Factory Activity Declined Less
Tenth District manufacturing activity declined less this month than in July, while expectations for future activity remained positive. Finished product prices increased somewhat this month after staying flat in July, but raw materials prices continue to grow at a faster pace. (Chart 1, Tables 1 & 2)
The month-over-month composite index was -3 in August, up from -13 in July and -8 in June (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Nondurable manufacturing was essentially flat, while durable goods manufacturing fell somewhat, driven by transportation equipment, fabricated metal, and machinery. The month-over-month indexes were mixed, but all increased from last month’s readings. Production rebounded from -12 to 6 while the volume of new orders stayed negative at -12 and backlogs posted a reading of -19. The two employment indexes also declined further. The year-over-year composite index for factory activity ticked down from -13 to -14 as production, shipments, and new orders all continue to fall considerably. Employment levels decreased moderately while capital expenditures stayed steady with a reading of 1. The future composite index increased from 5 to 8, as production and employment are expected to increase substantially.
Manufacturing Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| 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 |
| Aug-24 | -3 | -14 |
Special Questions
This month contacts were asked special questions about plans for hiring and capital expenditures as well as transportation costs. 19% of firms report they expect to hire more workers by the end of 2024 than they had originally planned at the beginning of the year, while 32% expect to hire less workers and 49% of firms’ plans are unchanged. Additionally, 11% of firms expect more capital expenditures by the end of the year than originally planned, 29% expect less, and 60% have unchanged plans (Chart 2). Contacts were also asked about transportation costs. In the last 6 months, transportation costs have increased significantly for 20% of firms, increased slightly for 50%, remained unchanged for 17%, and decreased slightly for 13%. Similarly in the next 6 months, 3% of firms expect transportation costs to increase significantly, 61% expect a slight increase, 28% expect no change, and 8% expect a slight decrease. (Chart 3).
Selected Manufacturing Comments
“Orders for the first half of 2024 were down substantially. We suspect that customers have been holding off, expecting interest rates to drop. We are seeing some recovery, but mostly with international customers.”
“Everything flipped in July. We got caught up and orders were pushed out at the same time. We laid off 30% of our hourly work force last week.”
“We continue to experience lower business levels than we have in the past several years. New business opportunities have come from failures of competitors, including facility closures, cyber-attack and ERP issues. There is continuing wage pressure at the shop-floor level. Election uncertainty, foreign dumping and the erosion of the spending power of consumers (higher debt/lower savings) make future business levels concerning.”
“We're starting to see some sales softening - especially with long-term/legacy customers. Really only has become noticeable over the last month or so. Customers telling us their transactions are down to a significant level. We remain concerned about cost increases on product inputs, particularly select commodities. Labor market continues to become more attractive with lots of incoming applicants.”
“Our industry is down by 20-35% which is a challenge to our sales department and maintaining work for our employees.”