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Manufacturing
Transportation and Trade
Energy Production
Automobile Production
In May, Sixth District manufacturing contacts noted less of a decline in current conditions and expectations than in April. Production levels and shipments, as well as incoming new orders, decreased only slightly from April levels. The proportion of contacts reporting employment cutbacks increased marginally from April to May. However, the average workweek increased slightly. Prices for both raw materials and finished goods increased moderately. Sixth District manufacturing contacts saw a rise in finished goods inventories and a decline in materials inventories. April's decline in export orders continued into May.
Kennesaw State University's Southeast Purchasing Managers Index (PMI), a gauge of regional manufacturing, increased from 47.1 in April to 50.2 in May. This was the first reading of over 50 since July 2008 and was 1.4 points above the May 2008 reading. (A PMI over 50 indicates expanding manufacturing activity, below 50, contracting activity.) In summary, May data and information from contacts reflected continued sluggishness in manufacturing throughout the region.
Trucking and Railway
The American Trucking Associations' (ATA) National Truck Tonnage Index for April fell 13 percent from a year earlier. Transportation industry contacts noted that their service volumes have been affected by inventory adjustments by retailers, wholesalers, and manufacturers.
Trucking companies servicing the retail industry were particularly affected by weak container imports from Asia in May. On a similar note, regional rail industry shipments of leading products such as lumber, gravel, and motor vehicles through early June 2009 remained well below 2008 levels. Intermodal rail shipments, closely tied to retail and consumer non-durables, are also down sharply from year-earlier levels.
International Trade
The value of international shipments passing through District ports slowed considerably during the first fourth months of 2009. Import values were down sharply in all regional ports. The value of regional imports (down 3.3 percent) dropped the most in New Orleans and Mobile; this decline was due to falling shipments of steel and chemicals. Export values also fell by 7.1 percent for all regional ports, with declining values in outbound auto shipments in Tampa and Savannah contrasting the high values reported in early 2008.
Inventories
The Energy Information Administration (EIA) reported a 13.8 million barrel (7 percent) decline in Gulf Coast crude inventories since mid-April. Despite the recent dip, stocks remain above their average range for this time of year. Gulf Coast gasoline inventories are also down 7 percent since mid-April but well above their seasonal average.
Production and Refining
According to the EIA's short-term outlook, national crude oil production is expected to increase 6 percent in 2009, with two major production platforms in the Gulf of Mexico coming online. The region's year-to-date crude oil production has averaged 13,000 barrels, or 1 percent above the same period in 2008.
According to the Baker Hughes Rig Count, on average, 53 rigs operated off the Gulf Coast during May, 13 rigs fewer than in May 2008. Gulf Coast refineries operated at 85 percent of their operable capacity in March, up 1 percent from year-earlier levels.
Lower demand for District-assembled vehicles continued through mid-June, down 50 percent from comparable 2008 levels, with all companies posting double-digit declines. Several auto suppliers located across the District have recently announced layoffs and cutbacks in hours, most related to extended production downtime at Chrysler and General Motors plants. The short-term outlook for regional vehicle producers and their suppliers is negative given the impact of weak demand and tight credit on vehicle financing and sales. On a brighter note, V-Vehicle, a startup automobile company, plans to assemble a new fuel-efficient car in Monroe, La., that could add about 1,400 jobs to the state in late 2010.
