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Southeastern Manufacturing Survey

Embargoed until 10 a.m. Sept. 12, 1996**

SOUTHEASTERN MANUFACTURING IN AUGUST: CURRENT ACTIVITY MODERATE; OUTLOOK IMPROVES

According to the monthly survey conducted by the Federal Reserve Bank of Atlanta, the share of southeastern manufacturers reporting gains in production was little changed in August after a moderate rise the month before. Shipments improved for the second month, while new orders were steady and slightly positive. Most outlook indicators rebounded sharply in August after a moderate decline in the prior month. Both current price indexes rose slightly but remained low, while price outlook indexes were mixed but also low.

In August, the proportion of survey respondents reporting increased production was essentially unchanged at 34 percent versus 33 percent in July. The share of respondents reporting a decline in production slipped to 22 percent in August from 25 percent in July. Overall, the diffusion index for production rose to 11 in August from 8 in July. The index for shipments rose to 14 in August from 4 in July, while the index for new orders rose to 4 from 2 over the same time period. However, labor force diffusion indexes declined as the number of employees index fell to minus 1 from 9 in July. The average workweek index fell moderately but remained marginally positive.

The diffusion indexes for both prices received and prices paid rose slightly in August. However, both indexes remain well below levels seen in 1994 and 1995. Since the middle of 1995, between 65 and 80 percent of respondents reported no change in prices received. The prices received index stood at minus 2 in August and has been slowly rising since a recent trough of minus 14 in March of this year. The series peak of 23 was set in January 1995. The diffusion index for prices paid for raw materials was essentially unchanged at 12 in August. In the latest period, almost two-thirds of the respondents indicated they had no change in prices paid for raw materials.

Indexes of expectations of future manufacturing activity rose sharply in August, returning to levels recorded last winter and spring, after a sizable decline in July. The production index jumped to 37 in August from 21 in July. Expectations indexes for shipments, new orders, and the average workweek also rose noticeably. The index for expected finished goods prices slipped in August for the second straight month. The expected materials prices index rebounded noticeably in August to 23 after dropping to 12 in July, its lowest level in the four and a half year history of the survey.

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: August 1996