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Southeastern Manufacturing Survey

Embargoed until 10 a.m. Oct. 15, 1996**

SOUTHEASTERN MANUFACTURING IN SEPTEMBER: CURRENT ACTIVITY STRENGTHENS; OUTLOOK WAVERS

According to the monthly survey conducted by the Federal Reserve Bank of Atlanta, the share of southeastern manufacturers reporting gains in production rose in September for the third consecutive month. Diffusion indexes for production shipments and new orders were at their highest levels since January 1995, but employment indicators dropped.

Most outlook indicators fell in September after rising sharply in August. They did not fall back to July levels, however. Current price indexes were mixed, while prices received and prices paid outlook indexes rose slightly but remained low.

In September the proportion of survey respondents reporting increased production advanced to 37 percent from 35 percent the month before. The share of respondents reporting a decline in production dropped to 18 percent from 23 percent in August. The diffusion index for production jumped to 19 in September from 12 in August. The latest month's index was the highest since a 25 mark for January 1995. In September the index for new orders followed a pattern similar to that for production but at more moderate levels.

Despite improvement in production, shipments, and orders indexes, the number of employees index fell to minus 7 in September from minus 1 in August.

The workweek index edged down in September but remained in the positive range where it has been for six months in a row. The diffusion index for prices received was unchanged at minus 2, while the prices paid index fell slightly in September. The prices received index has been negative in 12 of the last 13 months. The prices paid diffusion index fell to 5 in September from 10 the month before, after climbing from a series low of minus 2 as recently as March 1996.

Indexes of expectations of future manufacturing activity fell significantly in September after rebounding sharply in August. The production index dropped to 26 in September from 37 in August. This expectations index has fluctuated within the 15 to 37 range since January. The series low is 15, set in January 1996, and the series high is 58, set in December 1992. Expectations indexes for shipments, new orders, the number of employees, and the average workweek also declined in September. Price outlook indexes rose slightly in September. The index for expected finished goods prices edged up to 12 in September from 11 in August. Still, well over half of the respondents expect no change in prices received in coming months. The expected materials prices index rose slightly for the second straight month. Just over half of the respondents report that they expect no change.

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.

**For reprints and historical data, see http://www.frbatlanta.org on the World-Wide Web or visit the U.S. Commerce Department's Economic Bulletin Board.

Summary of Southeastern Manufacturing Conditions: September 1996