Manufacturing activity in the region has declined overall, according to companies that responded to the May Manufacturing Business Outlook Survey. The survey’s indicators for current overall activity, new orders and shipments all declined, with the latter two turning negative. The employment index indicates declines in employment overall. Both price indices indicate overall price increases but remain below their long-term average. Companies continue to expect this growth during the next six months of this year
Most current indicators decline: The diffusion index for current overall activity remained positive but fell by 11 points to 4.5 in May, which mostly reflects an increase from last month. More than 29 percent of businesses reported increases in overall activity this month (down from 38 percent last month), while 25 percent reported declines (up from 22 percent); 46% reported no type of change (up from 40%). The new orders index fell from 12.2 to -7.9, its first negative reading since February, and the shipments index fell from 19.1 to -1.2, its first negative reading since January.
Although employment indicators rose, companies continued to report a decline in employment in general. employment index rose 3 points to -7.9. Two-thirds of companies did not report any change in employment levels this month, and while the share of companies reporting decreases (20 percent) exceeded the share of companies reporting increases (12 percent). The average workweek index rose 10 points but remained negative at -8.3.
Price indices remain below long-term averages
Overall, companies continued to report overall price increases. After rising 19 points last month, the prices paid index fell 4 points to 18.7 in May. Nearly 19 percent of companies reported increases in input prices, while none reported decreases; 78% of companies did not announce any change. T current price index rose by one point to 6.6..
Companies expect increases in their prices to match inflation
In this month’s special questions, companies were asked to forecast changes in prices for their products and for US consumers over the next four quarters. Regarding their own prices over the next year, the average forecast for companies was an expected increase of 3.0 percent, unchanged from when this question was last asked in February.
Companies reported an average increase of 2.7 percent in their prices over the past year, down slightly from 3.0 percent in the last quarter. Companies expect employee compensation costs (wages plus benefits on a per-employee basis) to rise 3.5 percent over the next four quarters, down from 4.0 percent. The average corporate forecast for US consumer inflation over the next year was unchanged at 3.0 percent.
Businesses remain generally optimistic: The diffusion index for future general activity fell from 34.3 in April to 32.4 in May. The share of companies that expect an increase in activity during the next six months (45%) exceeds the share of companies that expect decreases (12%). 43% do not expect any change. The future new orders index fell 3 points to 39.7
Expectations of overall increases in employment
The future shipments index rose 17 points to 46.2. Expectations of overall increases in employment over the next six months were more widespread, with the Future Employment Index rising 9 points to 21.7. The future capital expenditure index was essentially unchanged at 20.1. Responses to the May Industrial Business Outlook survey indicate lower regional manufacturing activity this month. The current activity index remained positive but declined, and the indicators of new orders and shipments turned negative. Overall, companies reported a decline in employment, and price indices were below their long-term averages. The survey’s general indicators of future activity continued to indicate broad expectations for growth over the next six months.
On Thursday, the Federal Reserve Bank revealed that industrial production in the United States was stable during April, which was contrary to expectations that indicated limited growth. US Central Bank data showed that the country’s industrial production index did not change in April from what it was in March at 102.8 points, while economists’ expectations in a Wall Street Journal survey indicated an increase of 0.1%.
The data showed that the production reading recorded in March was revised downwards to a growth of 0.1%, compared to the initial estimate, which indicated an increase of 0.4%. Production data in February was also revised upward to a growth of 0.8% compared to the previous estimate, which indicated an increase of only 0.4%, which compensated for the downward revision of March data. The capacity utilization rate – which reflects the maximum operating limits of the country’s factories, mines and public utilities – fell to 78.4% in April from 78.5% in March, which was in line with expectations.
