Survey of Tenth District Manufacturers
by Chad R. Wilkerson
Manufacturing activity in the Tenth Federal Reserve District remained very strong in June. The year-over-year indexes for production and shipments reached new record highs, and expectations for future factory activity increased solidly. The year-over-year and future finished goods price indexes were unchanged after falling slightly in May from record highs in April, while the year-over-year and future raw materials price indexes both edged down for the second month in a row. Nearly all of the month-over-month indexes increased again in June, but the monthly data are not seasonally adjusted, so caution must be taken in basing analyses on month-to-month comparisons. Until several years of monthly data are available for seasonal adjustment, this report will focus primarily on changes in activity versus a year ago.
The net percentage of firms reporting year-over-year increases in production jumped from 35 in May to 51 in June, the highest reading in the history of the survey (Tables 1 & 2). Activity at both durable- and nondurable-goods producing plants rose strongly and, although sample sizes make it more difficult to draw firm conclusions about individual states, the data available suggest that production was well above year-ago levels in all district states.
Similar to the production index, most other year-over-year indexes of factory activity were very high in June. Indeed, the shipments and workweek indexes both rose to new survey highs. Moreover, the indexes for new orders, backlog, and supplier delivery time were down only slightly from the record highs reached in recent months. The employment and capital spending indexes remained well above zero, and the inventories of finished goods index was slightly positive for the second month in a row.
The year-over-year price indexes, although no longer at record levels, remained quite elevated by historical standards. The finished goods price index held steady at 34, down only slightly from the record high of 37 reached in April. The raw materials price index fell slightly for the second month in a row but still remained higher than before the April surge in prices.
Plant managers’ expectations for factory activity six months down the road rose solidly in June after easing somewhat in May. The future production index rose from 36 to 48, and the future new orders index jumped from 28 to 47. Both indexes are down only slightly from the record highs reached in the fourth quarter of 2003. The future shipments, backlog, and workweek indexes also rose in June. On a less positive note, the future hiring and capital spending indexes both eased slightly after falling by a larger amount in May. Even so, both indexes remain well above zero. Readings for the six-month-ahead price indexes were similar to those of the year-over-year price indexes. The future finished goods price index was unchanged at 28 after peaking in April, while the future raw materials price index eased for the second month in a row.
|
