May 1996 (April data)

Embargoed until 10 a.m. May 14, 1996**


According to the monthly survey conducted by the Federal Reserve Bank of Atlanta, the share of southeastern manufacturers reporting gains in production jumped noticeably in April. Gains were also observed in shipments and new orders. Outlook indicators for production, shipments and new orders fell after generally improving in February and March from a sharp decline in January. Price indexes--current and expectations--increased from record or near-record lows in recent months.

In April, the proportion of survey respondents reporting increased production jumped to 33 percent from 27 percent in March, while the share of reported declines dropped to 22 percent from 31 percent the month before. Consequently, the diffusion index for production moved to a plus 11 reading in April from minus 4 in March. This index reached its highest level in over a year. The indexes for shipments and new orders also improved but by a smaller amount. However, the new orders index was positive for the first time in eight months. The diffusion index for the number of employees was little-changed and slightly negative as it has been for the last year. The average work week index edged back into positive territory for the first time since November 1995.

The diffusion index for prices received for finished products rose in April but remained negative at minus 9, compared with the series low of minus 14 in March. Seventy-one percent of respondents reported no change; 10 percent, an increase; and 19 percent, a decrease. However, the prices paid index jumped to 14 from the series low of minus 2 in March. Sixty-three percent of respondents reported no change in raw materials prices.

Expectations for future manufacturing activity slipped. The production index declined to 20 in April from 33 in March but remained above the series low of 15 set in January 1996. Forty-three percent of respondents expect higher output in six months, compared with 52 percent in March. Expectations for shipments, new orders, and backlogs also declined but remained above January lows. In the negative range for the fourth month in a row, the employment outlook index continued to slip, but the average workweek expectations index improved slightly. The index for capital investment plans improved further from January's series low. Indexes for expected prices in six months rose in April but remained at low levels.

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: April 1996