Regional Update (July-September 1996)

Index The state of the states Southeastern manufacturing survey Views from the region Southeastern economic indicators

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Manufacturing Survey
Signs of Improvement in Overall
Weak Second 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 includes Alabama, Florida, Georgia, and portions of Louisiana, Mississippi, and Tennessee. The plants surveyed represent a cross-section of industries in the region.

Current conditions

Overall, the production index remained weak in the second quarter of 1996, but there were signs of improvement. About 30 percent of southeastern manufacturers surveyed reported that production increased at the end of the second quarter, compared with 27 percent at the end of the first quarter. The share that reported a decline in production was 33 percent, compared with 31 percent in March. The diffusion index improved to -2.7 in June from -4.0 in March. Indexes for new orders, backlogs, number of employees, average workweek, prices received for finished goods, and prices paid for raw materials also increased during the second quarter. Materials and finished goods inventories remained at low levels.

Employment indicators turned positive during the second quarter. The number-of-employees index reached 4.9, its highest level since the first quarter of 1995. Similarly, the average workweek index in the second quarter rose to its highest level since the end of 1994. However, the improvement is modest as most respondents continue to report no change in length of workweek and number of employees.

The majority of respondents continued to report no change in either prices received for finished goods or prices paid for raw materials, although price indexes increased. The prices-received index rose to -5.4 in June from -14.1 in March, its lowest level since January 1992. The prices-paid index reached 9.9 in the second quarter after dipping into negative territory in the first quarter at -1.5.


Expectations for future manufacturing activity during the second quarter were essentially unchanged from the first quarter. Fifty-four percent of manufacturers surveyed anticipate an increase in production activity in the coming months, compared with 52 percent in the first quarter. The share expecting a decline in production was 21 percent, measured against 19 percent in the first quarter. The production index from end-of-quarter to end-of-quarter was little changed. The index registered 33.7 in the second quarter compared with 33.4 in the first quarter. Expectations for shipments declined while new orders remained stable on a quarter-to-quarter basis.

The expected number-of-employees index reached 9.1 in June, its highest level since April 1996, while the average workweek index declined slightly.

The outlook index for finished goods jumped to its highest level since the first quarter of 1995 while the index for prices paid for raw materials remained stable.

Summary of Southeastern Manufacturing Conditions, June 1996
Seasonally Adjusted
June vs. May
Six Months from June
Southeastern Plant Indicators Decrease No
Increase Diffusion
Decrease No
Increase Diffusion
Production 32.6 37.5 29.9 -2.7 20.5 25.4 54.1 33.7
Volume of shipments 35.9 34.0 30.1 -5.7 21.8 27.2 51.0 29.2
Volume of new orders 27.9 35.1 36.9 9.0 20.3 31.5 48.2 27.9
Backlog of orders 29.7 42.3 28.0 -1.7 20.0 46.8 33.2 13.1
19.0 58.8 22.2 3.2 23.5 54.4 22.1 -1.4
Plant's finished goods
28.6 47.2 24.2 -4.4 26.2 37.9 35.9 9.7
Number of employees 15.3 64.4 20.2 4.9 15.6 59.6 24.8 9.1
Average employee workweek 16.1 62.1 21.8 5.6 20.0 59.2 20.7 0.7
Prices received for finished product2 12.5 80.4 7.1 -5.4 6.4 66.8 26.8 20.4
Prices paid for raw materials 10.9 68.2 20.9 9.9 15.5 54.9 29.5 14.0
Capital expenditures -- -- -- -- 10.0 58.5 31.5 21.4
New orders for exports3 12.7 79.1 8.3 -4.4 5.3 67.0 27.7 22.3
Supplier delivery time4 9.4 85.8 4.7 4.7 6.4 86.2 6.3 0.1
Industry business activity, national 22.6 45.0 32.3 9.7 21.1 36.7 42.1 21.0
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 113 respondents. Figures may not sum exactly to 100 because of rounding. Revised June and July 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.