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August 2008 Business Outlook Survey

Survey Press Conference

Listen to the press conference for this month's survey. Audio Interview

The region's manufacturing sector remains weak, according to firms polled for the August Business Outlook Survey. Indexes for general activity, new orders, shipments, and employment were all negative again this month, although slightly higher than in July. Price pressures remain but were slightly less widespread compared to recent months. However, more than one-third of the firms continue to report higher prices for their own manufactured products. Most of the survey's future indicators moved higher this month, suggesting that the region's manufacturing executives believe growth in their sector will return over the next six months.

Current Indicators Remain Negative

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -16.3 in July to -12.7 this month. Despite the improvement, the index has now been negative for nine consecutive months (see Chart). Other broad indicators remained negative but edged somewhat higher. The survey's shipments index, now at -3.3, increased five points, and the new orders index, at -11.9, increased less than one point. Indexes for unfilled orders and delivery times remained negative but increased 10 points and one point, respectively.

Indicators for employment and hours worked were consistent with negative readings in other broad indicators. The current employment index improved from -7.3 in July to -1.1. The percentage of firms reporting a decrease in employment (18 percent) was slightly greater than the percentage reporting an increase (16 percent). The average workweek index moved one point higher, but it has now been negative for eight consecutive months.

Cost Pressures Show Slight Moderation

Almost two-thirds of firms reported higher input prices this month, but this was down from 77 percent in July. Nearly 8 percent of the firms reported lower input prices. The prices paid index decreased 18 points, to 57.5, its first decrease in four months. Regarding prices for their own manufactured goods, the largest percentage of respondents (51 percent) reported no price change from July, but the percentage of firms reporting higher prices this month (35 percent) exceeded the percentage reporting lower prices (8 percent). The prices received index, however, edged slightly lower, from 28.8 in July to 27.0 in August.

Future Indicators Show Improvement

Despite declines in current activity, area manufacturers expect improvement in conditions over the next six months. Most of the survey's future indicators showed notable improvement this month. The future general activity index increased from 18.0, to 27.6 (see Chart). The indexes for future new orders and shipments showed a similar rise, increasing 15 and 11 points. On balance, firms expect an increase in employment levels over the next six months. The percentage of firms expecting to add workers (29 percent) is greater than that expecting to make cuts (16 percent); however, the future employment index decreased four points.

In special questions this month, manufacturing firms were asked about growth in export business over the past year. Exports as a percentage of sales have increased at 51 percent of the manufacturing firms; fewer than 2 percent indicated that exports as a share of sales have decreased. Among firms that indicated that exports were growing, export growth represented about 25 percent of their sales growth. Firms were also asked about outsourcing and operations moved since the beginning of the year. Only 11 percent of the firms indicated that some operations had been moved abroad since the beginning of the year, but 6 percent said that previously outsourced operations had been moved back to the U.S. over that period.


The region’s manufacturing sector showed continued weakness in August; all broad indicators of activity remained in negative territory but improved marginally from the previous month. Cost pressures remain widespread, but fewer firms reported increases in input price this month than in July.  More than one-third of the firms reported price increases for their own manufactured goods. Manufacturers were more optimistic about the outlook this month, with most of the survey’s six-month indicators showing notable improvement.

Special Questions (August 2008)

1. Over the past year, have exports as a share of your total sales:
August 2008
August 2007
Increased substantially
Increased modestly
Stayed the same
Decreased modestly
Decreased substantially
2. If your exports are currently growing, how would you complete the following? About ___% of my sales growth is attributable to exports.
Average response:
3. Since the beginning of the year, have you outsourced or moved any of your activities or production abroad?
Yes: 11.1%
No: 88.9%
4. Since the beginning of the year, have you returned any of the activities or production you previously outsourced or moved abroad back to the U.S.?
Yes: 6.2%
No: 93.8%

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