Wednesday, December 26, 2007

An Overview of Recent Manufacturing Reports

Every month, several Federal Reserve Banks issue regional manufacturing reports. Rather than look at them one at a time, I like to look at them as a group to get a better overview of what is happening.

The Empire State survey wasn't good:

The Empire State Manufacturing Survey suggests a marked deceleration in manufacturing activity in December. The general business conditions index plummeted 17 points, to 10.3. The new orders and shipments indexes, while positive, also posted notable declines, and the unfilled orders index fell well below zero. The prices paid index eased slightly, and the prices received index held steady. The index for number of employees was modestly positive, while the average workweek index fell into negative territory for the first time since January. Future indexes were positive, but the degree to which activity is expected to expand over the next six months remained low compared with expectations earlier this year.

The Philadelphia Survey wasn't much better:

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell notably, from 8.2 in November to -5.7 in December (see Chart). Fifty percent of the firms reported no change in activity from November, but the percentage of firms reporting decreases (27 percent) was greater than the percentage reporting increases (21 percent) for the first time since last December. However, other broad indicators suggest continued growth this month. Demand for manufactured goods, as represented by the survey’s new orders index, remained positive and increased seven points; the current shipments index increased 14 points. However, indexes for both unfilled orders and delivery times were negative.

And the Richmond Fed showed a slowing as well

Manufacturing activity in the central Atlantic region drifted lower in December, after stabilizing somewhat in November, according to the Richmond Fed’s latest survey. The index of overall activity was pushed into negative territory by weak readings for shipments and new orders. Other indicators were mixed. District contacts reported that the pace of hiring picked up, order backlogs changed little and delivery times edged slightly lower from a month ago. In addition, capacity utilization contracted at a quicker rate and manufacturers reported that growth in inventories expanded at a slightly faster pace.

And the Chicago National Index was low as well:

November economic growth below average
The Chicago Fed National Activity Index was −0.27 in November, up from −0.89 in October. Three of the four broad categories of indicators—employment, consumption and housing, and sales, orders, and inventories—made negative contributions to the index in November, while the production and income category made a slight positive contribution. (PDF,110KB)

The benefit of looking at all of these together is you can see if one report is out of place. However, an overview indicates there is a problem across regions. That's not a good sign going into the new year.