April 2022 Manufacturing Business Outlook Survey

Note: Survey responses were collected from April 11 to April 18.

Manufacturing activity continued to expand in the region, according to the firms responding to the April Manufacturing Business Outlook Survey. The survey’s indicators for current general activity, shipments, and new orders declined from last month’s readings but remained positive. The employment index and both price indexes edged higher and remain elevated. The future indicators for general activity and new orders fell sharply, but overall the firms continued to expect growth over the next six months.

Current Indicators Remain Positive

The diffusion index for current general activity decreased 10 points to 17.6 in April, mostly offsetting its increase from last month. More than 34 percent of the firms reported increases in current activity this month, while 17 percent reported decreases. The index for new orders declined 8 points to 17.8, and the current shipments index fell 11 points to 19.1.

On balance, the firms continued to report increases in employment. The employment index — which reached an all-time high last month — inched up higher, to 41.4. Although a majority of responding firms (56 percent) reported steady employment levels, the share reporting increases (42 percent) far exceeded the share reporting decreases (1 percent). The average workweek index ticked down from 21.4 to 20.8.

Price Increases Remain Widespread

The indicators for prices paid and prices received continued to suggest widespread price increases and inched higher this month. The prices paid index rose 4 points to 84.6, its highest reading since June 1979 (see Chart 2). More than 85 percent of the firms reported increases in input prices, while 1 percent reported decreases; 11 percent of the firms reported no change. The current prices received index edged up from 54.4 to 55.0. Almost 57 percent of the firms reported increases in prices received for their own goods this month, 2 percent reported decreases, and 36 percent reported no change.

Firms Expect Highest Cost Increases for Raw Materials

In this month’s special questions, the firms were asked about changes in wages and compensation over the past three months as well as their updated expectations for changes in various input and labor costs for the coming year. Eighty percent of the firms indicated wages and compensation costs had increased over the past three months, 20 percent reported no change, and none reported decreases. The majority of firms have reported adjusting their 2022 budgets for wages and compensation since the beginning of the year, with 65 percent noting they are planning to increase wages and compensation by more than originally planned and 33 percent noting they are planning to increase wages and compensation sooner than originally planned.

The firms still expect higher costs across all categories of expenses in 2022: Responses indicate a median expected increase of 10 to 12.5 percent for raw materials and of 7.5 to 10 percent for energy and for intermediate goods, higher than when this question was asked back in January. The median expected change for total compensation (wages plus benefits) was unchanged at 5 to 7.5 percent.

Future Indicators Decline but Remain Positive

The diffusion index for future general activity decreased 15 points to 8.2, its lowest reading since December 2008 (see Chart 1). More than 37 percent of the firms expect increases in future activity (down from 41 percent last month) compared with 29 percent that expect decreases (up from 18 percent). The future new orders index fell 18 points to 3.7, while the future shipments index edged down 1 point to 29.9. The future employment index ticked down 2 points but remains elevated. Nearly 55 percent of the firms expect steady employment levels over the next six months, 40 percent of the firms expect to increase employment, and 1 percent expect employment declines.

Summary

Responses to the April Manufacturing Business Outlook Survey suggest continued expansion in regional manufacturing conditions this month. The indicators for current activity, new orders, and shipments all decreased but remained positive. The firms continued to indicate overall increases in employment and widespread increases in prices. The indicators for future general activity and new orders fell notably, but the respondents continue to expect growth overall over the next six months.

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