Carolinas Survey of Business Activity

Feb. 27, 2014

Carolinas Business Conditions Changed Little in February; Expectations Edged Lower


Results from the February Carolinas Survey of Business Activity suggest that the region's economy expanded at a relatively steady pace recently, while respondents' expectations for future conditions moved down modestly. The headline current general business conditions measure inched down, but remained in positive territory, putting a halt to an up-and-down trend that has persisted over the past several months. Meanwhile, the corresponding expectations metric moved down somewhat, although it remained solidly positive.

The current labor demand indicators, number of workers and average workweek, both pointed to greater utilization in February compared to January. Meanwhile, the corresponding indexes reflecting respondents' expectations for labor demand six months out remained firmly in positive territory.

On balance, the survey's current business spending metrics firmed a bit this month, with all three of the measures coming in greater than 0. Meanwhile, the three matching expectations measures moved lower from January's readings, but each was still solidly positive.

Average current price increases, paid and received, moved lower in February and remained low by recent historical standards. The expectations for input price increases also headed lower from January to February, but the expectations for prices received was unchanged.

General Business Assessments

Results from the most recent Carolinas Survey of Business Activity suggest that the region's economic expansion remained relatively robust, but expectations declined a bit. The headline current general business conditions index dipped to 8 in February from 9 a month earlier. Despite the retreat, this was the index's thirteenth straight positive reading. Sales appeared to soften during the month as well. The current sales metric fell to 2 this month from 5 in January. While the current conditions measures moved a little lower, there was a slightly more noticeable decline in the corresponding expectations metrics. The expected general business conditions measure moved down three points in February to 37. After reaching 47 in December, the current conditions index has dipped two straight months. The sales expectations index moved down to 35 this month from 40 in January.

Labor Market Conditions

The survey's labor demand indicators suggested that firms were adding to their payrolls, on balance, albeit at modest pace. The current number of workers index bounced up to 5 in February from −1 in January. At the same time, the current average workweek metric inched back into positive territory after languishing below 0 the prior two months.

The equivalent expectations measures suggest that respondents are far more optimistic about future labor market conditions. The expected number of employees index increased four points in February to 19, its second highest level in the past two years. Meanwhile, the expected average workweek metric decreased to 17 this month from 21 in November, but it too was among the highest readings experienced over the past two years. Taken together, these expectations measures bode well for hiring in the region six months from now.

Business Spending

Business spending on capital was solid again in February, but business services spending remained soft. The survey's current business services spending index increased three points this month, but at 2, indicated little change in business services spending. At the same time, the current equipment or software spending measure also increased three points, rising to 18 from 15 during the month. The current total capital equipment expenditures indicator was the only current spending metric to lose some ground this month, as it dipped to 16 from 19 in January.

All three of the corresponding business spending expectations metrics edged down over the month, although each remained in positive territory. The expected business services spending measure decreased to 13 in February from 18 in January, while the expected equipment or software spending expectations index inched down to 19 from 21. Total capital spending plans dropped to 26 from 33.


The average increase in current prices paid moved down to 1.75 percent in February from 1.99 percent a month earlier. At the same time, the average increase in current prices received decreased to 0.98 percent from 1.23 percent. These measures suggest little change in the pressure on profit margins than existed during January.

Meanwhile, the expected average increase in prices paid edged down to 2.08 percent from 2.19 percent at the same time that the average increase in expected prices received held at 1.55 percent.

Survey Participation, Report, and Data Questions

Jeannette Plamp
Associate Regional Economist
(804) 697-8152