Survey of Tenth
District Manufacturing
by
Chad R. Wilkerson
Manufacturing activity in the Tenth Federal Reserve District
continued to expand in August. The year-over-year production index was
near a record high, and expectations for future factory activity remained
very strong. In addition, future hiring plans improved. The year-over-year
price indexes, though still high by historical standards, eased slightly,
and expectations for future price increases also moderated somewhat. Most
month-over-month indexes continued to rise, but the monthly data are not
seasonally adjusted, so caution must be taken in basing analyses on
month-to-month comparisons.
The net percentage of firms reporting
year-over-year increases in production rose from 46 in July to 50 in
August, only slightly below June’s record high of 51 (Tables 1 & 2).
The slight increase in August was due to a modest improvement at
nondurable-goods-producing firms. Durable goods production also remained
well above year-ago levels. Although sample sizes make it more difficult
to draw firm conclusions about individual states, the data available
suggest that production was above year-ago levels throughout the district.
Most other year-over-year indexes of factory activity improved or
remained at high levels in August. The shipments index rose to a new
survey high, the new orders index matched its previous high, and the
employment index increased moderately after easing for the first time in
six months in July. Both of the inventory indexes rose markedly. Indeed,
the index for inventories of raw materials rose to its highest level in
six years, and the index for inventories of finished goods was solidly
positive after dipping below zero in July. The capital expenditures index
was virtually unchanged, while the indexes for backlog of orders and
supplier delivery times both fell somewhat after rising to record levels
in July.
The year-over-year price indexes both fell somewhat in
August after rising to new highs in July. The raw materials price index
fell from 82 to 73 but was still higher than in June. Similarly, the
finished goods price index eased from 42 to 37 but remained higher than
June’s reading.
Plant managers’ expectations for future factory
activity remained very strong. The six-month-ahead production index edged
down to 39 from 40 in July, but the future indexes for shipments, new
orders, and capital spending all rose slightly. In a further sign of
confidence on the part of manufacturers, the future employment index
jumped from 15 to 30. The future price indexes both fell after rising
somewhat in July. The future raw materials price index edged down slightly
but remained very high at 55. Meanwhile, the future finished goods price
index dropped to 20, the lowest reading since January.
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