Business Outlook Survey December 2003 Activity in the region's manufacturing sector continued to expand, according to firms surveyed for this month's Business Outlook Survey. Most indicators pointed to continued expansion, with noteworthy increases recorded in the indexes for new orders, shipments, and employment. Firms reported an increase in input prices this month but no appreciable pressure on prices for their own manufactured goods. Expectations for growth over the next six months remained optimistic, although some indicators fell from their recent high readings. Conditions Continue to Improve The survey's broadest measure of manufacturing conditions, the diffusion index for current activity, increased from 25.9 in November to 32.1 this month. This marked the seventh consecutive month the index has been positive (see Chart). Both the new orders and the shipments indexes showed substantial improvement this month. The new orders index rose 21 points, to 41.8, its highest reading in 23 years. The current shipments index also jumped 14 points, to 41.1. Firms reported higher unfilled orders this month and essentially steady delivery times. The current inventories index was negative for the third consecutive month. There was notable improvement in the manufacturing employment index. It increased appreciably, from 3.3 in November to 21.9 this month. Twenty-seven percent of the firms reported increases in employment, and only 5 percent reported declines. Firms also reported that the average workweek expanded this month, with over one-fifth of the firms reporting a rise in work hours. The current workweek index rose from -1.0 to 18.4. Rise in Input Costs More Widespread This Month Firms reported higher input prices again this month. The index for current prices paid increased from 24.9 to 31.4. The index, which increased for the second consecutive month, has been drifting higher since mid-year. Thirty-five percent of the firms reported paying higher prices for inputs this month, compared with 29 percent last month. Despite higher costs, firms reported little upward pressure on prices for their own manufactured goods. The percentage of firms reporting price increases for their own products (16 percent) exceeds the percentage reporting price decreases (11 percent). Expectations for future price increases have also moved up in recent months. The future prices paid index has increased 13 points in the past two months, and the future prices received index has increased 16 points during the same period. Six-Month Indicators Still Reflect Optimism Overall expectations for the next six months remain optimistic, although most future indicators are lower this month than last month. While the diffusion index for future manufacturing activity decreased from 63.4 to 52.3, it remains at a relatively high level (see Chart). The future new orders index fell 8 points, and the future shipments index fell 5 points. Firms expect unfilled orders to increase over the next six months and delivery times to stay near their current level. More firms expect inventories to rise over the next six months (28 percent) than expect them to decrease (19 percent). Firms' expectations for future employment have shown some moderation in the past several months. Although the percentage of firms expecting to increase employment over the next six months (27 percent) exceeds the percentage expecting to decrease employment (11 percent), the diffusion index for future employment declined 5 points. The future workweek index increased, however, almost 11 points. The diffusion index for future capital spending, however, showed a modest improvement: It increased 6 points. In response to special questions this month, firms indicated what they were expecting in terms of growth in productivity in 2004 (see Special Questions). About 57 percent indicated that they expected productivity to grow between 2 and 3 percent next year, although 32 percent of the manufacturers indicated that the growth rate would be higher. Eighty-four percent of the firms indicated that the expected increase would result from better use of technology, plant, and equipment already in place. Summary Current indicators this month suggest that the pace of growth in the region's manufacturing sector continues to improve. Indicators for new orders, shipments, and employment rose appreciably. Although firms reported higher prices for inputs, prices of manufactured goods have not shown the same upward pressure. In general, manufacturing executives' outlook for future growth continued to be optimistic. ___ The survey's annual historical revisions, which incorporate new seasonal adjustment factors, will be released on January 8, 2004, at noon E.T. The information will be made available at: http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/boshistory.html. Special Questions (December 2003) How much do you expect productivity (output/worker) to increase at your establishment in 2004? Expected Productivity Growth ........Percentage of Respondents 0% 5.6% 1% 5.6% 2% 27.8% 3% 29.1% 4% 9.7% 5% 12.5% 6% or higher 9.7% Total 100% Will this increase result mostly from*: Better use of technology, plant, and equipment already in place 83.6% Introduction of new technology 20.9% Other 10.5% *Percentage exceeds 100% because firms chose more than one category. SUMMARY OF RETURNS December 2003 December vs. November | Six Months from now | December | Prev. | Prev. Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff. Index Index | Index Index | General Busines 25.9 39.5 50.3 7.4 32.1 | 63.4 59.9 25.4 7.6 52.3 Conditions | | New Orders 20.8 48.9 38.5 7.0 41.8 | 60.2 59.3 24.3 7.5 51.8 | Shipments 26.8 44.4 50.0 3.3 41.1 | 58.4 61.2 22.4 7.6 53.6 | Unfilled Orders 9.0 21.3 73.3 3.8 17.5 | 22.1 28.4 59.6 3.1 25.3 | Delivery Times -0.6 8.6 83.2 6.9 1.7 | 14.8 8.1 77.1 6.1 1.9 | Inventories -11.6 11.6 65.7 20.3 -8.7 | 8.4 28.2 41.9 19.2 9.1 | Prices Paid 24.9 35.0 61.1 3.6 31.4 | 30.4 44.8 45.7 2.5 42.3 | Prices Received 3.4 16.4 69.4 11.0 5.5 | 25.4 27.4 62.0 0.5 26.8 | Number of Emp. 3.3 27.0 67.8 5.1 21.9 | 21.6 27.4 55.4 10.7 16.7 | Avg. Emp. Wrkwk -1.0 20.5 75.4 2.1 18.4 | 16.2 31.2 55.8 4.2 27.0 | Capital Ex. -- -- -- -- -- | 17.6 27.9 41.3 4.8 23.1 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through December 12, 2003. November 2003 Activity in the region's manufacturing sector continues to expand, according to firms surveyed for this month's Business Outlook Survey. Although indicators for general activity, new orders, and shipments fell from their October readings, they remain at relatively high levels. Manufacturing executives' outlook for growth over the next six months improved again in November, and many future indicators remain near their highest readings since 1992. Manufacturers Report Growth The survey's broadest measure of manufacturing conditions, the diffusion index for current activity, declined slightly from 28.0 in October to 25.9 and has now been positive for six consecutive months (see Chart). Although some current indicators fell this month, they continue to reflect solid growth in the region's manufacturing sector. The current new orders index, which reached an eight-year high in October, fell eight points and the shipments index fell two points from its reading last month. Both indicators have remained positive for five consecutive months. Firms reported higher unfilled orders this month and essentially steady delivery times. The current inventories index remained negative for the second consecutive month, falling nine points to its lowest reading in nine months. There was little appreciable improvement in manufacturing employment in November. Employment indexes fell from their readings in October but still suggest that labor market conditions have stabilized in the past two months. The percentage of firms reporting increases in employment (18 percent) was greater than the percentage reporting decreases (14 percent). The diffusion index of current employment was positive for the second consecutive month, although it declined slightly from last month. The average workweek was mostly steady this month, after increasing in October. Manufactured Goods Prices Are Near Steady Firms reported higher input prices again this month. The index for current prices paid increased modestly, from 22.3 in October to 24.9 in November. Nearly 29 percent of the firms reported paying higher prices for inputs this month; only 4 percent reported paying lower prices. Despite higher costs, firms reported that prices for their own manufactured goods remained nearly steady. The percentage of firms reporting increases (14 percent) was nearly matched by the percentage reporting decreases (11 percent). The current prices received index fell two points this month. Outlook Remains Optimistic Expectations for future manufacturing growth improved this month. The diffusion index for future manufacturing activity increased from 55.5 to 63.4 in November, close to its 10-year high in September (see Chart). The future new orders index and shipments index showed improvement this month. Firms expect unfilled orders to increase over the next six months and delivery times to be longer. More firms expect inventories to increase over the next six months (24 percent) than expect them to decrease (15 percent). Firms' expectations for future employment growth showed some improvement last month, the future employment index fell from a high of 33.3 in October to 21.6 this month. Thirty percent of the firms indicated that they expect to increase employment over the next six months while only 8 percent indicated they would decrease employment. The outlook for capital spending improved this month. The future capital spending index increased almost eight points to its highest reading in seven months. This month, firms were asked special questions about recent trends in foreign competition and outsourcing of their own business (see Special Questions). Over half of the firms indicated they had lost domestic customers to foreign competition over the last three years. A smaller percentage (26 percent) indicated they had lost foreign customers to foreign competitors over the last three years, and 12 percent indicated that they had gained foreign customers. Twenty-two percent of the manufacturers indicated they have outsourced activities and production abroad, and 71 percent of those firms said the level of outsourcing had increased over the last three years. Finally, 38 percent of the firms reported that their share of inputs from foreign sources had increased over the last three years. Summary Although some current indicators fell modestly from their high levels in October, they continue to suggest that the region's manufacturing sector is expanding. Firms reported that current activity, new orders, and shipments continued to increase. Respondents reported that employment was steady this month. In general, manufacturing executives' outlook continued to be optimistic. Moreover, the outlook for both employment and capital spending has shown signs of recent improvement. Special Questions (November 2003) 1. In the past three years have you lost or gained any domestic customers to foreign competition? Lost 54.5% Gained 2.3% No Change 43.2% TOTAL 100.0% 2. In the past three years have you lost or gained any foreign customers to foreign competition? Lost 25.6% Gained 11.6% No Change 62.8% TOTAL 100.0% 3. Have you outsourced or moved any of your activities (e.g. customer support) or production abroad? Yes 21.6% No 78.4% TOTAL 100.0% If yes, how has this outsourcing changed in the last three years? Increased 70.8% Decreased 0.0% No Change 29.2% TOTAL 100.0% 4. Has the percentage of your inputs from foreign firms changed in the last three years? Increased 37.9% Decreased 2.3% No Change 59.8% TOTAL 100.0% Summary of Returns November 2003 November vs. October | Six Months from now | vs. November | Prev. | Prev. Diff. Inc. No ch. Dec. Diff.| Diff. Inc. No ch. Dec. Diff. Index Index | Index Index | General Busines 28.0 33.1 57.3 7.2 25.9 | 55.5 68.4 17.4 5.0 63.4 Conditions | | New Orders 29.0 36.9 46.9 16.1 20.8 | 50.8 69.0 15.9 8.8 60.2 | Shipments 28.8 37.9 51.0 11.1 26.8 | 50.0 68.5 14.2 10.1 58.4 | Unfilled Orders 7.7 16.7 69.1 7.7 9.0 | 22.4 30.7 55.7 8.7 22.1 | Delivery Times 2.3 9.1 81.2 9.7 -0.6 | 1.3 24.2 61.2 9.4 14.8 | Inventories -2.5 9.9 68.5 21.5 -11.6 | 8.1 23.7 53.9 15.4 8.4 | Prices Paid 22.3 28.9 66.7 4.0 24.9 | 29.8 36.2 53.2 5.8 30.4 | Prices Received 5.4 14.4 74.2 11.0 3.4 | 11.3 32.2 56.8 6.8 25.4 | Number of Emp. 5.5 17.5 68.4 14.1 3.3 | 33.3 29.9 57.2 8.3 21.6 | Avg. Emp. Wrkwk 13.5 10.7 72.5 11.7 -1.0 | 11.1 27.1 54.4 10.9 16.2 | Capital Ex. -- -- -- -- -- | 11.0 21.4 50.0 3.8 17.6 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through November 14, 2003. October 2003 Activity in the region's manufacturing sector improved notably this month, according to firms surveyed for the Philadelphia Fed's Business Outlook Survey. Most indicators pointed to improvement, with noteworthy increases recorded in the indexes for new orders, shipments, and employment. Expectations for growth continue to be optimistic, and an increasing share of firms anticipate expanding employment over the next six months. Current Indicators Show Marked Improvement The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, was positive for the fifth consecutive month and increased significantly from 14.6 in September to 28.0 this month (see Chart). The current new orders index also showed marked improvement, increasing nearly 10 points to 29.0, the highest reading of the index in eight years. The current shipments index also bounded higher, increasing from 13.2 in September to 28.8, its highest reading since November 1999. Survey indicators suggest delivery times and unfilled orders are edging higher-both diffusion indexes increased from their September readings and were positive this month. The current inventories index fell five points and moved below zero for the first time in five months. Overall improvement in manufacturing was also evident in firms' responses regarding employment. The current employment index increased 10 points to 5.5, its highest reading in three years. Although 65 percent of the firms reported no change in employment this month, the percentage reporting an increase in employment (21 percent) was higher than the percentage reporting lower employment (15 percent). Firms also reported continued improvement in the average workweek in October. The workweek diffusion index increased 10 points to 13.5 and has now remained positive for four consecutive months. Higher Input Prices Reported Firms reported higher input prices again this month. The index for current prices paid remained essentially unchanged after rising in August and September. Twenty-five percent of the manufacturers reported paying higher prices for inputs this month; only 2 percent reported paying lower prices. Despite higher costs, firms reported only slightly higher prices of their own manufactured goods. The prices received index increased marginally, to 5.4, but is now at its highest reading in six months. Although the prices received index has drifted slightly higher in recent months, this is ameliorated by the fact that a high percentage of firms (72 percent in October) have been reporting no change in prices of their own goods. Employment Forecast Improves Expectations for future manufacturing growth remain optimistic, although some future indicators fell from their high readings in September. After reaching its highest reading since June 1992 last month, the diffusion index for future manufacturing activity fell 11 points to 55.5 (see Chart). The future new orders and future shipments indexes also fell, but they remain at very high levels. Firms expect unfilled orders to increase over the next six months but delivery times to stay near their current levels. More firms expect inventories to increase over the next six months (25 percent) than expect them to decrease (17 percent). The outlook for employment improved notably in October. The future employment index increased for the second consecutive month, rising almost 13 points. Nearly 41 percent of the manufacturers indicated they would add workers over the next six months; only 7 percent indicated they would make cuts. In special questions this month, firms were asked about the impact of the recent recession on production levels (see Special Questions). Seventy-three percent of the manufacturing firms said they experienced declines in production during the 2001 recession. Among those that experienced declines, only 14 percent said that production had already returned to pre-2001 levels. Over half of the firms that experienced declines expect that production will not return to the pre-recession levels until after the first quarter of 2004. Moreover, a large percentage (44 percent) do not expect production to return to those pre-recession levels in the foreseeable future, for reasons involving competitiveness or long-term declines in their industry. Summary The region's manufacturing sector showed marked improvement in October. Indexes for new orders and shipments have risen significantly over the past two months, suggesting that the pace of recovery is picking up. Employment is also on the rise as suggested by increases in both average workweek and employment indicators. In general, manufacturers continued to be optimistic, and firms provided a more optimistic outlook for employment growth this month. ______________________ Special Questions October 2003 1. Did you experience a decline in production at your plant in the 2001 recession? Yes 72.5 % No 27.5 % 2. If yes, has production at your plant returned to its pre-2001 levels? Yes 14.3% No 85.7% 3. If no to question (2), when do you expect production to return to pre-2001 levels? 2003:IV 1.6% 2004:I 1.6% 2004:II 25.0% 2004:III 21.9% 2004:IV 6.2% Not in the foreseeable future because of: Loss of market share 7.8% Long-term decline in industry 23.4% Other 12.5% Total 100.0% ____________________________ SUMMARY OF RETURNS October 2003 October vs. September | Six Months From Now | vs. October | Prev. | Prev. Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff. Index Index | Index Index | General Busines 14.6 41.4 45.2 13.4 28.0 | 66.2 61.8 29.4 6.3 55.5 Conditions | | New Orders 19.3 41.6 42.2 12.6 29.0 | 66.6 59.1 28.6 8.3 50.8 | Shipments 13.2 40.0 39.7 11.2 28.8 | 65.3 57.2 28.8 7.2 50.0 | Unfilled Orders 6.5 22.2 63.3 14.5 7.7 | 26.2 28.0 60.4 5.6 22.4 | Delivery Times -2.1 12.2 77.9 9.9 2.3 | 11.6 10.1 77.5 8.8 1.3 | Inventories 2.8 16.9 61.5 19.4 -2.5 | 0.9 25.1 51.4 17.0 8.1 | Prices Paid 22.5 24.7 72.4 2.4 22.3 | 26.1 34.1 57.1 4.3 29.8 | Prices Received 4.8 16.5 72.3 11.1 5.4 | 10.0 17.3 72.4 5.9 11.3 | Number of Emp. -4.7 20.5 64.5 15.0 5.5 | 20.5 40.5 47.1 7.2 33.3 | Avg. Emp. Wrkwk 3.5 23.4 64.7 9.9 13.5 | 21.3 21.8 60.4 10.6 11.1 | Capital Ex. -- -- -- -- -- | 9.2 21.6 43.1 10.6 11.0 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through October 10, 2003. September 2003 The region's manufacturing sector improved again this month, according to firms surveyed for the Philadelphia Fed's Business Outlook Survey. Most indicators pointed to some improvement, but overall manufacturing employment declined. Expectations for growth over the next six months rose again in September, and many future indicators are now at their highest readings since 1992. New Orders Are on the Rise The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, continued to reflect expansion, although at a slower rate. The index declined from 22.1 in August to 14.6 this month (see Chart). This is the fourth consecutive month the index has been positive. The current new orders index showed further improvement, increasing 5 points to 19.3 this month, its highest reading in 46 months. The current shipments index dipped slightly from 16.3 in August to 13.2. Indexes from the survey suggest delivery times and inventories were unchanged this month. There was little appreciable improvement in manufacturing employment in September. The current employment index remained negative, although it improved slightly from -8.7 to -4.7. The average workweek has shown some modest improvement in the past several months-the workweek diffusion index remained slightly positive for the third consecutive month. Input Price Index Continues to Rise Firms reported higher input prices this month. The index for current prices paid rose from 16.0 to 22.5 this month, after increasing nearly 23 points in August. Twenty-five percent of the manufacturers reported higher input prices this month; only 3 percent reported lower prices. Despite higher input prices, firms reported only slightly higher prices of their own manufactured goods. The largest percentage of firms (75 percent) reported no change in prices of their own goods, although the prices received index increased from 1.1 to 4.8, its highest reading in five months. Future Indicators Continue to Rise Expectations for future manufacturing growth continue to improve. The diffusion index for future manufacturing activity rose from 62.0 to 66.2, its fourth consecutive increase and highest reading since June 1992 (see Chart). Both the future new orders and future shipments indexes increased 9 points this month. In special questions this month, firms were asked about their production plans for the fourth quarter (see Special Questions). More than 41 percent of the firms indicated that they expect production to increase in the fourth quarter (28 percent expect the rise to be greater than 5 percent). When asked if their production plans had changed over the past few months, 30 percent of the firms indicated that they had recently increased their fourth-quarter production plans; only 10 percent had lowered their plans. Expectations regarding future employment and capital spending continue to reflect a relative degree of caution. The manufacturing executives' six-month outlook for future employment showed only slight improvement this month-the future employment index increased just two points. Although almost 70 percent of the manufacturing executives surveyed expect growth in new orders over the next six months, only 31 percent expect to increase employment and 21 percent expect to increase capital spending. Summary Indicators suggest that the region's manufacturing sector continues to improve. Although the general activity index fell this month, it has remained positive for the fourth consecutive month. Firms report continued growth in new orders and shipments. Firms' expectations for growth over the next six months continued to improve in September, and a significant percentage of firms indicated that they had recently increased their fourth-quarter production plans. Manufacturing executives' outlook for overall activity continued to improve, but their expectations for growth in employment and capital spending have not yet shown significant improvement. Summary of Returns September 2003 September vs. August | Six Months From Now | vs. September | Prev. | Prev. Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff. Index Index | Index Index | General Busines 22.1 30.2 53.1 15.6 14.6 | 62.0 68.0 21.9 1.8 66.2 Conditions | | New Orders 14.6 34.4 47.3 15.1 19.3 | 57.9 69.0 21.6 2.3 66.6 | Shipments 16.3 35.5 41.9 22.3 13.2 | 56.1 66.6 19.7 1.3 65.3 | Unfilled Orders 1.1 17.8 71.0 11.2 6.5 | 20.5 29.7 54.7 3.5 26.2 | Delivery Times 0.5 8.8 77.4 10.9 -2.1 | 0.9 17.1 65.9 5.5 11.6 | Inventories 6.4 19.7 61.6 16.9 2.8 | 2.9 20.4 50.5 19.4 0.9 | Prices Paid 16.0 25.3 71.0 2.9 22.5 | 19.4 28.9 59.8 2.8 26.1 | Prices Received 1.1 14.6 75.1 9.8 4.8 | 8.3 18.9 64.7 8.9 10.0 | Number of Emp. -8.7 16.7 62.0 21.3 -4.7 | 18.3 31.2 49.6 10.7 20.5 | Avg. Emp. Wrkwk 4.7 18.5 65.6 15.0 3.5 | 21.8 26.4 59.0 5.0 21.3 | Capital Ex. -- -- -- -- -- | 14.6 20.6 43.2 11.4 9.2 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through September 12, 2003. Special Questions (September 2003) 1. For the fourth quarter, production and inventories of finished goods, on average, are expected to: Production Inventories % % Decline more than 10% 12.5 11.4 Decline 5-10% 5.0 7.6 Decline less than 5% 5.0 12.7 Stay at current levels 36.2 45.6 Increase less than 5% 13.8 16.4 Increase 5-10% 21.3 3.8 Increase more than 10% 6.2 2.5 TOTAL 100 100 2. In the past several months, have your plans for fourth quarter production: % Increased 30.0 Decreased 10.0 Remained the Same 60.0 TOTAL 100 August 2003 Activity in the region's manufacturing sector improved notably this month, according to firms surveyed for the Philadelphia Fed's Business Outlook Survey. Most indicators of current business improved this month, but overall manufacturing employment declined. Firms reported an increase in input prices this month but near steady prices for their own manufactured goods. Most future indicators suggest that manufacturing executives expect growth in the industry over the next six months. Demand Is on the Rise The diffusion index of current activity increased notably this month, from 8.3 in July to 22.1 in August. The general activity index was negative from March through May but has now been positive for three consecutive months (see Chart). Indexes for shipments and new orders increased this month, and both have registered positive readings for the second month in a row. The new orders index increased 4 points this month, and it has now risen 15 points over the past two months. The current shipments index increased 7 points this month and has risen more than 17 points over the past two months. Unfilled orders and delivery times were reported steady this month--both diffusion indexes are near zero. The current inventory index remained positive for the third consecutive month, increasing slightly from its July reading. Despite the pickup in overall activity, shipments, and new orders, more firms than normal scheduled plant shutdowns and production slowdowns over the past several months (see Special Questions). Thirty-six percent of the firms indicated that they regularly schedule plant shutdowns or production slowdowns during summer months, but 45 percent indicated they did so this year. For those reporting shutdowns this year, around 40 percent indicated that the production decreases were greater than usual. The most common reasons given for scheduled reductions were demand conditions, plant maintenance, and summer vacations The purported improvement in manufacturing conditions this month is not yet resulting in increased employment at the region's manufacturing plants. More firms reported declines in employment (20 percent) than reported increases (11 percent), and the current employment index fell from 0.8 in July to -8.7 this month. The diffusion index for the average workweek, however, remained positive for the second consecutive month. Input Price Index Is Higher Firms reported higher input prices this month but near steady prices for their own manufactured goods. The diffusion index for current prices paid jumped from -6.5 in July to 16.0 this month, with 23 percent of firms reporting higher input prices. However, the prices paid index had dropped 29 points from April to July, reaching its lowest reading in 19 months. Despite higher input prices, firms reported little upward pressure on the prices of their own manufactured goods this month. The largest percentage of firms (83 percent) reported no change in prices of their own manufactured goods, although the prices received index increased from -7.7 in July to 1.1 in August. Optimism Is Spreading Accompanying improved readings for current activity, new orders, and shipments this month, the diffusion index for future economic activity rose from 56.9 in July to 62.0. The index is now at its highest reading since February 1993 (see Chart). The future activity index has climbed over the past six months as fewer firms have reported they expect declines in manufacturing. This month no firms reported they expect declines. Similar optimism is reflected in the outlook for growth in new orders and shipments. On balance, firms expect the level of unfilled orders to increase over the next six months but delivery times to hold steady. The outlook for employment and capital spending was slightly less optimistic this month than last. Although 60 percent of the manufacturing executives expect growth in new orders over the next six months, only 28 percent expect to increase employment, and 20 percent expect to increase capital spending. Summary Indicators over the past several months have suggested that the region's manufacturing sector is on the mend. Firms reported the second consecutive month of increases in new orders and shipments. Although the firms surveyed reported a rise in input prices this month, prices of their manufactured goods remained steady. Manufacturing executives' outlook for overall activity has continued to improve in recent months, but their expectations for growth in employment and capital spending have not yet shown significant improvement. Summary of Results August 2003 August vs. July | Six Months from now | vs. August | Prev. | Prev. Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff. Index Index | Index Index | General Busines 8.3 33.2 55.8 11.1 22.1 | 56.9 62.0 37.2 0.0 62.0 Conditions | | New Orders 10.4 31.2 52.1 16.6 14.6 | 58.7 59.7 34.3 1.8 57.9 | Shipments 9.1 33.1 50.1 16.8 16.3 | 49.4 60.1 32.3 4.0 56.1 | Unfilled Orders 3.5 16.6 66.3 15.5 1.1 | 27.3 24.7 68.7 4.2 20.5 | Delivery Times -5.0 9.9 80.7 9.4 0.5 | -0.4 14.8 69.3 13.9 0.9 | Inventories 5.4 18.6 69.1 12.2 6.4 | -4.3 17.1 64.5 14.2 2.9 | Prices Paid -6.5 23.2 69.1 7.2 16.0 | 22.7 27.9 60.6 8.5 19.4 | Prices Received -7.7 8.5 82.5 7.5 1.1 | 8.8 18.9 68.3 10.7 8.3 | Number of Emp. 0.8 11.2 68.9 19.9 -8.7 | 21.9 27.5 58.3 9.2 18.3 | Avg. Emp. Wrkwk 5.1 15.0 72.9 10.3 4.7 | 23.2 25.7 65.4 3.9 21.8 | Capital Ex. -- -- -- -- -- | 15.6 20.4 55.3 5.8 14.6 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through August 12, 2003. Special Questions (August 2003) Yes No Do you normally schedule plant shutdowns or production slowdowns during the summer months? 36% 64% Did you schedule plant shutdowns or production slowdowns during the summer months this year? 45% 55% If yes, which of the following best characterizes your situation for this June, July, and August? June July August Production decreases greater than usual 41% 37% 44% Production decreases about the about the same as usual 50% 56% 44% Production decreases less than usual 9% 7% 12% NOTE: Firms were asked what the major reasons were for the shutdowns/slowdowns. The most commonly mentioned specific reasons were demand related (53 percent), maintenance (19 percent), and vacations (19 percent). Some firms listed several reasons. July 2003 Activity in the region's manufacturing sector improved modestly this month, according to firms surveyed for this month's Business Outlook Survey. Most indicators pointed to some improvement, with noteworthy increases recorded in indexes for new orders and shipments. The region's manufacturing executives remain generally optimistic that business conditions will improve over the next six months. Most Current Indicators Improve The survey's broadest measure of manufacturing conditions, the current activity diffusion index, increased from 4.0 in June to 8.3 this month. The index turned positive in June, following three months in negative territory (see Chart). Indexes for both shipments and new orders showed similar renewal this month. The current new orders index increased from -0.5 in June to 10.4, its first positive reading in five months. The current shipments index recorded its first positive reading in four months, increasing from -1.2 in June to 9.1 this month. More firms reported increases in unfilled orders than declines for the second consecutive month--another sign of improved activity. The index for delivery times improved moderately but remained negative. The current inventory index remained positive for the second consecutive month. The overall improvement in manufacturing is also evident in firms' responses regarding employment. Although manufacturing employment was virtually steady this month, as evidenced by the current employment index, the index increased 14 points and recorded its first positive reading in eight months. Similarly, the index for the average workweek increased 15 points in July and moved into positive territory for the first time in six months. Lower Prices Reported This Month Eleven percent of the manufacturing firms polled reported declines in prices of their own manufactured goods this month, exceeding the 4 percent that reported higher prices. Although the largest percentage of firms reported steady prices this month (84 percent), the prices received index remained negative for the second consecutive month. Input price pressures were not evident this month. The current prices paid index fell another 12 points to -6.5. The prices paid index has dropped 29 points in three months and is now at its lowest reading in 19 months. Signs of Improving Optimism Along with improved readings for current activity, firms' expectations for future growth showed improvement this month. The future general activity index edged higher, from 52.8 in June to 56.9 this month (see Chart). The percentage of firms expecting increases in activity over the next six months (61 percent) is significantly greater than the percentage expecting declines (only 4 percent). Firms' expectations for new orders and shipments show similar optimism. The outlook for employment and capital spending improved again this month. The future employment index increased for the second consecutive month and is now at its highest reading in 15 months. Twenty-eight percent of the firms indicated that employment would rise in the next six months; only 7 percent indicated that it would fall. The future capital spending index increased 7 points over the past two months, but its current reading is now only slightly above its average reading last year. Responses to special questions this month suggest that increases in employment will occur over the remainder of this year and continue into next year (see Special Questions). Of the firms projecting future growth in sales, 25 percent plan to add workers in the third quarter. An additional 17 percent of those firms will add workers in both the fourth quarter of 2003 and first quarter of 2004; 12 percent would add workers in the second quarter and 29 percent sometime after the second quarter of 2004. Firms' responses also reflected the current low rates of capacity utilization. Among firms that are projecting sales growth and the need to eventually increase capacity, half indicated that increased capacity would not be necessary until after the second quarter of 2004, assuming current sales forecasts are achieved. Nevertheless, some of the firms surveyed will need to increase capacity in each of the next several quarters if forecasts for growth are met. Summary Regional manufacturing showed signs of improvement again this month. Most of the survey's indexes of current performance improved this month and suggest a slight expansion of business. Manufacturing employment was reported steady this month, and on balance, more firms reported declines in prices for inputs and manufactured products. In general, manufacturers continued to be optimistic, and firms also provided a more optimistic outlook for employment growth this month. SPECIAL QUESTIONS (July 2003) What change in sales do you expect for the following quarters? Decrease No Increase Increase Increase Increase Total Change 1-2% 2-4% 4-6% > 6% Q3:2003 15% 31% 13% 19% 9% 13% 100% Q4:2003 13% 22% 20% 20% 16% 9% 100% Q1:2004 8% 18% 23% 30% 14% 7% 100% Q2:2004 1% 13% 27% 35% 13% 11% 100% If these increases occur, when will you need to increase capacity or hire additional workers? Q3:2003 Q4:2003 Q1:2004 Q2:2004 Sometime Total After Q2:2004 Hire Additional Workers 25% 17% 17% 12% 29% 100% Increase Capacity 8% 16% 20% 6% 50% 100% _______________________________________________________________________________ July 2003 Results Table July vs. June | Six Months from now | vs. July | Prev. | Prev. Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff. Index Index | Index Index | General Busines 4.0 26.8 54.7 18.5 8.3 | 52.8 60.7 27.8 3.8 56.9 Conditions | | New Orders -0.5 31.2 48.0 20.8 10.4 | 58.5 62.0 24.1 3.3 58.7 | Shipments -1.2 26.6 56.0 17.5 9.1 | 50.8 54.9 30.4 5.5 49.4 | Unfilled Orders 7.9 19.7 62.5 16.3 3.5 | 22.8 29.1 62.2 1.9 27.3 | Delivery Times -8.0 6.5 81.1 11.5 -5.0 | 0.6 11.1 73.7 11.5 -0.4 | Inventories 7.2 21.6 61.1 16.2 5.4 | -7.7 15.3 55.9 19.5 -4.3 | Prices Paid 5.8 11.2 71.0 17.7 -6.5 | 17.1 28.5 58.6 5.8 22.7 | Prices Received -9.5 3.5 84.3 11.2 -7.7 | 7.6 14.8 68.7 5.9 8.8 | Number of Emp. -12.9 16.4 66.8 15.6 0.8 | 14.8 28.4 59.5 6.5 21.9 | Avg. Emp. Wrkwk -10.1 19.6 64.2 14.5 5.1 | 15.3 28.8 64.3 5.6 23.2 | Capital Ex. -- -- -- -- -- | 12.3 25.4 35.8 9.8 15.6 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through July 10, 2003. June 2003 Activity in the region's manufacturing sector improved modestly, according to firms surveyed for this month's Business Outlook Survey. Most indicators pointed to some improvement over the last two months, and for the first time in four months more firms reported increases in business activity than reported decreases. Expectations for growth over the next six months continue to be optimistic, although the firms' longer-run outlook for capital spending remains subdued. First Positive Reading Since February The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -4.8 in May to 4.0 this month. This is the first positive reading for the index since February (see Chart). The new orders index also edged slightly higher, to near zero this month. Although not yet indicative of growth, the index has now improved in two consecutive months. The shipments index also increased slightly this month to just below zero. Portending some improvement in the near term, more firms reported an increase in unfilled orders than a decline. The current unfilled orders index increased notably from -7.4 in May to 7.9 this month. The index for delivery times improved moderately but remained negative. Inventories increased this month for the first time in six months - the current inventory index rose 14 points, moving into positive territory. Overall weakness in manufacturing, however, continues to be evident in firms' responses regarding employment. The current employment index remained negative and diminished marginally from its reading in May. Firms also reported continued declines in the average workweek this month. Lower Prices Reported This Month Nearly 17 percent of the manufacturing firms polled reported declines in prices of their own manufactured goods this month, exceeding the 7 percent that reported higher prices. The prices received index was negative for the first time in three months. Input price pressures moderated again this month. The current prices paid index fell another three points to 5.8, after falling 14 points last month. The index is now at its lowest reading in 15 months. Firms' expectations regarding future prices for their own manufactured goods increased slightly this month. The future prices paid index, however, declined to its lowest reading in five months. Firms' Expectations Show Marginal Improvement Along with improved readings for current conditions, firms' expectations about future activity also showed improvement. The future general activity index increased to its highest reading in a year (see Chart). The percentage of firms expecting increases in activity over the next six months (61 percent) is significantly greater than the percentage expecting declines (8 percent). Indicators for future new orders and shipments also increased this month, surpassing readings over the last year. Firms see unfilled orders increasing over the next six months, although delivery times are expected to remain steady. Slightly more firms expect declines in inventories than expect increases. The outlook for employment and capital spending also improved this month. Almost 28 percent of the firms anticipate adding workers over the next six months, although 13 percent will trim the number of workers, and the future employment index increased by seven points. On balance, firms continue to expect average work hours to increase over the next six months. The future capital spending index increased by four points in June, but its current reading remains below its average reading last year. Firms were asked about their plans for spending on plant and equipment over the next 12 months (see Special Questions). Over 33 percent of the firms indicated they planned to increase spending on plant and equipment over the next 12 months. About 25 percent, however, plan decreases. For firms planning increased spending, 59 percent cited sales growth as the underlying reason. High utilization rates were cited as another reason by 41 percent of the firms. For firms expecting declines in capital spending, one-half cited slow sales growth as a reason. Cash flow and limited investment needs were each reported as reasons for planned capital spending declines by one-third or more of the firms polled. About 22 percent of the firms cited low utilization rates as the reason for planned capital spending reductions. Summary The region's manufacturing sector showed signs of improvement this month, although overall growth is still not substantial. New orders and shipments are reported flat this month, but general activity is regarded as improved. A larger share of firms reported declines in prices of their own manufactured goods this month, and there is less pressure on input prices. In general, manufacturers are more optimistic, but expectations for employment and capital spending growth are subdued. Special Questions (June 2003) 1. How do you plan to change spending on new plant and equipment over the next 12 months? Increase 33.3% Decrease 24.5% Leave Unchanged 42.2% If you plan to increase spending, when will you place the order? Already placed 41.2% 2003:Q3 26.5% 2003:Q4 26.5% 2004:Q1 5.9% 2004:Q2 0.0% Why are you increasing capital spending?* Sales Growth 58.9% High Utilization 41.2% Investment needs for information technology 14.7% Other Investment needs 17.6% Favorable Financing 5.9% Cash Flow improved 11.8% Tax incentives 0.0% Listed "Other" Reason 20.6% 2. Why do you plan to decrease or leave unchanged capital spending?* Slow sales growth 50.0% Low utilization 22.1% Limited investment needs for information technology 8.8% Limited other investment needs 32.3% Unfavorable financing 1.5% Cash flow not improved 33.8% Listed "Other" Reason 1.5% * Because firms could choose as many reasons that apply, the total exceeds 100 percent. June 2003 June vs. May | Six Months from now | vs. June | Prev. | Prev. Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff. Index Index | Index Index | General Busines -4.8 28.2 44.5 24.2 4.0 | 45.2 60.6 24.8 7.8 52.8 Conditions | | New Orders -3.8 28.2 41.6 28.7 -0.5 | 50.7 65.2 19.5 6.7 58.5 | Shipments -2.3 28.8 40.9 30.0 -1.2 | 46.8 61.9 18.6 11.1 50.8 | Unfilled Orders -7.4 26.0 52.7 18.1 7.9 | 12.9 31.7 50.4 8.9 22.8 | Delivery Times -12.5 9.2 72.7 17.2 -8.0 | 1.0 16.1 59.8 15.5 0.6 | Inventories -7.3 30.9 44.2 23.7 7.2 | -4.0 21.7 42.6 29.4 -7.7 | Prices Paid 8.9 16.4 72.9 10.6 5.8 | 27.3 24.0 62.8 6.9 17.1 | Prices Received 2.1 7.3 76.0 16.7 -9.5 | 3.4 19.2 63.2 11.6 7.6 | Number of Emp. -10.9 11.1 63.8 24.0 -12.9 | 7.5 27.8 52.3 13.0 14.8 | Avg. Emp. Wrkwk -9.1 12.5 59.2 22.6 -10.1 | 15.7 25.0 55.8 9.7 15.3 | Capital Ex. -- -- -- -- -- | 8.4 25.3 43.2 13.0 12.3 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through June 11, 2003. May 2003 The region's manufacturers reported that activity was weak again this month, but there is some evidence that declines have diminished. Indexes of general activity, new orders, shipments, and employment remained negative but improved from their April readings. A smaller percentage of firms reported higher prices for inputs this month, and prices for manufactured goods were nearly steady. Most future indicators continue to suggest a fairly high degree of optimism for growth over the next six months, but the firms' outlook for employment and capital spending growth remains somewhat subdued. Current Indicators Are Less Negative The survey's broadest measure of regional manufacturing conditions, the index of general business activity, improved from -8.8 in April to -4.8 this month. The index, which has remained negative for three consecutive months, suggests an overall, albeit smaller, decline in activity this month (see Chart). Indexes for current shipments and new orders showed a similar pattern this month. The current new orders index increased more than seven points but remained negative for the third consecutive month. Similarly, the current shipments index improved three points but remained negative for the second consecutive month. In special questions this month, firms were asked whether they have experienced any improvement in shipments or new orders associated with the ending of the war in Iraq (see Special Questions). Almost 17 percent of the firms indicated that they have experienced some improvements attributable to the end of hostilities in Iraq. Among those firms citing improvements because of the ending of the war, 33 percent indicated that the improvement was slight, and 60 percent indicated the improvement was moderate. Only 10 percent of the firms indicated that their customers had experienced an improvement in shipments or new orders associated with the ending of the war in Iraq. Other indicators continued to point to the overall weakness in manufacturing conditions. The indexes for delivery times and unfilled orders continued to be negative, confirming general weakness in manufacturing. The index for unfilled orders showed an increase of nearly 12 points, however. But the delivery times index decreased six points. Firms also continued to trim employment. The current employment index remained negative, although it improved marginally from April. Price Pressures Moderate Substantially Input price pressures moderated substantially this month, probably reflecting continued lower prices for fuel and other energy products. The current prices paid index fell nearly 14 points to its lowest reading in 13 months. Only 13 percent of firms noted higher input prices this month, compared with 29 percent indicating higher input prices last month. Firms also reported near steady prices for their manufactured goods. The prices received index, at 2.1, fell six points. Firms' expectations regarding future price increases for their own manufactured goods also moderated substantially this month. The future prices received index, reflecting expectations for the next six months, decreased more than 17 points to its lowest reading since February. Six-Month Forecasts Are Guardedly Optimistic Firms' six-month forecasts remained generally optimistic this month. The future general activity index was essentially unchanged and remains at a relatively high level (see Chart). The percentage of firms expecting increases in activity over the next six months (56 percent) is significantly greater than the percentage expecting declines (11 percent). Indicators for future new orders and shipments increased slightly this month. With regard to production plans for the second half of 2003, however, nearly 44 percent of the firms indicated that their outlook had worsened since the beginning of the year, and only 5 percent indicated an improvement (see Special Questions). Forecasts for employment and capital spending weakened this month. After attaining a five-month high in April, the future employment index was nine points lower this month. The future capital spending index also fell nine points, after showing some improved readings over the previous three months. Summary Manufacturing conditions in the region remain weak, although some indicators showed modest improvement from their readings in April. There were slight declines in new orders and shipments this month. Some early evidence of post-war improvement was provided--17 percent of firms reported an improvement in shipments or new orders associated with the ending of the war, although 83 percent saw no improvement. Firms reported continued declines in employment this month, however. Fewer firms reported increases in prices for inputs this month, and the prices paid index dropped significantly. Prices of manufactured goods are virtually steady this month. Expectations remain generally optimistic, although expectations for employment and capital spending are subdued. May 2003 May vs. April | Six Months from now | vs. May | Prev. | Prev. Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff. Index Index | Index Index | General Busines -8.8 20.1 54.9 24.9 -4.8 | 45.8 56.0 32.2 10.8 45.2 Conditions | | New Orders -11.2 26.2 43.8 30.0 -3.8 | 48.9 60.0 26.8 9.3 50.7 | Shipments -5.7 21.9 54.0 24.2 -2.3 | 43.1 59.1 28.6 12.3 46.8 | Unfilled Orders -19.0 12.5 67.3 19.8 -7.4 | 15.6 23.4 61.7 10.5 12.9 | Delivery Times -6.1 4.4 77.8 16.8 -12.5 | 4.9 11.3 72.6 10.2 1.0 | Inventories -2.7 15.3 61.5 22.6 -7.3 | -3.5 19.0 54.2 23.0 -4.0 | Prices Paid 22.8 13.4 81.9 4.5 8.9 | 20.4 35.6 55.1 8.2 27.3 | Prices Received 8 10.3 81.5 8.2 2.1 | 20.7 19.4 60.3 16.0 3.4 | Number of Emp. -12.5 7.8 73.4 18.7 -10.9 | 16.6 24.6 55.1 17.1 7.5 | Avg. Emp. Wrkwk -6.4 10.0 68.8 19.1 -9.1 | 10.2 25.6 59.5 9.9 15.7 | Capital Ex. -- -- -- -- -- | 17.6 25.4 38.2 17.0 8.4 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through May 10, 2003. Special Questions (May 2003) 1. Have you experienced any improvements in shipments or new orders associated with the ending of the war in Iraq? Yes 16.9% No 83.1% 100.0% If yes, how much improvement: Slight 33.3% Moderate 60.0% Significant 6.7% 100.0% 2. Have any of your customers noted improvement in shipments or new orders associated with the ending of the war in Iraq? Yes 10.3% No 89.7% 100.0% 3. Since January, has the outlook for production at your firm for the second half of 2003: Gotten worse 43.8% Not changed 51.7% Increased 4.5% 100.0% April 2003 The region's manufacturers report weaker activity for the second consecutive month. Indexes of general activity, new orders, and shipments all declined this month. Firms surveyed also reported declines in employment. The manufacturers reported increases in input prices again this month, and a growing percentage reported higher prices for their own manufactured goods. Despite the current weakness in manufacturing, most future indicators, which reflect expectations for the next six months, suggest a fairly high degree of optimism. Current Indicators Show No Improvement The survey's broadest measure of manufacturing conditions in the region, the index of general business activity, declined slightly this month. This represents the fourth consecutive monthly decline in the index and the second consecutive month it has been below zero (see Chart). This is also the first time since December 2001 that the index has remained negative for two consecutive months. The recent weakness in manufacturing is also reflected in the U.S. industrial production index for manufacturing, which registered declines in the most recent two months available (February and March). Both the current new orders index and shipments index recorded notable declines this month. The new orders index fell almost 7 points, after falling more than 18 points last month. In response to special questions this month, 25 percent of the firms reported declines in new orders attributable to the beginning of the war (see Special Questions). Of those reporting some effects of the war on new orders, more than three-quarters reported that the declines were slight or moderate, but 14 percent indicated that they were substantial. The shipments index fell below zero for the first time since December 2001. Negative indexes for delivery times and unfilled orders confirm the weakness in manufacturing. The unfilled orders index fell to its lowest reading in six months. Some Higher Prices Reported The manufacturing firms surveyed reported continued increases in the prices of inputs this month. But the current prices paid index, which reached its highest reading in 29 months in March, moderated slightly in April. About 29 percent of the firms reported higher input prices this month, which is only slightly lower than the 31 percent that reported higher prices in March. Although the recent rise in the prices paid index is largely due to the rise in energy prices, other prices are rising as well. Thirty-four percent of the firms in our survey reported that average prices of non-energy materials have risen since the beginning of the year (see Special Questions). There was a notable rise this month in the prices received index, which turned positive again after a negative reading in March. This month's prices received index is at its highest reading in two years. Nevertheless, a small percentage of the firms surveyed are still experiencing price declines for their products, and 76 percent of the firms reported that the prices of their manufactured goods were steady. Looking ahead, firms expect a continuation of higher costs over the next six months. But the future prices paid index fell substantially after reaching its highest reading in two and one-half years last month. The decline probably reflects expectations of a fallback in energy prices. The future prices received index, however, remained near its reading last month, with nearly 30 percent of the firms expecting increases in the prices of their manufactured goods over the next six months. Expectations Are Little Changed And Optimistic Despite weaker manufacturing conditions in April, expectations remain optimistic and have changed little from the previous month. The future general activity index, which increased substantially from February to March, declined only slightly this month (see Chart). The percentage of firms expecting increases in activity over the next six months (59 percent) is significantly greater than the percentage expecting declines (13 percent). Indicators for future shipments and new orders increased slightly this month. Forecasts for employment also improved this month. The future employment index recorded its best reading in five months. On balance, firms expect average work hours to increase over the next six months. The future capital spending index moderated slightly in April, but its current reading (17.6) is slightly above its average of the past 12 months. Summary The regional manufacturing sector continued to weaken in April, as evidenced by negative readings of the activity, new orders, shipments, and employment indexes. Pressures continued on input prices but moderated slightly from the previous month. More firms reported increases in their own manufactured goods prices this month. Despite the current weakness, manufacturing firms continue to anticipate increases in activity over the next six months, and their employment plans improved this month. ------------------------------------------------------------------------------- Special Questions (April 2003) Have you experienced declines in new orders attributable to the beginning of the war? Yes..........................25% No...........................75% If yes, have declines been: Slight.......................29% Moderate.....................48% Substantial..................14% No response...................9% On average, prices for non-energy materials since the beginning of the year have: Decreased.....................2% Not changed..................64% Increased....................34% ------------------------------------------------------------------------------- April 2003 April vs. March | Six Months From Now | vs. April | Prev. | Prev. Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff. Index Index | Index Index | General Busines -8.0 19.5 52.1 28.3 -8.8 | 46.4 59.0 24.2 13.2 45.8 Conditions | | New Orders -4.3 22.1 44.7 33.2 -11.2 | 45.4 59.6 22.5 10.7 48.9 | Shipments 0.9 26.8 40.7 32.5 -5.7 | 42.5 56.2 24.7 13.1 43.1 | Unfilled Orders -9.5 12.8 55.0 31.8 -19.0 | 12.3 28.2 55.5 12.5 15.6 | Delivery Times -5.5 9.0 72.7 15.1 -6.1 | 6.5 14.9 70.4 10.0 4.9 | Inventories -10.5 21.6 53.8 24.2 -2.7 | 6.7 18.8 54.9 22.3 -3.5 | Prices Paid 25.1 29.2 63.6 6.4 22.8 | 43.1 28.2 55.0 7.8 20.4 | Prices Received -6.2 16.0 76.0 8.0 8.0 | 19.3 29.5 57.5 8.8 20.7 | Number of Emp. -8.8 5.1 77.3 17.6 -12.5 | 6.5 26.8 58.5 10.2 16.6 | Avg. Emp. Wrkwk -12.4 16.5 60.7 22.9 -6.4 | 10.4 20.2 62.5 10.0 10.2 | Capital Ex. -- -- -- -- -- | 20.5 24.9 46.8 7.2 17.6 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through April 10, 2003. March 2003 Activity in the region's manufacturing sector weakened in March, according to firms surveyed for this month's Business Outlook Survey. This represents a deterioration from the basically flat performance in February. Indexes for general activity and new orders declined from their readings in February, and most indicators have weakened over the past two months. Overall employment was reported lower this month, and average work hours also declined. Almost one-third of firms reported increases in input prices this month. There was, however, no accompanying increase in prices of manufactured goods. Despite the weakness in current conditions, expectations for growth over the next six months improved markedly this month. Conditions Weaken This Month The survey's broadest measure of manufacturing conditions, the current activity diffusion index, declined notably, from 2.3 in February to -8.0 this month. This is the third consecutive decline in the index and the first negative reading since October (see Chart). The index has dipped below zero twice before in the past two years, only to recover in the following month. The recent weakness in manufacturing is also reflected in the U.S. industrial production index for manufacturing, which registered a slight decline in the most current month available (February). The index for new orders fell significantly from 14.1 in February to -4.3 this month, the first negative reading since December 2001. The indexes for delivery times and unfilled orders also point to continued weakness. Suggesting a less dramatic deterioration of activity, however, the current shipments index increased slightly this month, but its level, at just above zero, suggests nearly flat levels of shipments for the second consecutive month. Employment in the region's manufacturing sector also registered larger declines this month. The current employment index, which fell from -0.9 to -8.8, is now at its lowest reading since August. The index of average hours also declined this month, falling to its lowest reading since December 2001. Responses to special questions this month suggest that firms have delayed previously planned employment increases, probably because of geopolitical uncertainties (see discussion below). Price Pressures Mount Firms participating in the survey reported continued increases in prices of raw materials and other inputs this month. The current prices paid index increased for the third consecutive month and is now at its highest reading in 29 months. Although the survey does not specifically address the nature of price increases, higher prices for energy boosted national measures of price change at the intermediate goods and wholesale levels over the first two months of 2003. Despite the higher costs noted by some firms, the prices received by area manufacturers were not reported to be higher. More firms reported decreases in prices this month (15 percent) than reported increases (9 percent). This month's prices received index fell back into negative territory, following three months of slightly positive readings. Looking ahead, firms expect a continuation of higher costs over the next six months. The future prices paid index is now at its highest reading in two and one-half years. Area manufacturers expect to see some price increases for their own manufactured goods: over 23 percent of the firms expect to see higher prices for their products over the next six months, and the future prices received index increased substantially this month. Six-Month Indicators Rebound Despite the decline in current activity this month, expectations for future growth improved significantly in March. With the exception of employment, every indicator of future activity showed improvement. The index of future activity rebounded this month, following declines in the previous two months (see Chart). Similar increases were recorded in indexes for future new orders and shipments. Firms also expect unfilled orders to increase and delivery times to lengthen over the next six months. The future inventories index suggests that firms expect inventories to rise from current levels: the future inventories index rose to its highest reading in 11 months. The improved outlook, however, did not carry over to firms' expectations for future employment. Although more firms expect to increase employment than expect to decrease it, the future employment index declined almost 10 points this month and is now at 6.5. The average workweek index increased marginally, however, to 10.4. In response to special questions this month, 33 percent of firms indicated that they have delayed hiring since the beginning of the year (see Special Questions). Most firms that expect to add workers this year indicated that the hiring would take place in the second and third quarters rather than in the fourth. The outlook for capital spending showed some improvement. The future capital spending index rose from 12.9 to 20.5, its highest reading in four months. Although 48 percent of firms indicated that they have delayed capital spending plans since the beginning of the year, the largest percentage of firms expect increases to occur in the second and third quarters. Summary Overall manufacturing conditions in the region weakened this month, as indicators of current performance declined from their February readings. Area manufacturers reported virtually flat shipments this month, and growth of new orders halted. Employment losses were also somewhat greater this month, and firms indicated that both hiring and capital spending increases have been delayed since the beginning of the year. Despite the weakness in current activity, firms' expectations for the next six months improved notably this month; apparently firms anticipate that the current slump in manufacturing will be short-lived. Special Questions (March 2003) For the remainder of 2003 do you plan to: add workers? 42% increase capital spending? 32% If yes, Q2 Q3 Q4 in which quarter(s) will you add workers? 64% 67% 24% in which quarter(s) will you increase capital spending? 64% 76% 32% Notes: Percentages exceed 100% because firms could choose more than one quarter in which an increase is expected to occur. When the same question was posed in December, firms indicated the following employment plans for this year: first quarter (30%); second quarter (63%); third quarter (35%) and fourth quarter (23%). -------------------------------------------------------------------------------- Since the beginning of the year, have you changed the timing: Delayed Accelerated Not changed for adding workers? 33% 9% 57% for increasing capital spending? 48% 5% 48% SPECIAL NOTE: Beginning this month, the Summary of Returns table will include the previous month's diffusion index for each indicator. Also, the order of the columns for "increase" and "decrease" has changed. Summary of Returns March 2003 March vs. February Six Months from now vs. March Previous Inc. No. Ch. Dec. Index Previous Inc. No. Ch. Dec. Index Index Index General Business 2.3 15.8 60.3 23.8 -8.0 24.7 59.7 21.0 13.4 46.4 Conditions New Orders 14.1 24.2 47.3 28.5 -4.3 29.2 59.6 23.1 14.2 45.4 Shipments 0.0 26.6 47.7 25.7 0.9 28.5 56.1 24.2 13.6 42.5 Unfilled Orders -9.1 12.4 65.7 21.9 -9.5 0.1 26.1 52.7 13.9 12.3 Delivery Times -15.5 9.3 75.0 14.7 -5.5 -3.5 18.4 57.4 11.8 6.5 Inventories -15.7 12.1 63.6 22.6 -10.5 -3.8 27.6 45.8 20.9 6.7 Prices Paid 16.2 31.3 60.3 6.1 25.1 35.5 47.6 40.1 4.5 43.1 Prices Received 2.2 8.9 76.1 15.0 -6.2 4.9 23.2 67.2 3.9 19.3 Number of Employees -0.9 9.7 71.0 18.4 -8.8 16.0 22.1 54.1 15.6 6.5 Avg. Employee Workweek -5.1 6.3 75.0 18.7 -12.4 6.8 22.5 58.3 12.1 10.4 Capital Expenditures -- -- -- -- -- 12.9 24.5 40.9 4.0 20.5 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through March 13, 2003. Business Outlook Survey February 2003 Activity in the region's manufacturing sector was mostly flat, according to firms surveyed for this month's Business Outlook Survey. Although one-third of firms reported higher new orders in February, one-fifth reported lower orders, and other indicators suggest no improvement this month. Expectations for growth diminished again in February, although manufacturing executives still expect conditions to improve over the next six months. Current Indicators Fall The diffusion index of current activity declined from 11.2 in January to 2.3 this month (see Chart). Only slightly more firms reported increases in activity this month (22 percent) than reported decreases (20 percent). The shipments index fell significantly this month: from 21.3 in January to zero. New orders, which have shown improvement over the past three months, continued to grow in February. The current new orders index decreased only slightly from 17.3 to 14.1. Nearly 34 percent of the firms reported increases in new orders this month, but 19 percent reported declines. Firms report lower inventories again this month: the inventory index remained negative but improved slightly from -17.3 to -15.7. The unfilled orders index remained negative at -9.1, slightly down from its reading of -1.5 in the previous month. The index for delivery times also fell, from -7.3 to -15.5. Overall employment in the manufacturing sector was steady this month. Seventy percent of firms reported steady employment levels in February, and the percentage of firms reporting declines in employment (15 percent) only slightly exceeded the percentage reporting increases (14 percent). The current employment index remained negative but improved from -6.1 in January to -0.9. However, the index of average hours worked declined this month, from 3.8 in January to -5.1. Prices of Manufactured Goods Remain Steady Firms participating in the survey held prices of their goods mostly steady this month, despite higher costs noted by some firms. Three-fourths of firms reported no change in prices of their own manufactured goods, and the percentage reporting higher prices (12 percent) is nearly offset by the percentage reporting lower prices (10 percent). The prices received index declined from 6.3 in January to 2.2 this month. Despite relatively steady prices received for their own products, many firms continued to report higher costs. The percentage of firms that reported paying higher input prices (21 percent) outpaced the percentage that reported paying lower prices (4 percent). The prices paid index remained positive for the 12th consecutive month, increasing from 11.6 in January to 16.2 this month. Still, the largest percentage of firms (75 percent) reported steady input prices this month. However, there was a notable rise in firms' expectations about price increases over the next six months. The future prices paid index jumped from 11.9 in January to 35.5 this month, although the future prices received index increased modestly from 3.4 in January to 4.9. Manufacturing Outlook Moderates Again This Month Although manufacturers still expect economic conditions to improve over the next six months, they have generally grown much less optimistic. The percentage of firms expecting growth over the next six months (45 percent) tops the percentage of firms expecting declines (20 percent). Nevertheless, the future activity index, which was 52.2 in December, declined again, from 32.6 in January to 24.7 (see Chart). Indicators of expected new orders and shipments also declined this month: the future new orders index fell from 35.7 to 29.2, and the future shipments index fell slightly from 32.6 to 28.5. On balance, firms expect unfilled orders and delivery times to remain near their current levels. Over the next six months, 25 percent of firms anticipate lower levels of inventories and 21 percent expect higher. Two areas in which firms' expectations improved this month were employment and capital spending. The future employment index increased from 5.4 in January to 16.0, with only 28 percent expecting to increase their payrolls and 12 percent expecting to decrease them over the next six months. Nearly 24 percent of the manufacturers report that they will increase capital spending over the next six months, but 11 percent expect spending to decline. The index for future capital spending improved marginally from 9.5 in January to 12.9 this month. Special questions this month asked firms about the impact of geopolitical uncertainties on their hiring and capital spending plans for 2003 (see Special Questions). The firms' responses suggest that both hiring and capital spending are being adversely affected by these uncertainties but lack of demand is also an important factor. The largest percentage of firms (58 percent) indicated that a lack of demand was holding back hiring and spending plans this year, while 40 percent cited geopolitical uncertainties. Of those that cited geopolitical uncertainties as an influence, 12 percent indicated such uncertainties are having significantly negative effects on their hiring plans, and 36 percent indicated significantly negative effects on capital spending plans. Moreover, 40 percent or more of firms report they do not plan to increase hiring and capital spending within the first six months, if at all, after the resolution of geopolitical uncertainties. Summary Overall manufacturing conditions in the region are mostly steady this month, and indicators for general activity, shipments, and employment suggest no growth. Manufacturers' own prices remain steady despite about one-fifth of the firms reporting increases in input prices. Firms' expectations for the next six months deteriorated again this month, although firms expecting improvement outnumbered those expecting declines by slightly more than 2 to 1. Special Question (February 2003) Are your hiring and spending plans in 2003 being adversely affected by: Lack of Demand 58% Geopolitical Uncertainties 40% Other 9% Not Affected 26% If geopolitical uncertainties are having an impact on your hiring and capital spending for 2003, are the impacts: Hiring Capital Spending Significantly Negative 12% 36% Slightly Negative 79% 58% Slightly Positive 6% 3% Significantly Positive 3% 3% Once geopolitical uncertainties are resolved, how soon will your hiring and spending increase: Hiring Capital Spending Immediately 10% 8% Within 3 months 28% 24% Within 6 months 21% 21% After 6 months 13% 21% No changes planned 28% 26% February 2003 Results February vs. January Six Months from Now vs. February Dec. No ch. Inc. Index Dec. No ch. Inc. Index General Business 20.0 57.7 22.3 2.3 20.1 25.2 44.9 24.7 Conditions New Orders 19.4 47.0 33.6 14.1 20.4 26.1 49.6 29.2 Shipments 26.3 45.9 26.3 0.0 20.0 22.0 48.5 28.5 Unfilled Orders 20.3 64.8 11.2 -9.1 14.8 59.4 14.9 0.1 Delivery Times 21.1 72.5 5.6 -15.5 14.4 65.0 10.9 -3.5 Inventories 32.3 50.8 16.6 -15.7 24.8 44.8 21.0 -3.8 Prices Paid 4.3 75.2 20.5 16.2 5.3 47.5 40.8 35.5 Prices Received 9.6 75.1 11.8 2.2 9.7 67.3 14.6 4.9 Number of Employees 15.3 70.2 14.4 -0.9 12.1 54.6 28.1 16.0 Avg. Employee Workweek 19.7 63.4 14.6 -5.1 14.7 57.5 21.5 6.8 Capital Expenditures - - - - 10.6 44.9 23.6 12.9 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through February 14, 2003. Business Outlook Survey January 2003 Manufacturing activity in the region is showing improvement, according to this month's Business Outlook Survey. Over one-third of the firms reported higher new orders and shipments in January, and most indicators have shown some improvement over the last two months. The employment index, however, was negative again this month. Expectations for growth diminished notably in January, although manufacturing executives are still optimistic about conditions for the next six months. Current Indicators Show Continued Improvement To start the new year, the index of current general activity held steady at 11.2?virtually unchanged from its upward-revised reading of 11.3 in December. The index has remained positive for three consecutive months (see Chart). Twenty-six percent of the manufacturers reported increases in activity this month, and 15 percent reported decreases. Indexes for both new orders and shipments increased notably in January. The current new orders index increased from a revised reading of 13.2 in December to 17.3, with nearly 34 percent reporting increases in new orders. The current shipments index also increased significantly, from 4.8 in December to 21.3 this month. Inventories fell this month, and the inventory index declined substantially from 10.5 in December to -17.3. Nearly one-third of the firms reported a decline in inventories this month; only 15 percent reported higher inventories. The unfilled orders index remained negative at -1.5, virtually unchanged from the previous month. The delivery times index fell slightly from -2.9 to -7.3. Demand for labor continues to be weak, despite the reported improvement in new orders and shipments this month. The current employment index fell from a revised reading of -0.9 in December, to -6.1. Although nearly 71 percent of the firms reported no change in employment this month, the percentage reporting declines (16 percent) was higher than the percentage reporting increases (10 percent). But the current average workweek index showed slight improvement this month, increasing slightly from a revised -1.0 in December to 3.8. Price Pressures Are Slight Costs pressures diminished this month, but the index for prices of manufactured goods drifted slightly higher. With regard to input prices, the percentage of firms reporting higher prices (18 percent) was greater than the percentage reporting lower prices (6 percent). Still, the prices paid index moderated from its revised reading of 17.7 in December to 11.6 this month. With regard to output prices, slightly more firms reported higher prices for manufactured goods (13 percent) than reported lower prices (6 percent), and the prices received index rose from 2.9 in December to 6.3 this month. Nearly 80 percent of the manufacturers, however, reported stable prices for their manufactured goods. New Year Starts with Diminished Expectations Manufacturers begin 2003 less optimistic about business growth over the next six months. The future general activity index dropped notably this month, decreasing from 52.2 in December to 32.6 (see Chart). Firms are divided about the future: although 33 percent of the firms expect no change in overall business over the next six months, the percentage expecting increases (45 percent) continues to exceed the percentage expecting decreases (12 percent). Indicators for expected new orders and shipments also declined from their December readings: the future new orders index fell from a revised 48.1 to 35.7, and the future shipments index declined from a revised 49.5 to 32.6. Fewer firms are expecting declines in inventories over the next six months compared with the previous month: the future inventories index fell from 0.5 in December to -3.2 this month. Firms' expectations regarding employment were less encouraging this month. The future employment index fell from 12.3 in December to 5.4. Although one-half see increases in new orders over the next six months, only 22 percent expect to increase their payrolls; 16 percent expect to decrease them. Firms' expectations about capital expenditures continue to be muted. Only 19 percent of the manufacturers report that they will increase spending on capital over the next six months; 9 percent expect to decrease spending. The index for future capital spending fell marginally from 10.5 in December to 9.5 this month. This month, firms were asked about their current rates of plant utilization (see Special Questions). About 15 percent of the firms reported capacity utilization rates of less than 60 percent, and 62 percent of the firms reported rates at 75 percent or less. About 70 percent of the firms indicated they would not increase employment unless production increased more than 10 percent. About 72 percent of the firms indicated they would not increase spending on plant and equipment unless production increased more than 15 percent. Summary Manufacturing conditions have shown gradual improvement over the past few months. Firms report an increase in general activity and new orders this month and a notable increase in shipments compared with December. Firms report declines in employment, however, and firms' low rates of capacity utilization suggest that substantial employment increases will be unlikely in the foreseeable future. Firms' expectations for the next six months also showed some deterioration this month, although firms expecting improvement outnumber those expecting declines 4 to 1. Special Questions (January 2003) Which of the following best characterizes your current capacity utilization rate? Capacity Utilization Rate (%) Respondents Reporting That Rate (%) Less than 60 15.2 60-65 9.8 65-70 19.6 70-75 17.4 75-80 19.5 80-85 4.3 85-90 3.3 90-95 7.6 95-100 3.3 If production increases (%) Firms that would likely increase employment (%) 0-5 3.3 5-10 26.1 10-15 29.3 15-20 26.1 > 20 15.2 If production increases (%) Firms that would likely increase spending on plant and equipment (%) 0-5 5.8 5-10 8.0 10-15 13.8 15-20 32.2 > 20 40.2 January 2003 Results January vs. December Six Months from Now vs. January Dec. No ch. Inc. Index Dec. No ch. Inc. Index General Business 15.1 54.5 26.3 11.2 12.1 33.0 44.7 32.6 Conditions New Orders 16.5 49.7 33.8 17.3 14.3 28.1 50.0 35.7 Shipments 12.4 51.1 33.7 21.3 14.3 32.5 46.8 32.6 Unfilled Orders 15.0 70.1 13.5 -1.5 15.6 50.1 28.7 13.1 Delivery Times 16.2 73.2 8.9 -7.3 10.2 66.3 17.5 7.3 Inventories 32.6 47.6 15.3 -17.3 26.2 42.5 22.9 -3.2 Prices Paid 5.9 76.2 17.5 11.6 8.9 61.9 20.8 11.9 Prices Received 6.3 79.9 12.7 6.3 8.0 72.7 11.4 3.4 Number of Employees 15.9 70.9 9.8 -6.1 16.2 55.8 21.6 5.4 Avg. Employee Workweek 15.4 62.0 19.2 3.8 11.4 55.6 24.5 13.1 Capital Expenditures - - - - 9.3 42.6 18.8 9.5 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey results reflect data received through January 10, 2003. New-Portugal-new-Beijing-info@ondemandseminarportal.com 彩票网站大全 彩票app 中国青年网-军事频道 电子试玩 QQ个性签名大全 电子试玩 买球平台 买球平台 澳门皇冠赌场 澳门皇冠赌场 彩票网站 酷盘 岳西热线 大金华论坛 浩亚股份 青岛新闻网健康 上岛咖啡官网 我的影院 合团网 晋城银行 360手机防盗 优酷体育频道 天极网音箱耳机频道