Survey shows manufacturing activity mostly flat to decreasing in previous quarter; outlook for next six months improving

For non-manufacturing companies, the diffusion index was positive for the assessment of the general level of business activity in the U.S. in the last quarter. The index was even more positive for the level of activity at the respondent’s company. More respondents reported an increase in payrolls than a decrease. However part-time payrolls and hours worked by full and part-time workers were mostly unchanged. Wage and price pressure continued to be strong. More respondents expected to increase capital expenditures rather than decrease. All of these survey responses correlate well with data on the local economy received from the Bureau of Labor Statistics and state-level labor agencies.

Responses to the same questions concerning the next six months yielded much the same results. Respondents mostly feel that the next six months will be much like the last three. Expectations of business activity at the national level are more positive. Fewer respondents expect wage pressures to increase over the next six months compared to the last quarter.

Compared to other respondents, manufacturers reported a less optimistic view of both the U.S. economy and their own businesses' economic activity in the previous quarter. There was near universal sentiment that prices and wages increased last quarter. Half of the respondents reported increased capital spending.

We ask two additional questions specific to manufacturers concerning new orders and supply chain issues. Respondents report little change in new orders, but an increase in delivery times and supply chain issues.

Looking ahead to the next six months, manufacturers have better expectations for their own company than for the U.S. economy as a whole. Wages and prices are expected to continue to rise. Little change in new orders or delivery times is expected.

This quarter's special focus question was on the most pressing economic concern of 2024 in the minds of the respondents. Over two-thirds of respondents identified either inflation or availability of labor as the most pressing concern, with inflation being the most common concern.

While consumer level expectations of inflation have decreased nationwide, businesses are still feeling the pressure. As the labor market continues to be tight both nationwide and locally, the concerns over the availability of labor are not unique to our region.

Overall, the responses to the survey corroborate the data that we see nationally and have reported in our Weekly Economic Trends and Indicators blog.