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Southeastern Manufacturing Survey

For Immediate Release Sept. 12, 1997

SOUTHEASTERN MANUFACTURING SURVEY IN AUGUST:
CURRENT ACTIVITY SLIPS FROM JULY SURGE

According to the monthly survey conducted by the Federal Reserve Bank of Atlanta in August, reports on current manufacturing activity in the Southeast reflect a general reversal of a jump in most measures of current activity reported in July. The production index rebounded in August, continuing at levels not consistently seen since late 1994. However, indexes for shipments, new orders, backlogs and the average workweek dropped below levels reached in the spring after large increases in July. August's notable reversals suggest that much of the pickup noted in July was related to difficulties in seasonally adjusting some series. Price indexes moved counter to each other but remained at low or moderate levels compared with late 1994 and early 1995. Employment indexes--both current and outlook--remain slightly positive. Outlook indicators, in general, declined in August after remaining at moderate levels for three or four months.

The production index in August rebounded to 15 from 10 in July. The proportion of survey respondents reporting increased production edged up to 36 percent from 34 percent in July, while those reporting declining production dropped to 20 percent in August from 24 percent the month before. Other indicators of current activity generally reversed large gains seen in July. The new orders index declined to 5 in August from 19 in July, while the backlogs index dropped to minus 13 from plus 14 in July. Although the employment index edged down to 6 in August from 10 in July, this level is suggestive of moderate strength because this index has been in the positive range for 11 consecutive months.

Current price indexes were mixed in direction but stood at low or moderate levels. The prices received index dropped to 2 from 11 in July. The current raw material prices index rose to 13 in August from 8 the month before. The supplier delivery time index jumped noticeably in August--to 10 from 1 in July--and was at its highest level since March 1995. Not only did more plants report an increase in delivery time, but no respondents indicated that delivery time had fallen. This slowing in deliveries may have been strike related.

Outlook indexes generally declined in August but remained at moderate levels. The outlook production index dropped to 28 from 37 in July. This index has been relatively steady over the last year although August's level was down from moderate levels seen over the prior four months. Forty-six percent of August's respondents expected higher output in coming months, while only 17 percent anticipated lower levels. Softening also was seen in August for outlook indexes for shipments and new orders. The outlook employment index was steady at a moderately positive level, 9 compared to 8 in July, while the expectations average workweek index rose from minus 1 in July to 3 in August.

Over 50 percent of reporting manufacturers expect no change in either prices received or prices paid, but both outlook indexes declined in August. The expectations prices paid index dropped from 33 in July to 22--the lowest level since August 1996. The outlook prices received index slipped from 26 in July to 20.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1997



August July (R) June

Production 15.2 10.4 14.6
Shipments 8.4 24.6 14.8
New orders 4.8 18.8 10.8
Backlog of orders -13.1 14.2 -1.5
Materials inventories 0.6 2.2 1.8
Inventories of finished goods -5.7 3.6 0.7
Number of employees 6.3 9.9 5.8
Average workweek -4.4 11.2 -7.5
Prices received 1.9 10.7 0.0
Prices paid 13.2 7.6 7.9
New export orders 8.5 5.3 10.6
Supplier delivery time 9.7 1.0 1.0
Industry business conditions 16.9 23.4 15.3

Six Months From Now Versus Current Month


August July (R) June

Production 28.4 36.9 40.0
Shipments 21.6 43.5 39.7
New orders 30.2 38.9 38.8
Backlog of orders 4.8 2.7 9.0
Materials inventories -1.4 -0.6 -5.2
Inventories of finished goods 1.8 -2.5 -9.9
Number of employees 9.0 8.1 9.6
Average workweek 3.1 -0.7 -3.3
Prices received 20.0 26.3 29.1
Prices paid 22.4 33.4 30.8
Capital expenditures 15.5 13.5 16.8
New export orders 20.0 20.3 24.4
Supplier delivery time -2.0 -9.0 -1.0
Industry business conditions 23.3 38.0 4.7

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.

 

Summary of Southeastern Manufacturing Conditions: August 1997 data