Factory Activity Continued to Fall
Tenth District manufacturing activity continued to fall in July, while expectations for future activity stayed positive. Price growth for raw materials increased this month while cooling slightly for finished products, further constraining profits margins. (Chart 1, Tables 1 & 2).
The month-over-month composite index was -13 in July, down from -8 in June and -2 in May (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decline was primarily driven by durable manufacturing, particularly transportation equipment, fabricated metal, and machinery. All month-over-month indexes were negative and fell from last month, except the price indexes. The volume of shipments, new orders, and backlogs all decreased substantially from last month, while production and employment fell at a moderate pace. The year-over-year composite index for factory activity ticked down from -9 to -13 as employment was flat but new orders fell sharply once again. Despite this, capital expenditures grew modestly and are expected to increase more in coming months. The future composite index ticked down from 7 to 5 in July, as firms continue to expect increases in production, new orders, and employment.
Manufacturing Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| Jul-23 | -9 | -4 |
| Aug-23 | 0 | -9 |
| Sep-23 | -7 | -12 |
| Oct-23 | -6 | -11 |
| Nov-23 | -2 | -9 |
| Dec-23 | -1 | -8 |
| Jan-24 | -9 | -12 |
| Feb-24 | -4 | -8 |
| Mar-24 | -7 | -4 |
| Apr-24 | -8 | -12 |
| May-24 | -2 | -6 |
| Jun-24 | -8 | -9 |
| Jul-24 | -13 | -13 |
Special Questions
This month contacts were asked special questions about employee turnover. Responses concerning the change in turnover were mixed. 31% of firms reported an increase in employee turnover in the past year, while 45% reported no change in turnover, and 24% reported a decrease (Chart 2). Additionally, 79% of the firms that reported an increase in turnover said that it has primarily increased for production workers and 3% said it has primarily increased for managerial workers, while 18% said it has primarily increased for both production and managerial workers (Chart 3).
Selected Manufacturing Comments
“Soft market demand is impacting labor hours. Normally very busy during the summer season, but this year average hours per week are approximately 36 - 40. Finding growth has been slower than normal.”
“We continue to see increased demand for our machining services. Some is definitely attributable to our ability to take work from our domestic competitors. Maintaining dedicated sales staff has been beneficial.”
“The past 2 years we have been using temporary employees, only way we could get enough people. With the demand for our products dropping, we have let most of the temps go and reduced our production to get back in line to where we need to be.”
“Business has picked up slightly. We are anxious to see what the second half of this year looks like.”
“Certain raw material prices have continued to climb in pockets of our business. Many suppliers and customers are struggling to transact business as smoothly as pre-covid due to new employees/retirements of senior employees. Employee wage expectations continue to be extremely high.”
“Orders have slowed as we enter middle of summer. This will ramp back up in the fall. Steel prices are down, and we feel it is probably close to the bottom. We are ordering more to capture lower prices going forward in case they start going up.”
“Customer demand has decreased significantly and last six months of year is very soft.”
“Record amount of work in process and orders on the books. On pace for record year in sales and profit.”
“Additional employees required to take care of filling orders.”
“Existing sales and backlogs are slowing. Employment will probably need to be reduced next month faster than the turnover.”
“Very difficult to get entry-level workers and maintenance workers.”
“Orders are down significantly from the prior year.”