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Southeastern Manufacturing Survey

For release September 12, 1995

SOUTHEASTERN MANUFACTURERS IN AUGUST:
PRODUCTION SLIPS; PRICES EDGE UP FROM LOWS

In August the share of manufacturers reporting higher production and new orders fell noticeably following strong gains in July, according to the monthly survey conducted by the Federal Reserve Bank of Atlanta. Diffusion indexes for both prices paid and prices received edged up from recent lows set in June and July, respectively. Outlook indicators for activity slackened in August but remained generally positive and significantly stronger than spring reports. August reports regarding the outlook for prices were mixed.

The proportion of survey respondents reporting increased production declined to 27 percent from July's revised 37 percent. The diffusion index for production fell from 13 in July to 4 in August. Since the series low of minus 11 in April, the production diffusion index has been positive. The new orders index also dipped sharply from 13 in July to 2 in August--essentially reversing almost all of July's gain. August indexes for the number of employees and for the average workweek also reversed July's gains.

The proportion of respondents reporting higher inventories of finished goods and of materials edged down. The share indicating lower materials inventories rose over 7 percentage points.

Outlook indicators for manufacturing activity slipped in August but generally remained strong. For production, 55 percent of August respondents anticipate higher ouput in coming months, compared with 59 percent in July. This is in sharp contrast to the series low of 34 percent in March of this year. Though a majority of repondents expects to produce more, most do not expect to add to their work force or average work week.

The August diffusion indexes for prices continued to nudge upward, rising from 6 in July to 9 in August. Still the vast majority of respondents reported no change in prices received or paid. Looking forward, the prices received outlook index jumped to 21 from 16 in July. However, the outlook index for prices paid in raw materials fell from 34 in July to 27 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: August 1995