Factory activity continued to decline modestly in November
Tenth District manufacturing activity continued to decline modestly in November, however expectations for future activity rebounded moderately (Chart 1). The month-over-month price indexes for raw materials and finished products both increased and District firms expected prices to increase over the next 6 months.
The month-over-month composite index was -3 in November, equal to -3 in October, and similar to -2 in September (Table 1). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decline in district manufacturing activity continued to be driven by slower activity at durable goods plants, especially from decreases in primary metal, fabricated metal products, machinery, and computer and electronic products manufacturing. Most month-over-month indexes were negative in November. The overall production index turned negative and the materials inventory index declined further. However, the shipments and supplier delivery time indexes expanded somewhat. Year-over-year factory indexes increased slightly in November, and the composite index rose from -1 to 6. The future composite index also grew, increasing from 2 to 15, the highest reading since March 2019.
This month contacts were asked special questions about employment plans and changes in wages and salaries to attract or retain employees. While over 48 percent of District manufacturing contacts expected their firms to leave employment unchanged over the next 12 months, nearly 40 percent expected their firms to increase employment levels (Chart 2). Almost 40 percent of contacts indicated they were increasing wages and/or salaries for most job categories by more than in previous years to attract new hires, and 37 percent of contacts indicated they were increasing wages and salaries for most job categories in order to retain existing employees (Chart 3). Another 41 percent and 33 percent of firms reported increased wages and salaries for selected job categories by more than in the past few years in order to attract new hires or retain existing employees, respectively.
"Labor market is really tight, and production labor is hard to attract and retain even at higher hourly pay."
"Tariffs continue to reduce sales. No government decision or direction forces companies to make our own decisions."
"Our business is seasonal, so we flexed the work force down until next year, but we plan on hiring a bit stronger in 2020."
"Seems like the 4th quarter is slow in getting started. Usually cold weather helps our sales but we haven’t seen the bump yet."
"The extreme labor shortage has reduced production and the number of specialty products we can make."
"Backlog is dropping and new orders are harder to get signed. Shipments are ahead of last year because of stronger backlog from summer orders."
"Sales continue to be strong going into the winter months."
"We believe things will improve into next year, but are very watchful of political turmoil and non-business friendly platforms."
"The economy is running smoothly and efficiently at this time. We are well balanced overall and see continued growth short of political upheaval and concern around the upcoming elections."
"The energy industry demands have decreased. We are hoping for an upturn in the coming year."