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Southeastern Manufacturing Survey

For immediate release Sept. 14, 1999

SOUTHEASTERN MANUFACTURING SURVEY IN AUGUST:
PRODUCTION WEAKENS; OUTLOOK DOWN

According to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, most current indicators of manufacturing activity in the region were down significantly in August following a mixed July. The production index was especially weak in August. In addition to production, current activity indexes for shipments, new orders, finished goods inventories, number of employees and the employee workweek declined in August. Current and outlook price indexes moved little but remained at relatively high levels. Outlook indexes generally were down from July and may be offering early evidence that manufacturers expect a slow start for the coming year.

The current production index in August fell to minus 2.5 from a positive 24.3 in July. The proportion of respondents reporting higher production dropped to 26.4 percent from 34.5 percent in July, while the proportion indicating a decrease jumped to 28.9 percent from 10.2 percent in July. Even taking into account that summer production tends to be very volatile, August's drop after July's strong gain still suggests a slowing trend in Southeastern manufacturing since May of this year. August's production index number was the first negative since September 1998.

Outlook indexes generally fell in August. The outlook index for production declined to 24.3 in August from 28.1 in the prior month. This index has been somewhat softer over the past three months than during the rest of 1999; its August level was the lowest since July 1996. Outlook indexes for shipments, new orders, backlogs, the average workweek, capital expenditures and new orders also slipped in August. The new orders index was at its lowest level in three years; the index for new export orders dipped after rising in the three prior months. Manufacturers generally anticipate few delivery problems six months out as the outlook index for supplier deliveries fell moderately to its lowest level since October 1998. A decline in this index indicates that fewer manufacturers anticipate longer delivery times.

Both current and outlook price indexes showed little change in July but remained at levels well above those seen in late 1998. The current prices received index edged down to 4.4 in August from 7.8 in July. Meanwhile, the current prices paid index slipped to 22.1 in August from 23.4 in July. This index had jumped in July from 2.7 in June. Outlook prices received continued to climb from moderate levels recorded earlier this year. The outlook index for prices paid moved down slightly.


Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month
1999


August July (R) June

Production -2.5 24.3 15.6
Shipments 12.6 17.0 17.3
New orders 7.1 14.2 13.5
Backlog of orders 9.3 3.0 10.4
Materials inventories 4.6 1.5 -0.5
Inventories of finished goods 3.3 8.7 3.0
Number of employees 3.6 11.4 2.2
Average workweek -3.9 4.5 7.7
Prices received 4.4 7.8 2.7
Prices paid 22.1 23.4 2.7
New export orders 5.5 -6.5 -3.4
Supplier delivery time 10.3 4.0 5.6
Industry business conditions 8.4 16.2 12.5

Six Months From Now Versus Current Month

August July (R) June

Production 24.3 28.1 28.8
Shipments 25.6 31.7 29.7
New orders 12.8 31.3 24.3
Backlog of orders 3.3 9.9 4.9
Materials inventories -4.6 -12.3 -0.9
Inventories of finished goods -8.0 -8.3 -5.1
Number of employees 7.8 4.6 3.9
Average workweek -7.8 0.0 -3.1
Prices received 29.3 26.3 16.1
Prices paid 28.8 31.0 16.3
Capital expenditures 16.0 19.7 21.0
New export orders 13.8 15.9 11.5
Supplier delivery time -4.5 0.0 0.0
Industry business conditions 28.8 28.5 29.0

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.

Chart 1
Chart 2
Summary of Southeastern Manufacturing Conditions: August Data