Factory Activity Was Unchanged
Tenth District manufacturing activity was unchanged in August, and expectations for future activity rose slightly (Chart 1, Tables 1 & 2). District firms’ finished product prices continued to decline on a monthly basis even as raw materials prices increased. Firms continue to expect input and output price increases in the next six months.
The month-over-month composite index was 0 in August, up from -11 in July and -12 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. The change from last month was primarily driven by increases in printing, wood production, and furniture manufacturing. The month-over-month indexes were mixed, but all increased from previous readings except the number of employees which cooled slightly and new orders for exports which declined further. The production and volume of shipments indexes increased significantly, while the materials inventory index continued to decrease as finished goods inventories picked up. Factory activity decreased further on a year-over-year basis. The composite index decreased to -9 in August from -4 in July, but was up from -12 in June. Production stayed flat, while new orders and materials inventory fell and capital expenditures growth cooled. The future composite index increased to 2 in August from -2 in July, as firms expect production and new orders to grow somewhat in the next six months.
Manufacturing Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| Aug-22 | 5 | 36 |
| Sep-22 | 4 | 30 |
| Oct-22 | -2 | 24 |
| Nov-22 | -2 | 19 |
| Dec-22 | -4 | 15 |
| Jan-23 | -1 | 4 |
| Feb-23 | 0 | 5 |
| Mar-23 | 0 | 6 |
| Apr-23 | -10 | -2 |
| May-23 | -1 | 6 |
| Jun-23 | -12 | -12 |
| Jul-23 | -11 | -4 |
| Aug-23 | 0 | -9 |
Special Questions
This month contacts were asked special questions about changes in wages and prices. 44% of firms reported that wages have increased by 6-10% in the last year, while 34% reported an increase of less than 5% and about 15% said wages had risen more than 10%. However, for the coming year, nearly three-quarters of firms expect wages to increase less than 5% (Chart 2). Additionally, nearly a third of firms reported that prices for their company’s products or services have increased by less than 5%, while 29% reported a 6-10% increase, and 2% reported an increase of 11-15%. In the next 12 months, nearly half of all firms surveyed expect their prices to increase by less than 5%, while 28% expect a 6-10% increase (Chart 3).
Selected Manufacturing Comments
“Obviously at a macro level inflation is way down, but in our little corner of the world it is still a huge threat. Lots of volatility and uncertainty. Some items way down, other items way up. Commodities in general are just not as predictable as they used to be.”
“Our hourly billing rates are still below what most industries charge. With demand continuing to increase and outpacing labor supply, we will continue to increase our rates.”
“Companies are literally buying jobs just to keep crews busy cause there are so many gaps in the backlog, but you don't dare pare down or lay off on your skilled labor cause you won't ever get them back.” “American manufacturers are being forced into a much more difficult position competitively with huge labor cost increases against foreign competitors.”
“We are seeing some abatement with wages, however our medical premiums are increasing for next renewal cycle in September. The quality of available workforce is still a challenge.”
“We are seeing some softening in the market.”
“The tooling industry faces significant challenges due to low-cost imports from China and India. We are going to struggle to keep highly trained staff due to pressure on wages caused by reduced margins necessary to stay competitive with those who are paying much less for similar skill set.”