March 2000 (February data)

For Immediate Release: March 14, 2000


According to the monthly survey of Southeastern manufacturers conducted by the Federal Reserve Bank of Atlanta, most current indicators of manufacturing activity in the region remained flat in February after a notable decline in January. Outlook indicators softened from January but remained well above levels seen during the second half of 1999. Manufacturing still seems to be coming off the robust run-up of activity in the fourth quarter of last year. Expectations of strengthening from current softness, while healthy, are not as robust as in the previous month. Price indexes rose significantly with outlook indexes up sharply.

Output has been very sluggish over the past two months as the current production index in February slipped to 1.2 from 5.9 in January — both well below fourth quarter levels. The proportion of respondents reporting higher production dropped to 29.1 percent in February from 34.7 percent while the proportion reporting lower production actually nudged down to 27.9 percent from 28.8 percent. The share of respondents reporting no change rose by 6.4 percentage points. The shipments index was soft for a second consecutive month after a robust fourth quarter while the new orders index weakened in February after a moderately healthy January. Notably, indexes for materials and for finished goods inventories were down significantly in February after sharp gains in January. This inventory swing may partially explain current production weakness.

Outlook indexes mostly declined in February, following strong gains in January, and remain at relatively strong levels. The outlook index for production fell to 33.2 in February from 41.6 in January. This index level is still about six to 10 percentage points above levels seen during the second half of 1999. Outlook indexes for shipments and for new orders followed a similar pattern. Outlook indexes for material inventories and especially for finished goods inventories fell in February. Both of these indexes were atypically weak compared with levels seen over the past two years.

Most price indexes rose sharply in February. The exception was the current prices received index, which firmed moderately after a decline in January. The current activity prices paid index posted a sharp increase, reaching its highest level since April 1995. The latest number is a continuation of the relatively high levels seen during the second half of 1999. The outlook indexes for prices received and for prices paid continued their rebound started in January as both jumped sharply. The outlook prices received index was at its highest level since January 1995 while the outlook index for prices paid reached its highest level since May 1995. The higher price indexes appear to be largely related to commodity price gains rather than to supply shortages. The supplier delivery time indexes — current and outlook — remained soft, suggesting that supply constraints are not an important factor in recent boosts in price indexes.

Summary of Southeastern Manufacturing Conditions
Diffusion Indexes
Seasonally Adjusted

Current Month Versus Prior Month

   2000 1999

February January (R)

Production 1.2 5.9 27.9
Shipments 3.0 18.6 25.3
New orders 5.3 13.9 12.5
Backlog of orders 0.0 -4.2 5.0
Materials inventories -11.9 20.2 8.8
Inventories of finished goods 2.9 10.6 5.3
Number of employees 2.9 -4.9 1.8
Average workweek -1.8 2.1 8.4
Prices received 3.4 -14.7 15.0
Prices paid 31.5 18.4 21.9
New export orders 7.6 -3.6 3.0
Supplier delivery time 0.0 -3.2 7.8
Industry business conditions -1.4 4.2 12.6

Six Months From Now Versus Current Month

February January (R)

Production 33.2 41.6 24.1
Shipments 32.4 49.8 22.8
New orders 37.9 44.2 18.2
Backlog of orders -6.0 1.1 2.4
Materials inventories -19.9 -18.3 -11.3
Inventories of finished goods -12.8 3.6 -7.8
Number of employees 0.9 10.0 0.0
Average workweek -7.7 -1.2 -5.4
Prices received 30.4 20.5 19.8
Prices paid 41.6 26.4 29.6
Capital expenditures 14.9 10.0 14.3
New export orders 13.6 -3.6 22.1
Supplier delivery time -1.3 -16.1 -1.3
Industry business conditions 16.3 34.5 17.7


 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 "Tracking Manufacturing: The Survey of Southeastern Manufacturing Conditions." Click here for historical data.

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Summary of Southeastern Manufacturing Conditions: February 2000 Data