Indexes for general activity, new orders, and shipments all remained positive this month. Indicative of improvement, the overall level of employment and average work hours among reporting firms increased this month. Overall, expectations moderated somewhat in December, although the forecast for employment improved slightly.
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 16.7 in November to 20.4 this month. The index has now remained positive for five consecutive months. Other broad indicators suggest continued growth this month, but they fell somewhat from their November readings. The current new orders index, which has also remained positive for five consecutive months, decreased 8 points. The current shipments index fell less than 1 point. The current inventory index, although still negative, increased 10 points, to its highest reading in four months. Indicators for unfilled orders and delivery times edged higher and reached their highest readings since well before the recession began at the end of 2007.
Labor market conditions have been stabilizing in recent months, and for the first time since late 2007, more firms reported an increase in employment than reported declines. The current employment index increased 7 points, to its highest reading since October 2007. The workweek index edged four points higher, to 6.4, its second consecutive positive reading.
Margin squeeze:
Respondents reported higher costs for inputs this month. The prices paid index showed a notable increase of 19 points from last month.
The percentage of firms reporting higher prices paid increased from 24 percent in November to 39 percent this month. On balance, however,
firms reported near?steady prices for their own manufactured goods. The percentage of firms reporting lower prices (14 percent) was slightly greater than the percentage reporting higher prices (12 percent).The future general activity index remained positive for the 12th consecutive month but decreased notably from 36.8 in November to
24.4, its lowest reading since March. The future activity index has been trending downward since mid?year. Indexes for future new orders and shipments declined this month, falling 15 points and 7 points, respectively.
For the eighth consecutive month, the percentage of firms expecting employment to increase over the next six months exceeded the
percentage expecting declines (28 percent versus 14 percent) and the future employment index edged 6 points higher.
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