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Southeastern Manufacturing Survey

For Immediate Release Nov. 13, 1997

SOUTHEASTERN MANUFACTURING SURVEY IN OCTOBER:
CURRENT ACTIVITY STEADY AND MODERATE; PRICES SOFT

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current activity was little changed in October from September. Indexes for output, new orders, employees and the average workweek moved only slightly, while shipments declined and backlogs were up. Outlook indicators in general declined but remained moderately positive. Current price indexes staged a modest rebound in October, while outlook price indexes remained at low levels relative to series highs.

The production index in October was virtually unchanged at 16. Also, the proportion of respondents reporting higher production was flat at 37 percent, while the share reporting lower output was steady at 21 percent. Over the last 10 months, the production index has stayed within a relatively tight band of index values from 10 to 19.

For both October and September, over one-third of the respondents reported increases in new orders. Shipments have been unusually volatile over the last three months -- likely reflecting the impact of strike activity in August. The backlog index has risen two consecutive months, from minus 9 in August to plus 6 in September to plus 11 in October. October's backlog figure was only slightly below the series high of 15 set in July 1994.

While holding essentially steady, both the materials inventories index and the finished goods inventories index stood at levels somewhat high relative to historical figures. The current employment index and the current employee workweek indexes were little changed -- with the employment series slightly positive and the workweek index marginally negative.

The current prices received index firmed slightly in October from a low level the prior month -- rising from minus 7 to plus 2. The prices paid index increased to 16 from 12 in September. The current supplier delivery time index dropped to 4 in October from 9 in September, which was a recent high likely related to delivery problems associated with a recent strike.

The outlook production index slipped back to more moderate levels after a strong rebound in September. It stood at 33 in October, compared with 43 in September and 32 in August. This outlook index has ranged between 32 and 43 over the last six months, compared with a 29 to 34 range over the prior six months. Forty-eight percent of September's respondents expected higher output in coming months, while only 14 percent anticipated lower levels.

Outlook indexes for shipments, new orders and backlogs also declined after large increases in September but remained above August levels. There was little change in the outlook indexes for inventories. These indexes remained slightly negative, and most respondents indicate they expect inventories to change little over the next six months. Outlook indexes for prices were essentially stable at moderate levels -- somewhat above weak levels seen in the latter part of 1996 but well below series peaks that occurred in late 1994/early 1995.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1997



October September (R) August

Production 16.2 16.0 18.3
Shipments 9.7 18.2 6.7
New orders 17.0 17.8 7.2
Backlog of orders 11.4 6.1 -8.6
Materials inventories 9.5 8.0 1.5
Inventories of finished goods 10.3 11.9 -1.5
Number of employees 6.1 5.6 5.8
Average workweek -0.7 -0.5 -5.4
Prices received 2.0 -6.7 1.7
Prices paid 15.9 12.2 13.1
New export orders 1.3 11.1 7.3
Supplier delivery time 4.4 8.7 8.4
Industry business conditions 17.7 9.5 15.8

Six Months From Now Versus Current Month


October September (R) August

Production 33.3 43.4 32.4
Shipments 33.8 40.4 26.7
New orders 34.7 37.9 31.8
Backlog of orders 15.4 19.0 9.2
Materials inventories -5.2 -5.9 -2.4
Inventories of finished goods -3.6 -4.6 0.4
Number of employees 7.6 9.3 10.2
Average workweek -3.7 4.8 4.7
Prices received 19.8 22.4 19.9
Prices paid 25.0 24.2 20.4
Capital expenditures 23.1 23.5 18.0
New export orders 26.9 26.2 21.2
Supplier delivery time -1.1 -1.0 -2.6
Industry business conditions 23.5 32.8 27.9

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.

Summary of Southeastern Manufacturing Conditions: October 1997 data