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Southeastern Manufacturing Survey

For Immediate Release May 12, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN APRIL:
PRODUCTION SETTLES; OUTLOOK REMAINS MODERATE

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current indicators for manufacturing activity in the region generally eased in April after notable gains in March. A number of outlook indicators rose slightly, but employment and inventory outlook indexes softened. Price indexes — current and outlook — firmed, reaching levels not seen in several months.

The current production index in April edged down to 23.5 from 28.3 in the prior month but remained well above levels seen in the second half of 1998. For April, the proportion of respondents reporting higher production declined to 42.2 percent from 48.4 percent the previous month. The proportion indicating a decrease slipped to 18.7 percent from 20.1 percent in March.

Other indicators of current activity generally declined or were little changed from March. Current activity indexes that declined included shipments, backlog orders, the number of employees and materials inventories. Forward momentum appears to be continuing, however, as the new orders index dipped only slightly after a strong March. The shipments index fell after a sharp boost the prior month. Additionally, inventories appear to be lean relative to 1998. The finished goods inventories index was little changed but notably negative. The materials inventories index fell to the lowest level since June 1995. In tandem with favorable outlook indexes, the April combination of solid current production, shipments, orders and inventories indexes suggests continued, healthy output.

Current price indexes have been volatile but clearly firmer in recent months than during the latter part of 1998. The prices received index jumped back into positive territory and was at its highest level since July 1997. The prices paid index also turned positive, reaching its highest level since January 1998. In both series, however, about two-thirds of the respondents reported no change in prices.

Outlook indexes were mixed but at moderate levels. The outlook index for production rose to 37.3 in April from 33.6 in March. Similar gains were seen in outlook indexes for shipments, new orders and backlogs. Both the number of employees and the average workweek outlook indexes slipped after each posted a notable gain in March. The materials inventories outlook index fell into negative territory after several months in the mildly positive range, but single-digit negative values are typical for this series. The outlook prices received index posted its fourth consecutive increase and continued its recovery from lows seen in the latter part of 1998. The outlook prices paid index has been unusually volatile this year. This index jumped to 27.6 in April after posting figures of 13.8 in March and 26.2 in February.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1999


April March (R) February

Production 23.5 28.3 15.4
Shipments 12.7 28.1 14.1
New orders 17.7 18.3 12.9
Backlog of orders 5.6 9.9 10.3
Materials inventories -10.9 -0.7 1.7
Inventories of finished goods -8.1 -9.5 -6.6
Number of employees 4.3 10.3 11.1
Average workweek 7.9 7.5 2.4
Prices received 6.8 -5.6 1.1
Prices paid 6.9 -2.3 -6.6
New export orders 1.8 4.6 0.0
Supplier delivery time 6.2 1.2 -1.2
Industry business conditions 13.7 14.1 13.7

Six Months From Now Versus Current Month

April March (R) February

Production 37.3 33.6 38.3
Shipments 37.4 34.3 38.3
New orders 34.7 29.7 35.4
Backlog of orders 3.0 0.0 13.5
Materials inventories -7.6 1.4 2.1
Inventories of finished goods -4.5 -2.9 -1.5
Number of employees 2.0 11.8 -1.5
Average workweek -6.2 3.3 -1.2
Prices received 18.0 16.9 15.9
Prices paid 27.6 13.8 26.2
Capital expenditures 11.1 13.5 24.6
New export orders 1.7 7.0 12.3
Supplier delivery time 1.5 0.0 0.0
Industry business conditions 25.2 25.9 23.0

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
Chart 2

Summary of Southeastern Manufacturing Conditions: April data