The November Manufacturing Business Outlook Survey showed a decline in manufacturing activity in the region, according to the opinions of companies that participated in the survey between November 11 and 18. In the month, the survey’s index for overall activity turned negative, reflecting the current weak performance of the manufacturing sector. In contrast, the new orders and shipments indicators declined but remained in positive territory, indicating some continued activity in these areas.
As for the employment index, it turned positive, indicating an increase in hiring in some companies. This shows that some sectors have witnessed an expansion in the workforce in general. However, companies continue to expect price increases, as both price indices indicate continued increases in production and service costs. These increases remain close to historical averages, which may indicate relative stability in the long term.
On the other hand, companies remain optimistic about future growth, with most companies expecting growth in the next six months. Positive expectations were widely spread this month, reflecting greater optimism about the future than in previous periods. This trend reflects an improvement in the outlook for the industrial sector, with many expecting greater stability in economic activity in the coming period.
Despite the decline in overall industrial activity in November, the outlook remains positive. This suggests that companies are ready to respond to current challenges and adapt their strategies to achieve sustainable growth in the coming months.
In terms of employment, expectations of higher employment costs also showed an improvement in the outlook. The Future Employment Index rose from 27.3 to 34.2, indicating an increase in employment expectations over the next six months. This positive outlook indicates that companies are ready to expand their workforce to keep up with increased demand and meet market needs.
Manufacturing Business Outlook Survey November 2024
The November 2024 Manufacturing Business Outlook Survey results indicate a clear decline in most economic indicators for the industrial sector. The current general activity index fell from 10.3 to -5.5, achieving a negative reading for the second time since January. This decline reflects a decline in overall activity for many of the companies surveyed. About 18% of companies reported an increase in activity this month, but this percentage was lower than 24% last month.
In contrast, 23% of companies reported a decline in activity, which is higher than the 14% recorded last month. While 58% of companies confirmed that activity did not change, which reflects relative stability. As for new orders and shipments, their indicators declined but remained in positive territory. The new orders index fell by 5 points to reach 8.9, while the shipments index fell by 3 points to reach 4.5. Despite this decline, the indicators still reflect continued activity in these areas.
On the other hand, the employment index witnessed a clear improvement. After remaining flat last month, the index rose to 8.6, indicating an increase in staffing levels at some firms. More than two-thirds of firms reported no change in staffing levels, while 17% reported an increase in staffing compared to just 9% reporting a reduction in workforce. This increase in staffing suggests that some firms are boosting their productivity.
The Average Workweek Index also rose by 29 points to 17.4, the highest level since April 2022. This increase suggests that firms may be asking their employees to work longer hours to meet demand or to cope with economic challenges.
Despite most indicators showing a decline in activity, firms remain optimistic about growth in the coming months. Firms remain optimistic about growth expectations, reflecting their desire to adapt to the current situation.
The Received Prices Index also fell by 4 points
Firms continue to report increases in overall prices despite some declines. The Prices Paid Index fell for the second month in a row, but remained positive. It fell by 3 points to 26.6. About 27% of firms reported increases in input prices, while none reported decreases. 67% reported no change in prices. The Prices Received Index also fell by 4 points to 14.3. More than 15% of firms reported increases in the prices received for their goods, while only 1% reported decreases. 76% of firms reported no change in prices received. Despite the slight decline in both indices, increases were still noticeable in some areas, reflecting continued downward pressure on input and commodity prices.
The decline in the indices may be due to the decline in overall industrial activity. However, firms that saw price increases continue to highlight higher costs due to various economic factors. Despite the slight decline in the indicators, the relative stability in prices reflects the market being affected by some ongoing pressures.
On the other hand, companies continue to respond to the challenges of pricing by adjusting their strategies. These changes in the indicators indicate a difference in the way companies are dealing with the effects of increasing costs. However, companies are expected to continue raising prices to absorb the increased costs and maintain profit margins.
The outlook remains optimistic despite the current challenges, with some expecting price increases to continue but at a slower pace. This indicates that companies are adapting to the difficult economic conditions and looking for ways to maintain the stability of their businesses in light of the changing circumstances.
Companies expect greater increases in their prices
Companies continue to expect price increases over the next four quarters. This month’s questions asked companies to forecast changes in their own product prices as well as the prices that U.S. consumers will pay. For their own product prices over the next year, companies forecast a 3.0% increase, up slightly from 2.8% in the previous survey in August. Companies also reported an average price increase of 3.0% over the past year, the same rate as in the previous quarter.
For employee compensation costs, companies forecast a 3.4% increase in wages and benefits on a per-employee basis over the next four quarters. However, this represents a slight decrease from the August forecast of a 3.5% increase. As for inflation, companies’ expectations for U.S. consumer inflation remained steady at 3.0% over the next year, the same rate as in the last survey.
Most Forward-Looking Indicators Rise
Despite the current challenges, several forward-looking indicators rose significantly in November. The diffusion index for future general activity rose from 36.7 to 56.6, its highest level since June 2021. This increase reflects companies’ optimism that activity will pick up in the near future. The new orders and future shipments indices also saw notable increases, rising to 66.2 and 52.1, respectively. These increases represent their highest levels in more than three years, indicating an improvement in demand for products and services.
Furthermore, the future prices paid index rose significantly from 47.3 to 63.7, its highest level since April 2022. This indicates expectations of a further increase in input costs in the coming months. The future prices received index also rose by 9 points to 48.5, reflecting companies’ expectations of higher prices for their goods.
