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Southeastern Manufacturing Survey

For immediate release Nov. 15, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN OCTOBER:
CURRENT PRODUCTION AND SHIPMENTS UP; OUTLOOK SLIPS

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, current indicators of manufacturing activity in the region showed an upward shift in production, shipments and inventories — possibly to meet Y2K-related requests by customers. Other current activity indicators suggest moderate underlying momentum for the southeastern manufacturing sector. Outlook indicators showed some slippage but generally remained at moderate levels. For both current and outlook series, prices paid indexes declined in October. The current index for prices received drifted down, but the outlook index rebounded back to a recent high.

The current production index in October rose to 16.4 from 11.5 in September. The proportion of respondents reporting higher production rose to 39.8 percent from 33.6 percent. The proportion indicating a decline actually edged up marginally as the share indicating no change in production declined to 36.8 percent from 44.3 percent in September. Production currently may be more concentrated on immediate shipments as the shipments index jumped to 23.9 in October from 16.5 in September. October's figure was the highest since March 1999. Yet, current activity inventory indexes also rebounded after a very weak September, returning to more frequently observed values. Manufacturers appear to be attempting to keep inventories from declining further.

Outlook indexes were flat or slipped incrementally in October. The outlook index for production nudged down to 23.9 in October from 25.3 in September. Outlook production indexes for the past three months have been moderately lower than during the first half of 1999. For October, slippage also was seen in outlook indicators for shipments, new orders, backlogs, materials inventories, finished goods inventories, the average workweek, capital expenditures, new orders for exports and supplier delivery time. The outlook index for the number of employees rose slightly, however, suggesting a mild vote of confidence by manufacturers for orders and production next year.

The current prices paid index was down notably in October after three strong months. However, further slippage in material prices is not expected to be dramatic as the outlook prices paid index fell only slightly after three strong months. The outlook index for prices received rose, returning to a recent high even though the current prices received index declined moderately in October. The outlook series for prices received has been strong for four consecutive months.
Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1999
October September (R)
August
Production 16.4 11.5 -2.4
Shipments 23.9 16.5 11.2
New orders 13.4 17.1 8.1
Backlog of orders 5.8 -7.5 8.2
Materials inventories -2.4 -10.4 1.9
Inventories of finished goods -2.2 -23.2 2.7
Number of employees 4.2 4.8 4.3
Average workweek -0.6 3.8 -2.7
Prices received 2.7 8.0 5.3
Prices paid 16.2 27.0 24.0
New export orders 3.2 4.8 4.9
Supplier delivery time 6.9 0.0 9.3
Industry business conditions 13.7 11.1 7.6
Six Months From Now Versus Current Month
October September (R)
August
Production 23.9 25.3 23.8
Shipments 27.4 29.2 24.0
New orders 21.3 25.6 10.6
Backlog of orders -8.2 2.9 3.8
Materials inventories -7.8 1.9 -5.5
Inventories of finished goods -10.7 4.1 -5.8
Number of employees 4.1 2.4 8.0
Average workweek -6.3 -4.1 -7.7
Prices received 29.6 26.6 29.6
Prices paid 25.8 31.4 30.4
Capital expenditures 15.7 17.6 12.6
New export orders 9.8 12.7 12.5
Supplier delivery time -2.9 -1.4 -4.1
Industry business conditions 20.4 27.8 27.4
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: October Data