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Southeastern Manufacturing Survey

For release October 12, 1995

SOUTHEASTERN MANUFACTURERS IN SEPTEMBER:
PRODUCTION REMAINS SOFT; PRICES WEAKEN

In September, the share of manufacturers reporting higher production was little changed, according to the monthly survey conducted by the Federal Reserve Bank of Atlanta. Manufacturers also continued to report flat figures for shipments, new orders, and unfilled orders; the proportion reporting employment gains increased but remained low. Also, the share reporting higher inventories of finished goods was up moderately from August.

For both prices paid and prices received, diffusion indexes dropped noticeably in September. Reports regarding the outlook for prices were mixed. However, the diffusion indexes for both current and expected prices are well below year-ago levels. Outlook indicators for activity generally changed little in the month, remaining moderately above year-ago levels.

While the proportion of survey respondents reporting increased production rose marginally, the diffusion index for production decreased to 5.8 in September from 8.1 in August, as the share reporting lower output rose to 25 percent from 22 percent. Although the share of respondents reporting higher new orders inched up, the proportion of firms with a decline in unfilled orders rose to 33 percent in September from 27 percent in August. Diffusion indexes for employment and workweek remained in the negative range.

According to southeastern manufacturers, those reporting higher finished goods inventories reached a series high of 35 percent in September, compared with the August figure of 29 percent. This occurred during a period when reports of new orders and shipments were sluggish, while expectations for orders and shipments rebounded moderately from earlier in the year.

The diffusion indexes for prices received for finished products and prices paid for inputs fell in September to the lowest levels since late 1993. Only 12 percent of the reporting firms noted higher prices received; over three-fourths indicated no change.

Outlook indicators for manufacturing activity changed little in September and generally remained at moderately healthy levels. For production, 55 percent of September respondents anticipate higher output in coming months, compared with 54 percent in August. Just over half of the responding firms expect higher new orders and shipments in coming months. As in recent months, most do not expect to add to their work force or average work week.

The prices received outlook index slipped to 16 in September after jumping to 23 in August from 16 the month before. However, the outlook index for prices paid for raw materials was steady at 30 in September compared with 29 in August.

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 the article by R. Mark Rogers "Tracking Manufacturing: The Survey of Southeastern Manufacturing Conditions," in the September/October 1992 issue of the Federal Reserve Bank of Atlanta's Economic Review.

Summary of Southeastern Manufacturing Conditions: September 1995