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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


April 16, 2015

Southeast Manufacturing: Solid as an Oak

When I was a kid, I spent a few fall afternoons cutting and splitting firewood with my older brother. I must say that I didn't care for the process at all. It was hard work, and I have much respect for people that carry on the time-honored tradition. I learned quickly that there were certain types of wood you wanted to stay away from. Oak was one of them. Now, I am ashamed to say that I didn't pay close attention when collecting tree leaves for science class, but I always knew when I was trying to split a piece of oak. As a matter of fact, when I would come across a piece of oak, I preferred to skip over it. Oaks are strong and stately trees and no fun at all to split. The March Southeastern purchasing managers index (PMI) report, released on April 6, reminded me of my ill-fated attempts to split oak. It is one tough piece of wood.

The Atlanta Fed's research department uses the Southeast PMI to track regional manufacturing activity. The Econometric Center at Kennesaw State University produces the survey, which analyzes current market conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates that activity is contracting.

The March Southeast PMI's overall index declined slightly from February, falling 2.5 points to 58.0 (see the chart). However, the index has remained above the 50 threshold for expansion 14 out of the last 15 months. It also averaged a solid 58.0 during the first quarter.

  • The new orders subindex fell 6.6 points to 56.9.
  • The production subindex decreased 2.9 points compared with the previous month and now reads 61.8.
  • The employment subindex declined 9.2 to 57.8. The March report indicated that manufacturing payrolls have now grown for 18 consecutive months.
  • The supplier deliveries subindex increased 1.2 points to 54.9.
  • The finished inventory subindex increased 5.2 points to 58.8.
  • The commodity prices subindex rose 4.8 points and now reads 40.2.

Southeast Purchasing Managers Index

Optimism for future production also increased in March. When asked for their production expectations during the next three to six months, 53 percent of survey participants expected production to be higher going forward, compared with 46 percent in February.

Much of the recent national manufacturing data have been weak. In March, the industrial production report indicated that manufacturing output increased 0.1 percent during February, but output had declined in the previous two months. New orders for core capital goods also declined for the sixth consecutive month in February and the March ISM index, although still indicating expansion, fell to its lowest reading since May 2013. Some analysts believe cold weather and the strong dollar are affecting overall manufacturing activity.

Despite the recent weak national numbers, southeastern manufacturing appears to be holding strong...just like the oak trees I tried to split as a kid. If you've never split wood—and especially a piece of oak—try it sometime. I doubt it will make your top-five list of things to do. Oak is one tough piece of wood.


March 12, 2015

Southeast PMI Surges in February

The Southeast purchasing managers index (PMI) report was released on March 5, and it indicates that any lingering effects from the late 2014 manufacturing slowdown have abated. If you recall, the December Southeast PMI dipped into contraction territory, but it has rebounded nicely since. The PMI index has risen 14.9 points since December and now sits at its highest reading since April 2014.

The Atlanta Fed's research department uses the Southeast PMI to track southeastern manufacturing activity. The Econometric Center at Kennesaw State University produces the survey, which provides an analysis of current conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates contracting activity.

The Southeast PMI's overall index rose 4.9 points to 60.5 in February (see the chart). The subindexes also suggest some positive future developments:

  • The new orders subindex rose to 63.4, a 6.0 point increase over January and a 29.4 point increase over the last two months.
  • The production subindex increased 3.5 points over the previous month and now reads 64.6.
  • The employment subindex rose 7.8 points over January to 67.1, indicating that manufacturing payrolls grew for the 17th consecutive month.
  • The supply deliveries subindex increased 1.8 points from the previous month to 53.7.
  • The finished inventory subindex increased 5.5 points compared with January.
  • The commodity prices subindex fell 1.7 points and now reads 35.4.

Southeast Purchasing Managers Index

Optimism for future production fell in February. When asked for their production expectations during the next three to six months, 46 percent of survey participants expected production to be higher going forward, compared with 61 percent in January. The good news is that no survey respondents expect production to be lower than their current levels during the same time period.

The change in energy prices and severe winter weather are just a couple of challenges manufacturing faces. Some isolated reports of reduced orders from manufacturers closely tied to the energy sector have emerged, but on the other hand, the drop in oil prices has other contacts saving money on fuel costs. However, most contacts in the Southeast have expressed little direct energy-related effect on their business activity. Judging by the February PMI report, southeastern manufacturing is holding strong. We'll see if the positive momentum sustains into spring.


February 13, 2015

Southeastern Manufacturing Sees No Shadow

In a January SouthPoint post, I suggested that winter posed problems for manufacturing last year, and after the release of December's lackluster Southeast Purchasing Managers Index (PMI) report, it appeared that 2015 might get off to a slow start as well. Then the really disconcerting news hit: America's favorite groundhog saw its shadow on February 2, predicting six more weeks of winter. Would this event affect southeastern manufacturing going forward? According to the January Southeast PMI report, released on February 6, the answer was a resounding no!

The Atlanta Fed's research department uses the Southeast PMI to track manufacturing activity in the Southeast. Econometric Center at Kennesaw State University produces the survey. It provides an analysis of current market conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates that activity is contracting.

After contracting in December for the first and only time in 2014, the Southeast PMI bounced back with vigor in January (see the chart). The overall reading rose 10.0 points over December to 55.6 and saw a healthy rise in most subindexes.

  • The new orders subindex rebounded 23.4 points over December, seeing the subindex increase to a solid 57.4 reading.
  • The production subindex also saw a significant gain over last month, rising 21.1 points to a 61.1 reading.
  • The employment subindex rose 5.3 points over December and remained in expansionary territory for the 16th consecutive month, suggesting that manufacturing payrolls continue to grow.
  • The supplier deliveries subindex increased 1.9 points from the previous month to 51.9.
  • The finished inventory subindex fell 1.9 points compared with December. The 48.1 reading suggests that inventories may be slightly below optimal levels, and production could ramp up in the near term as a result.
  • The commodity prices subindex continued its slide, falling another 5.0 points compared to last month.

Se-purchasing-managers

Optimism was at healthy levels in January as well. When asked for their production expectations during the next three to six months, 61 percent of survey participants expected production to be higher going forward.

The January report was a nice reversal from the December data and provides a strong start to 2015. Hopefully, the momentum will carry over to the entire year. Although we love Punxsutawney Phil as much as anyone, we hope his weather forecast doesn't hamper manufacturing activity. So far in 2015, there are no shadows in the Southeast.

By Troy Balthrop, a senior Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch

January 15, 2015

O Manufacturing, Is Winter Thy Enemy?

While in high school, I really enjoyed studying Shakespearean literature. Not because I liked the plays so much, but because I enjoyed trying to speak Shakespearean. It became a go-to move when I was trying to aggravate my mother. "Mom, would thee please passeth the potatoes ere I starve to death?" My mother would look at me with complete exhaustion but would always pass the potatoes.

While mulling over the data from the December Southeast purchasing managers index (PMI) report released on January 5, I was reminded of last winter and a Shakespeare quotation. A partial line from his play As You Like It read, “Here shall he see no enemy but winter and rough weather” (act 2, scene 5). If you remember, last winter’s weather caused problems for manufacturing activity across much of the country. According to the Southeast PMI, December had been a lackluster month for regional manufacturing activity for several years, and 2014 was no different.

The Atlanta Fed’s research department uses the Southeast PMI to track regional manufacturing activity. The Econometric Center at Kennesaw State University produces the survey. It provides an analysis of current market conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates that activity is contracting.

After indicating expansion every month this year, the overall PMI fell below the 50 threshold for expansion in December (see the chart). All underlying variables in the December PMI report fell except for finished inventories. In some cases the decreases were significant. The PMI decreased to 45.6, which was a 12.7 point drop compared with November.

  • The new orders subindex fell below the 50-point threshold for expansion for the first time since January, decreasing 27.0 points compared with the previous month.
  • The production subindex fell 19.8 points compared with November, also falling below the 50-point threshold for expansion.
  • The employment subindex fell 10.6 points from November but remained in expansionary territory for the fifteenth consecutive month.
  • The supply deliveries subindex decreased 7.3 points from the previous month to 50.0, which represents no change in activity.
  • The finished inventory subindex inched up 1.2 points compared with November and now also reads 50.0.
  • The commodity prices subindex fell to 42.0, a 10.4 point decrease compared with November.

Southeast-purchasing-managers

However, optimism rose in December versus November. When asked for their production expectations during the next three to six months, 66 percent of survey participants expected production to be higher going forward.

Is it just coincidence that winter began and manufacturing activity slowed? One could point to several other factors for the decrease. Maybe the strong dollar is reducing manufacturing exports, or maybe the fall in oil prices is affecting production activity. It’s still too early to know for sure. Based on optimism for future production, let’s hope it was just a one-month anomaly. The Atlanta Fed will be watching—or in my best Shakespeare, "we shalt be watching."

By Troy Balthrop, a senior Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch

April 16, 2015

Southeast Manufacturing: Solid as an Oak

When I was a kid, I spent a few fall afternoons cutting and splitting firewood with my older brother. I must say that I didn't care for the process at all. It was hard work, and I have much respect for people that carry on the time-honored tradition. I learned quickly that there were certain types of wood you wanted to stay away from. Oak was one of them. Now, I am ashamed to say that I didn't pay close attention when collecting tree leaves for science class, but I always knew when I was trying to split a piece of oak. As a matter of fact, when I would come across a piece of oak, I preferred to skip over it. Oaks are strong and stately trees and no fun at all to split. The March Southeastern purchasing managers index (PMI) report, released on April 6, reminded me of my ill-fated attempts to split oak. It is one tough piece of wood.

The Atlanta Fed's research department uses the Southeast PMI to track regional manufacturing activity. The Econometric Center at Kennesaw State University produces the survey, which analyzes current market conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates that activity is contracting.

The March Southeast PMI's overall index declined slightly from February, falling 2.5 points to 58.0 (see the chart). However, the index has remained above the 50 threshold for expansion 14 out of the last 15 months. It also averaged a solid 58.0 during the first quarter.

  • The new orders subindex fell 6.6 points to 56.9.
  • The production subindex decreased 2.9 points compared with the previous month and now reads 61.8.
  • The employment subindex declined 9.2 to 57.8. The March report indicated that manufacturing payrolls have now grown for 18 consecutive months.
  • The supplier deliveries subindex increased 1.2 points to 54.9.
  • The finished inventory subindex increased 5.2 points to 58.8.
  • The commodity prices subindex rose 4.8 points and now reads 40.2.

Southeast Purchasing Managers Index

Optimism for future production also increased in March. When asked for their production expectations during the next three to six months, 53 percent of survey participants expected production to be higher going forward, compared with 46 percent in February.

Much of the recent national manufacturing data have been weak. In March, the industrial production report indicated that manufacturing output increased 0.1 percent during February, but output had declined in the previous two months. New orders for core capital goods also declined for the sixth consecutive month in February and the March ISM index, although still indicating expansion, fell to its lowest reading since May 2013. Some analysts believe cold weather and the strong dollar are affecting overall manufacturing activity.

Despite the recent weak national numbers, southeastern manufacturing appears to be holding strong...just like the oak trees I tried to split as a kid. If you've never split wood—and especially a piece of oak—try it sometime. I doubt it will make your top-five list of things to do. Oak is one tough piece of wood.


March 12, 2015

Southeast PMI Surges in February

The Southeast purchasing managers index (PMI) report was released on March 5, and it indicates that any lingering effects from the late 2014 manufacturing slowdown have abated. If you recall, the December Southeast PMI dipped into contraction territory, but it has rebounded nicely since. The PMI index has risen 14.9 points since December and now sits at its highest reading since April 2014.

The Atlanta Fed's research department uses the Southeast PMI to track southeastern manufacturing activity. The Econometric Center at Kennesaw State University produces the survey, which provides an analysis of current conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates contracting activity.

The Southeast PMI's overall index rose 4.9 points to 60.5 in February (see the chart). The subindexes also suggest some positive future developments:

  • The new orders subindex rose to 63.4, a 6.0 point increase over January and a 29.4 point increase over the last two months.
  • The production subindex increased 3.5 points over the previous month and now reads 64.6.
  • The employment subindex rose 7.8 points over January to 67.1, indicating that manufacturing payrolls grew for the 17th consecutive month.
  • The supply deliveries subindex increased 1.8 points from the previous month to 53.7.
  • The finished inventory subindex increased 5.5 points compared with January.
  • The commodity prices subindex fell 1.7 points and now reads 35.4.

Southeast Purchasing Managers Index

Optimism for future production fell in February. When asked for their production expectations during the next three to six months, 46 percent of survey participants expected production to be higher going forward, compared with 61 percent in January. The good news is that no survey respondents expect production to be lower than their current levels during the same time period.

The change in energy prices and severe winter weather are just a couple of challenges manufacturing faces. Some isolated reports of reduced orders from manufacturers closely tied to the energy sector have emerged, but on the other hand, the drop in oil prices has other contacts saving money on fuel costs. However, most contacts in the Southeast have expressed little direct energy-related effect on their business activity. Judging by the February PMI report, southeastern manufacturing is holding strong. We'll see if the positive momentum sustains into spring.


February 13, 2015

Southeastern Manufacturing Sees No Shadow

In a January SouthPoint post, I suggested that winter posed problems for manufacturing last year, and after the release of December's lackluster Southeast Purchasing Managers Index (PMI) report, it appeared that 2015 might get off to a slow start as well. Then the really disconcerting news hit: America's favorite groundhog saw its shadow on February 2, predicting six more weeks of winter. Would this event affect southeastern manufacturing going forward? According to the January Southeast PMI report, released on February 6, the answer was a resounding no!

The Atlanta Fed's research department uses the Southeast PMI to track manufacturing activity in the Southeast. Econometric Center at Kennesaw State University produces the survey. It provides an analysis of current market conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates that activity is contracting.

After contracting in December for the first and only time in 2014, the Southeast PMI bounced back with vigor in January (see the chart). The overall reading rose 10.0 points over December to 55.6 and saw a healthy rise in most subindexes.

  • The new orders subindex rebounded 23.4 points over December, seeing the subindex increase to a solid 57.4 reading.
  • The production subindex also saw a significant gain over last month, rising 21.1 points to a 61.1 reading.
  • The employment subindex rose 5.3 points over December and remained in expansionary territory for the 16th consecutive month, suggesting that manufacturing payrolls continue to grow.
  • The supplier deliveries subindex increased 1.9 points from the previous month to 51.9.
  • The finished inventory subindex fell 1.9 points compared with December. The 48.1 reading suggests that inventories may be slightly below optimal levels, and production could ramp up in the near term as a result.
  • The commodity prices subindex continued its slide, falling another 5.0 points compared to last month.

Se-purchasing-managers

Optimism was at healthy levels in January as well. When asked for their production expectations during the next three to six months, 61 percent of survey participants expected production to be higher going forward.

The January report was a nice reversal from the December data and provides a strong start to 2015. Hopefully, the momentum will carry over to the entire year. Although we love Punxsutawney Phil as much as anyone, we hope his weather forecast doesn't hamper manufacturing activity. So far in 2015, there are no shadows in the Southeast.

By Troy Balthrop, a senior Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch

January 15, 2015

O Manufacturing, Is Winter Thy Enemy?

While in high school, I really enjoyed studying Shakespearean literature. Not because I liked the plays so much, but because I enjoyed trying to speak Shakespearean. It became a go-to move when I was trying to aggravate my mother. "Mom, would thee please passeth the potatoes ere I starve to death?" My mother would look at me with complete exhaustion but would always pass the potatoes.

While mulling over the data from the December Southeast purchasing managers index (PMI) report released on January 5, I was reminded of last winter and a Shakespeare quotation. A partial line from his play As You Like It read, “Here shall he see no enemy but winter and rough weather” (act 2, scene 5). If you remember, last winter’s weather caused problems for manufacturing activity across much of the country. According to the Southeast PMI, December had been a lackluster month for regional manufacturing activity for several years, and 2014 was no different.

The Atlanta Fed’s research department uses the Southeast PMI to track regional manufacturing activity. The Econometric Center at Kennesaw State University produces the survey. It provides an analysis of current market conditions for the manufacturing sector in Alabama, Georgia, Florida, Louisiana, Mississippi, and Tennessee. The PMI is based on a survey of representatives from manufacturing companies in those states and analyzes trends concerning new orders, production, employment, supplier delivery times, and inventory levels. A reading above 50 indicates that manufacturing activity is expanding, and a reading below 50 indicates that activity is contracting.

After indicating expansion every month this year, the overall PMI fell below the 50 threshold for expansion in December (see the chart). All underlying variables in the December PMI report fell except for finished inventories. In some cases the decreases were significant. The PMI decreased to 45.6, which was a 12.7 point drop compared with November.

  • The new orders subindex fell below the 50-point threshold for expansion for the first time since January, decreasing 27.0 points compared with the previous month.
  • The production subindex fell 19.8 points compared with November, also falling below the 50-point threshold for expansion.
  • The employment subindex fell 10.6 points from November but remained in expansionary territory for the fifteenth consecutive month.
  • The supply deliveries subindex decreased 7.3 points from the previous month to 50.0, which represents no change in activity.
  • The finished inventory subindex inched up 1.2 points compared with November and now also reads 50.0.
  • The commodity prices subindex fell to 42.0, a 10.4 point decrease compared with November.

Southeast-purchasing-managers

However, optimism rose in December versus November. When asked for their production expectations during the next three to six months, 66 percent of survey participants expected production to be higher going forward.

Is it just coincidence that winter began and manufacturing activity slowed? One could point to several other factors for the decrease. Maybe the strong dollar is reducing manufacturing exports, or maybe the fall in oil prices is affecting production activity. It’s still too early to know for sure. Based on optimism for future production, let’s hope it was just a one-month anomaly. The Atlanta Fed will be watching—or in my best Shakespeare, "we shalt be watching."

By Troy Balthrop, a senior Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch