Growth Expected Over Next Six Months: Business Outlook Survey
The future general activity index remained positive for the 21st consecutive month and increased 7 points, to a reading of 26.3. The index, however, remains well below levels in the first half of the year. Indexes for future new orders and shipments declined slightly, falling 5 and 2 points, respectively. The percentage of firms that expect to increase employment over the next six months (22 percent) is higher than the percentage that expects to decrease employment (12 percent). The future employment index increased 12 points but remains well below its average reading for the year.
For this month’s special questions, manufacturers were asked about their total production growth for the third quarter (ending in September) and expectations for the fourth quarter. While 49 percent of the firms said total production would end higher for the third quarter compared with the second quarter, 36 percent indicated it would be lower. The average growth rate among the firms was a tepid 0.6 percent for the quarter. For the upcoming fourth quarter, the percentage of firms that expect a deceleration in production growth (48 percent) is higher than the percentage expecting an acceleration (24 percent).
According to respondents to the September Business Outlook Survey, regional manufacturing activity has stalled over the past two months. The broadest indicators of growth — general activity, new orders, and shipments — have all remained slightly negative for at least the last two months. Firms maintained steady employment levels this month but average work hours fell notably, as in the previous month. Despite the evident weakness over the past two months, firms expect growth in their manufacturing business over the next six months. However, the degree of confidence slipped in the third quarter, and, as a group, firms are expecting a slowing in the pace of production growth in the fourth quarter.