Regional Update (July-September 1998)

Index The State of the States Views From the Region Southeastern Manufacturing Survey Southeastern Economic Indicators

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Manufacturing Survey
Current Output and Prices Up,
Outlook Activity Softens in July

A ccording to the monthly survey of southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, the July index for current output rebounded, while shipments, new orders and price indexes continued to decline. Current employment indexes rebounded, while inventories were mixed. Current price indexes fell noticeably. Current and outlook new export orders indexes fell significantly, and outlook indicators generally weakened.

Summary of Southeastern Manufacturing Conditions, July 1998
Seasonally Adjusted
  July vs. June
(Percent)
Six Months From Now
(Percent)
Southeastern Plant Indicators Decrease No
Change
Increase Diffusion
Index1
Decrease No
Change
Increase Diffusion
Index1
Production 14.5 49.7 35.8 21.3 16.2 36.6 47.2 31.0
Volume of shipments 26.7 38.9 34.4 7.7 21.5 27.5 51.0 29.5
Volume of new orders 26.6 46.2 27.2 0.5 21.9 34.1 44.1 22.2
Backlog of orders 23.6 52.8 23.7 0.1 21.1 49.8 29.0 7.9
Inventories:
Materials
16.0 67.9 16.1 0.2 22.4 61.4 16.2 -6.2
Plant's finished goods
16.3 61.2 22.6 6.3 22.4 56.2 21.4 -1.0
Number of employees 11.4 68.7 19.9 8.5 15.1 56.9 28.0 12.9
Average employee workweek 10.3 73.0 16.8 6.6 22.0 61.2 16.8 -5.3
Prices received for finished product2 19.4 72.0 8.6 -10.8 16.7 54.2 29.2 12.5
Prices paid for raw materials2 20.4 74.2 5.4 -15.1 12.7 56.5 30.9 18.3
Capital expenditures 17.0 51.1 31.9 14.9
New orders for exports3 19.4 72.2 8.3 -11.1 9.5 74.3 16.2 6.8
Supplier delivery time4 13.2 82.4 4.4 8.8 6.7 84.4 8.9 -2.2
Industry business activity, national 22.3 52.0 25.7 3.4 22.9 38.7 38.4 15.5
1 The diffusion index is calculated as the difference between the percentage of total respondents reporting increases and the percentage reporting declines.
2 Not seasonally adjusted for the month-ago series.
3 Not seasonally adjusted for the six-months-from-now series.
4 Not seasonally adjusted for the month-ago series and "decrease" indicates slower, while "increase" indicates faster delivery time. The diffusion index for this indicator reflects that faster delivery time is a negative factor.

Data from 93 respondents. Figures may not sum exactly to 100 because of rounding. For background on the Survey of Southeastern Manufacturing Conditions, see "Southeastern Manufacturing Survey Reveals Regional Economic Trends" in the Federal Reserve Bank of Atlanta's Regional Update, Volume 6, Number 2-3, 1993. Click here for historical data.

The production index in July rebounded to 21.3 from a revised 10.1 in June. The proportion of respondents reporting higher production in June slipped to 35.8 percent from 37.2 percent in June, while the proportion of respondents reporting declines dropped to 14.5 percent in July from 27.0 percent the prior month.

Shipments and new orders indexes, however, continued to decline. Inventory indexes were mixed as the materials inventory series moved lower, while the index for finished goods inventories rebounded slightly, turning positive once again. The new export orders index turned decidedly negative, setting a record low of minus 11.1. The supplier delivery time index continued to rise moderately.


Survey of Southeasten
Manufacturing Conditions





Current price series softened once again. The prices received index slipped to minus 10.8 in July from minus 5.6 in June, reaching its lowest level since December 1996. The prices paid index continued its four-month slide, setting a record low in July of minus 15.1.

Outlook indexes generally declined. The outlook index for production fell to 31.0 in July from 36.2 in June. The outlook indexes for shipments, new orders, backlogs, number of employees, workweek, capital expenditures and new orders for exports declined in July as well. Both inventory outlook indexes moved up slightly. Outlook price indexes also rose slightly, suggesting that more respondents may see the current price weakness as temporary. The outlook index for new orders for exports reached a series low.

Editor's note: This article was contributed by Mark Rogers, forecast coordinator, and Whitney Mancuso, economic analyst, of the Atlanta Fed's research department.