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October 2008 Business Outlook Survey

Survey Press Conference

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

Conditions in the region's manufacturing sector deteriorated significantly in October, according to firms polled this month. Coincident with the turmoil in financial markets over the past few weeks, indexes for general activity, new orders, shipments, and employment all decreased sharply from their readings in September. Cost pressures, which have been prevalent since the beginning of the year, were considerably less widespread this month. Also, fewer firms reported increases in the prices of their own manufactured goods. Most of the survey's indicators of future activity also fell this month, suggesting that the region's manufacturing executives expect no growth over the next six months.

Current Indicators Deteriorate

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 3.8 in September to -37.5, its largest one-month decline ever. The index is now lower than at any time during the nine-month span of negative readings prior to September (see Chart). Other broad indicators were sharply lower this month. Demand for manufactured goods, as represented by the survey's new orders index, decreased 36 points, to a reading of -30.5. The survey's shipments index decreased 21 points. Indexes for unfilled orders and delivery times declined 17 points and 15 points, respectively.

A drop in the current employment index paralleled the decline in current indicators, falling 17 points, to -18.0. The percentage of firms reporting a decrease in employment (28 percent) was greater than the percentage reporting an increase (10 percent). The average workweek index fell 11 points and has now been negative for 10 consecutive months.

Price Pressures Moderate Significantly

Price pressures eased notably this month. Although 30 percent of the firms reported paying higher prices for inputs, this was substantially offset by 22 percent paying lower prices. The prices paid index fell 24 points and has now fallen 68 points over the past three months. Price increases for firms' own manufactured goods also moderated this month: The percentage of firms reporting higher prices for their own manufactured goods (25 percent) was slightly higher than the percentage reporting lower prices (20 percent), and the prices received index fell 10 points, its fifth consecutive monthly decline.

Six-Month Indicators Also Decline

Area manufacturers' expectations for future conditions deteriorated sharply this month. The future general activity index decreased from 30.8 in September to -4.2 this month (see Chart). Indexes for future new orders and shipments both fell sharply, declining 48 and 55 points, respectively. On balance, firms now expect a decrease in employment over the next six months: The percentage of firms that expect a decrease (32 percent) exceeds the percentage expecting an increase (16 percent).

In this month's special questions, manufacturers were asked about problems related to the recent turmoil in credit markets (see Special Questions). Nearly 14 percent of the polled firms indicated that they had experienced problems obtaining credit to finance ongoing activities over the past month; however, a larger percentage of firms (30 percent) indicated that their customers were having such problems. About 18 percent of the firms said the credit problems had affected their own levels of production, and 6 percent reported that adverse conditions had influenced inventory levels. Firms were also asked if changes in financial conditions had prompted them to revise planned spending on plant or equipment over the next six months. Nearly 15 percent of the firms said they have revised their plans substantially downward; 28 percent noted a small downward revision.


According to the respondents to October's survey, manufacturing conditions declined sharply this month. Indicators for activity, new orders, shipments, and employment were all negative this month and declined sharply from September. Cost pressures have moderated significantly, and fewer firms are reporting price increases for their own manufactured goods. Indicators for future business conditions also fell markedly this month, and the percentage of firms that now expect a decline in activity over the next six months is higher than that of firms expecting an increase.

Special Questions (October 2008)

1. In the past month have either your firm or your customers experienced problems obtaining credit to finance ongoing activities?
Your firm
Your customers
No response
2. Have the problems affected levels of your own production or inventories?*
Substantial downward revision
Small downward revision
No change
3. Have recent changes in financial conditions prompted your firm to revise its planned spending on new plant or equipment over the next six to 12 months?
Small upward revision
Substantial upward revision
No response

Return to the main page for the Business Outlook Survey.

  • * Firms could choose more than one category. Twenty-one percent of total respondents indicated at least one of the problem categories.

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October 2008 PDF

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