Regional Update (January-March 1996)

Index The state of the states Southeastern manufacturing survey Southeastern economic indicators

Cover Story - New President to Guide Atlanta Fed Through Era of Change

Federal Reserve System Serves Three-Tiered Mission

Atlanta Fed to Build New Headquarters

Manufacturing Survey
Production Dips in Fourth Quarter

ince December 1991, the Atlanta Fed has conducted a monthly survey of manufacturing conditions in the Southeast. The survey covers the Sixth Federal Reserve District, which consists of Alabama, Florida, and Georgia and portions of Louisiana, Mississippi, and Tennessee. The plants surveyed represent a cross-section of industries in the region.

Current Conditions

Overall, indexes of production declined from the third to the fourth quarter of 1995 while respondents reported that price pressures remained subdued, according to southeastern manufacturers surveyed by the Federal Reserve Bank of Atlanta. Nearly 26 percent of those polled reported an increase in production in the fourth quarter, compared with 30 percent in the previous quarter. The share of respondents reporting a decline in production was 33 percent, measured against 27 percent in the third quarter. The diffusion index for production dropped to -7.0 from +2.4 in the third quarter. Similarly, indexes for shipments, new orders, and number of employees declined as well. Backlogs changed little from quarter to quarter but remained near series lows. Indexes for materials and for finished product inventories declined again in the fourth quarter.

Employment indicators remained in negative territory during the fourth quarter with the diffusion index for the number of employees reaching -11.4, its lowest level since the middle of 1993 when it stood at -12.1. However, most respondents continued to report no change in length of workweek and number of employees.

Most respondents continued to report no change in either prices received for finished goods or prices paid for raw materials. However, recent price data were mixed. The prices received index fell to -5.5, its lowest level since the second quarter of 1993, while the prices paid index was relatively stable from quarter to quarter.


Expectations indexes for future manufacturing activity generally declined in the fourth quarter. For the latest period, 50 percent of manufacturers surveyed anticipated an increase in production in the coming months compared with 53 percent in the third quarter. Similarly, in the fourth quarter, 19 percent expected a decline compared with 17 percent in the prior quarter. As a result, the diffusion index for production fell. Expectations indexes for new orders and shipments also declined.

The workweek expectations index climbed to 3.5, its highest level since the first quarter of 1994. Employment expectations were relatively stable from quarter to quarter.

The outlook index for prices received for finished goods remained fairly stable while the prices paid for raw materials index dropped noticeably from 31.3 in the third quarter to 21.1 in the fourth quarter, a new series low.

Summary of Southeastern Manufacturing Conditions, December 1995 (revised)
Seasonally Adjusted
December vs. November
Six Months from December
Southeastern Plant Indicators Decrease No
Increase Diffusion
Decrease No
Increase Diffusion
Production 33.0 41.1 25.9 -7.0 18.9 31.1 50.0 31.1
Volume of shipments 36.0 37.0 27.0 -9.0 18.3 31.6 50.1 31.8
Volume of new orders 37.2 38.2 24.6 -12.6 18.8 34.8 46.3 27.5
Backlog of orders 35.9 45.0 19.1 -16.8 20.3 50.8 28.9 8.6
26.1 53.9 20.1 -6.0 25.2 56.8 18.0 -7.2
Finished goods
28.4 42.8 28.8 0.4 31.9 50.8 17.2 -14.7
Number of employees 22.4 66.6 11.0 -11.4 21.1 56.6 22.3 1.2
Average employee workweek 22.3 61.0 16.7 -5.6 15.0 66.3 18.7 3.7
Prices received for finished product2 14.2 77.2 8.7 -5.5 17.5 52.8 29.7 12.2
Prices paid for raw materials 10.3 67.4 22.4 12.1 16.8 45.3 37.9 21.1
Capital expenditures -- -- -- -- 13.3 56.0 30.8 17.5
New orders for exports 12.0 73.7 14.3 2.4 7.1 67.7 25.3 18.2
Supplier delivery time3 7.4 87.7 4.9 2.5 2.4 86.8 12.1 -9.7
Industry business activity, national 37.2 49.1 13.7 -23.5 16.9 42.7 40.3 23.4
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 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 128 respondents. Figures may not sum exactly to 100 because of rounding. December and revised November tables are available on the U.S. Department of Commerce Bulletin Board. For background on the Survey of Southeastern Manufacturing Conditions, see "Tracking Manufacturing: The Survey of Southeastern Manufacturing Conditions." Click here for historical data, or visit the U.S. Commerce Department's Economic Bulletin Board.

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