Survey of Tenth District Manufacturing
Tenth District manufacturing activity declined sharply in October, and firms’ expectations about future factory activity weakened further. Price indexes in the survey also fell considerably, though more firms continued to plan price increases heading forward than planned price decreases.
The net percentage of firms reporting month-over-month increases in production in October was -23, down from -9 in September and 6 in August (Tables 1 & 2, Chart). Production declined sharply at durable-goods producing plants, but remained relatively stable at non-durable-goods producing plants, particularly for food and chemical products. All other month-over-month indexes also declined in October. Like the production index, the new orders and order backlog indexes also recorded their lowest levels in the survey’s fourteen-year history. The shipments index also decreased from -8 to -20, and the employment index eased slightly. The new orders for exports index also fell into negative territory, following several years of steady growth. Both inventory indexes declined from the previous month.
All year-over-year factory indexes posted steep declines in October compared with their September readings. The production index plummeted from -1 to -22 and the shipments and new orders indexes also declined, with all three recording their lowest levels since early 2002. The employment index decreased from -7 to -22 and the order backlog index posted its lowest level in survey history. The capital expenditures index remained the lone positive index but also edged down from 10 to 6. Both inventory indexes dipped into negative territory, with a few firms citing a reduction due to credit constraints.
Nearly all future factory activity indexes weakened further in October, with several falling into negative territory for the first time in a number of years. The future production index eased from 3 to -3, and the shipments and new orders index also slowed to their lowest levels since 2001. The future employment index reached a seven-year low, while the future order backlog index remained unchanged. The future capital expenditures index contracted from 12 to -3, with the majority of contacts reporting future spending plans as decreased or unchanged. The future raw materials inventory index declined from -7 to -14 and the future finished goods inventory index also eased.
Most price indexes fell considerably for the second straight month. The month-over-month finished goods index dropped from 20 to 2, and the raw materials index decreased from 38 to -2, with both at their lowest levels in over 5 years. The year-over-year finished goods price index edged down slightly, and the raw materials index moderated from 86 to 72. The future raw materials index posted a sharp decline from 51 to 17, and the future finished goods index continued to edge downward but remained well above zero, suggesting some continued pass-through of past price increases in the months ahead.
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