August 1996 (July data)

Embargoed until 10 a.m. Aug. 13, 1996**


According to the monthly survey conducted by the Federal Reserve Bank of Atlanta, the share of southeastern manufacturers reporting gains in production rose in July after slipping in June. Shipments also rose but to a lesser degree. Reports of increases in new orders and backlogs declined. Most outlook indicators dropped in July after a slight rebound in June. Both current price indexes rose but remained low, while outlook price indexes edged down from already low levels.

In July the proportion of survey respondents reporting increased production rose to 33 percent from 30 percent in the previous month. The share of respondents reporting a decline in production dropped from 33 percent in June to 24 percent in July. Consequently the diffusion index for production rose to 9 from minus 3 in June. The diffusion index for shipments also improved, moving from minus 6 to positive 3. In contrast, the index for new orders dropped into negative territory after three consecutive months at 9. The index for order backlogs declined, remaining negative for the eighteenth consecutive month, as June was revised down to a slight negative. Both labor force diffusion indexes showed slight improvement. The index for the number of employees improved for the third consecutive month. Meanwhile, the diffusion index for the average workweek also rose and was in the positive range for the fourth month in a row.

The diffusion indexes for both prices received and prices paid rose in July. However, they remain well below levels seen in 1994 and 1995.

Indexes of expectations for future manufacturing activity fell sharply in July after a slight gain in June. The production index declined to 20 in July from 34 in June. Expectations indexes for shipments, new orders, backlogs, employment, and average workweek also dropped. However, the outlook index for capital expenditures rose slightly. This index has been slowly rising since the series low set this past February. The index for expected finished goods prices slipped in July after jumping in June to its highest level since March 1995. The expected materials prices index dropped to its lowest level in the four and a half year history of the survey.

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 the article by R. Mark Rogers "Tracking Manufacturing: The Survey of Southeastern Manufacturing Conditions," in the September/October 1992 issue of the Federal Reserve Bank of Atlanta's Economic Review.

**For reprints and historical data, see on the World-Wide Web or visit the U.S. Commerce Department's Economic Bulletin Board.

Summary of Southeastern Manufacturing Conditions: July 1996