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April 2008 Business Outlook Survey

Survey Press Conference

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

Activity in the region’s manufacturing sector continued to weaken this month, according to firms polled for the April Business Outlook Survey. Indexes for general activity, shipments, new orders, and employment all remained negative this month and decreased from their readings in March. A significant share of the manufacturers continued to report price pressures, and more firms reported higher prices for their own products. Despite the weakness in current activity, the region’s manufacturing executives were cautiously optimistic about future activity, with most future indicators showing improvement this month.

Indexes Reflect Weaker Activity

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, deteriorated from -17.4 in March to -24.9 this month (see Chart). The index has remained negative for five consecutive months. Forty-eight percent of the firms reported no change in activity from March, but the percentage of firms reporting decreases (38 percent) remained greater than the percentage reporting increases (13 percent). Other broad indicators behaved similarly. Demand for manufactured goods, as represented by the survey’s new orders index, decreased from -9.3 to -18.8. The current shipments index decreased slightly, from -6.3 to -8.0. The index for unfilled orders remained negative for the eighth consecutive month, but the delivery times index increased and was positive for the first time in six months. Firms reported a decline in inventories, and the current inventory index fell 13 points, to its lowest level since September 2001.

Continued weakness in manufacturing is evident in responses about employment and hours worked this month. The percentage of firms reporting a decrease in employment (19 percent) was greater than the percentage reporting an increase (8 percent), and the current employment index fell from -4.7 to -11.1, its third negative reading in four months. Weakness remained in hours worked: 18 percent indicated declines in average hours worked; 6 percent reported increases. The average workweek index declined from -10.0 in March to -12.3, its fourth consecutive negative reading.

Firms Report Higher Prices

A sizable share of the firms continued to report higher prices, both for inputs and for their own products. Fifty-five percent of manufacturers reported higher input prices this month, although the prices paid index edged slightly lower, from 54.4 in March to 51.6. Price increases for the manufacturers’ own products remained relatively widespread. Thirty-eight percent of the firms reported increased prices for their own goods this month, up from 30 percent in March; 8 percent reported lower prices. The prices received index rose 10 points, to 30.9, its highest reading since January.

Six-Month Outlook Sees Improvement

The future general activity index rebounded from a reading of -0.5 in March, rising to 13.7, its highest level in five months (see Chart). Thirty-seven percent of firms expect growth in activity over the next six months; 24 percent expect declines. The indexes for future new orders and shipments also improved this month, rising eight points and five points, respectively. On balance, firms expect to maintain current employment levels over the next six months. The percentage of firms expecting to add workers is essentially the same as the percentage expecting to make cuts (23 percent).

In this month’s special questions, firms were asked about changes in demand for their products and changes in capital spending plans since January (see Special Questions). The percentage of firms indicating that demand was currently lower than they had expected at the beginning of the year (38 percent) exceeded the percentage indicating that demand was greater than expected (29 percent). With regard to capital spending, the percentage of firms indicating that they had decreased their capital spending plans (27 percent) was greater than the percentage indicating they had increased them (19 percent) since January. Moreover, since January, 10 percent of the firms indicated that they had either delayed planned capital spending until later in the year or postponed it indefinitely.


The region’s manufacturing sector showed continued weakness in April. The survey’s current indicators for activity, new orders, shipments, employment, and average hours worked remained negative and declined from their readings in March. Cost pressures remained widespread, and a larger share of firms reported price increases for their own manufactured goods this month. Although somewhat more optimistic about the future this month, manufacturers remain generally cautious. Firms expect no increase in employment over the next six months, and some firms have cut back, delayed, or postponed planned capital spending.

Special Questions (April 2008)

1. How would you characterize the current demand for your product(s) compared to what was expected at the beginning of the year?
Greater than expected
Significantly greater
Somewhat greater
About what was expected
Less than expected
Somewhat less
Significantly less
No response
2. To what extent have you changed your plans for capital spending since January?
Increased significantly
Increased somewhat
No change
Decreased somewhat
Decreased significantly
Delayed until later in the year
Postponed indefinitely
No response

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