2
Materials inventories 10.9 0.7 -1.6
Inventories of finished goods 3.4 -6.2 -11.2
Number of employees 11.4 11.3 13.3
Average workweek 9.1 8.5 3.4
Prices received -1.1 5.3 0.0
Prices paid -1.1 4.4 -8.2
New export orders 10.0 8.7 8.1
Supplier delivery time 5.7 9.1 8.7
Industry business conditions 19.9 29.5 15.2

Six Months From Now Versus Current Month

April March (R) February

Production 29.1 43.0 40.9
Shipments 30.1 40.6 35.5
New orders 24.8 34.9 34.2
Backlog of orders 9.5 15.2 8.2
Materials inventories -6.8 6.4 0.9
Inventories of finished goods -9.2 7.3 2.9
Number of employees 10.3 14.3 12.2
Average workweek -6.5 8.9 4.5
Prices received 9.8 14.6 20.1
Prices paid 20.0 23.3 21.6
Capital expenditures 27.1 32.2 22.7
New export orders 17.1 14.6 19.6
Supplier delivery time -4.6 -1.8 4.9
Industry business conditions 28.4 31.6 32.3

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.

Summary of Southeastern Manufacturing Conditions: April 1998 data