Survey of Tenth District Manufacturing
Tenth District manufacturing activity declined in June, although export activity continued at solid levels and firms’ expectations for future factory activity remained generally positive. Price pressures intensified, with nearly all survey price indexes posting record high levels.
The net percentage of firms reporting month-over-month increases in production in June was -13, down from 0 in May and 7 in April (Tables 1 & 2, Chart). Production fell at both durable and non-durable-goods producing plants. The majority of other month-over-month indexes also decreased in June. The shipments index dropped to its lowest level since 2001, and the new orders index fell from 0 to -3. The employment and order backlog indexes both fell into negative territory this month. The new export orders index edged down from 17 to 8, but still remained relatively solid. Both inventory indexes fell slightly for the second straight month.
The year-over-year indexes posted sluggish results in June. The production index eased from -7 to -10 and the shipments index decreased from -4 to -10, both at their lowest levels in five years. The new orders, employment, and order backlog indexes all declined this month. In contrast, the capital expenditures index was unchanged and the new export orders index remained at an all-time survey high. The raw materials inventory index dropped from 3 to -6, and the finished goods inventory index also edged down.
Most future factory activity indexes remained positive, especially for areas that produce agriculture and energy equipment. The future production index climbed from 11 to 21, and the future shipments index rose from 16 to 18. The future order backlog and capital expenditures indexes also edged up in June. The future new export orders index increased from 22 to 25, an all-time survey high. In contrast, the future new orders and future employment indexes both fell slightly. Both inventory indexes improved over the previous month.
Price indexes rose even further in June, with several at continued all-time highs. The month-over-month finished goods index increased from 31 to 36, and the raw materials index was unchanged at 70, both at their highest levels in survey history. The year-over-year raw materials index moderated slightly from 95 to 88, but the year-over-year finished goods index continued to climb higher. The future price indexes both recorded historically high levels, with the finished goods index unchanged at 49 and the raw materials index increasing from 82 to 84. Firms continued to comment on the rapid rise in raw materials prices, particularly for commodities such as steel, oil, and natural gas.
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