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Saturday, November 29, 2014

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October 2013 Business Outlook Survey

Manufacturing growth in the region continued in October, according to firms responding to this month’s Business Outlook Survey. The survey’s broadest indicators for general activity, new orders, shipments, and employment were positive, signifying growth. The survey's indicators of future activity suggest continued optimism about growth over the next six months.

Indicators Suggest Continuing Expansion

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, edged down from 22.3 in September to 19.8 this month (see Chart). The index has now been positive for five consecutive months. The percentage of firms reporting increased activity this month (36 percent) was greater than the percentage reporting decreased activity (16 percent).

The demand for manufactured goods, as measured by the current new orders index, increased 6 points, to 27.5, its highest reading since March 2011. Shipments continued to expand: The index fell 1 point to 20.4, following a 22 point increase last month. The diffusion indexes for inventories, delivery times, and unfilled orders were all positive and higher than last month.

Labor market indicators showed improvement this month. The current employment index increased 5 points, to 15.4, its highest reading since May 2011. The percentage of firms reporting increases in employment (23 percent) exceeded the percentage reporting decreases (8 percent).

Price Indexes Suggest Moderate Pressures

The indexes for prices reflected moderate price pressures this month. Input price pressures were slightly less widespread this month: The prices paid index fell 4 points, to 21.7. With respect to prices received for manufactured goods, 21 percent of firms reported higher prices, and 7 percent reported lower prices. The prices received index increased 2 points, to 14.2.

Six-Month Indicators Reflect Optimism

The survey’s future indicators have suggested markedly improved optimism among the reporting manufacturers in recent months. The future general activity index increased 3 points, from 58.2 to 60.8, exceeding its previous highs since the end of the recession in 2009 (see Chart). Slightly over 63 percent of firms expect increases in activity over the next six months; only 2 percent of firms indicated that they expect decreases over the next six months. The indexes for future new orders and shipments also remained at relatively high levels. Over 67 percent of firms expect increases in new orders and 57 percent of firms expect increases in shipments over the next six months. The future employment index fell 4 points; however, nearly 37 percent of the firms expect to increase employment over the next six months.

For this month's special questions, manufacturers were asked about changes in their workforce and the changing use of flexible workers over the past year (see Special Questions). The share of firms that increased their total workforce over the past year (51 percent) was significantly greater than those that decreased their workforce (27 percent), reflecting a marked improvement from when the question was asked last year. The mix of employment has changed for many firms. For example, 76 percent of firms indicated that they use part-time workers. Of this number, 15 percent of firms indicated that their share of the total part-time workforce has increased over the past year, whereas 5 percent of the firms decreased their share of these workers. Fewer firms use temporary/agency workers (65 percent) and contract workers (39 percent) compared with part-time workers. Among the firms that use temporary/agency and contract workers, these workers account for nearly 10 percent of their workforce.

Summary

According to respondents to the October Business Outlook Survey, the region’s manufacturing sector continued to grow this month. All the broad indicators were positive, with firms reporting improvements in new orders and hiring. Input price pressures were slightly less widespread this month. Firms’ outlook has shown notable improvement in recent months, with a majority of firms now expecting to expand manufacturing activity over the next six months and more than one-third expecting to add workers.

Special Questions (October 2013)

1. Has your total workforce decreased, increased, or stayed the same over the past year?
 
October 2013
October 2012
Decreased
27.2%
31.1%
Stayed the same
20.0%
32.4%
Increased
51.4%
32.4%
No response
1.4%
4.1%
    Total
100.0%
100.0%
2. Indicate whether over the past year the following categories of workers have increased as a share of your total workforce, decreased as a share of your total workforce, not changed as a share of your total workforce, or are not used at your firm.
 
Percentage That Use This Type of Labor
Percentages
Not Used
Decreased Share
No Change
Increased Share
Total
Regular Full-Time
100.0
0.0
15.9
49.3
34.8
100.0
Regular Part-Time
76.1
23.9
4.5
56.7
14.9
100.0
Short-Term Workers
39.7
60.3
1.6
23.8
14.3
100.0
On-Call Workers
28.1
71.9
1.6
20.3
6.2
100.0
Temporary or Agency Workers
65.2
34.8
10.1
29.0
26.1
100.0
Independent Contract Workers
39.1
60.9
0.0
28.1
11.0
100.0
3. Approximately what percent of your total workforce is accounted for by temporary/agency workers and contract workers?
 
Percentage of total workforce for those firms using these categories of workers
Average
9.5%
Median
5.0%

Return to the main page for the Business Outlook Survey.

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A complete writeup of this survey, including all tables, is available in PDF format.

October 2013 PDF

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Questions?

Questions about the Business Outlook Survey and its historical data can be addressed to Mike Trebing. E-mail