September 2024 Manufacturing Business Outlook Survey

Note: Survey responses were collected from September 9 to September 16.

Manufacturing activity in the region was mixed overall, according to the firms responding to the September Manufacturing Business Outlook Survey. The survey's indicator for current general activity turned positive, while the indexes for new orders and shipments declined and turned negative. The employment index rose and suggested increases in employment overall. Both price indexes moved higher and continue to indicate overall increases in prices. The firms continue to expect growth over the next six months, with expectations more widespread this month.

Current Indicators Are Mixed

The diffusion index for current general activity rose from -7.0 to 1.7 in September (see Chart 1). Nearly 22 percent of the firms reported increases in general activity this month, while 20 percent reported decreases; 51 percent reported no change. The indexes for new orders and shipments declined and turned negative. The new orders index fell 16 points to -1.5. The shipments index declined 23 points to -14.3, its lowest reading since March 2023.

The firms reported an increase in employment, on balance, after reporting an overall decline last month. The employment index rose from -5.7 to 10.7 this month, the index's second positive reading in the last three months following mostly negative readings since March 2023. More than 89 percent of the firms reported no change in employment levels this month, the highest share reporting steady employment since December 1978. Nearly 11 percent of the firms reported increases, while none reported decreases. The average workweek index declined from -2.3 to -13.6.

Price Indexes Move Higher

On balance, the firms continued to report overall increases in prices. The prices paid index moved up 10 points to 34.0, its highest reading since December 2022 (see Chart 2). Thirty-four percent of the firms reported increases in input prices, while none reported decreases; 66 percent of the firms reported no change. The current prices received index rose 11 points to 24.6, undoing its decrease from last month. Nearly 25 percent of the firms reported increases in prices received for their own goods, none reported decreases, and 75 percent reported no change.

Firms Report Higher Production, Little Change in Capacity Utilization

In this month's special questions, the firms were asked to estimate their total production growth for the third quarter ending this month compared with the second quarter of 2024. A higher share of firms reported an increase in production (38 percent) compared with the share reporting a decrease (28 percent). Regarding firms' capacity utilization for the current quarter and one year ago, the median current capacity utilization rate reported among the responding firms was unchanged at 70 to 80 percent.

More than 56 percent of the firms reported labor supply as at least a slight constraint to capacity utilization in the current quarter, and the share of firms reporting it as a moderate or significant constraint (31 percent) rose slightly from when this question was asked in June (27 percent). Half of the firms cited supply chains as a constraint in the current quarter. However, no firms reported supply chains as a significant constraint. Looking ahead over the next three months, most firms expect the impacts of various factors to stay the same. However, the share of firms expecting labor supply impacts to improve (13 percent) was higher than when this question was asked in June (6 percent). The share of firms expecting financial capital impacts to improve (16 percent) also rose from June (6 percent).

Most Future Indicators Rise

The diffusion index for future general activity was little changed at 15.8 in September (see Chart 1). The share of firms expecting increases in activity over the next six months (39 percent) exceeded the share expecting decreases (23 percent); 24 percent expect no change. The future new orders index rose 11 points to 21.8, and the shipments index increased 17 points to 26.8. The firms continue to expect an overall increase in employment over the next six months, and the future employment index rose from a reading of 7.4 to 19.1. The future prices paid index rose 15 points to 49.8, and the future prices received index increased 22 points to 34.3. The future capital expenditures index moved up for the second consecutive month, to 25.0, its highest reading since March 2022.

Summary

Responses to the September Manufacturing Business Outlook Survey suggest mixed regional manufacturing activity this month. The indicator for current activity rose to positive territory, while the new orders and shipments indexes declined and turned negative. On balance, the firms indicated an increase in employment and continued to report increases in prices. The survey's broad indicators for future activity suggest more widespread expectations for growth over the next six months.

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