Carolinas Survey of Business Activity

March 27, 2014

Carolinas Business Expansion Slowed in March; Expectations Bounced Back


The economic expansion in the Carolinas appeared to slow according to results from the March survey of business activity, while respondents' expectations for future conditions rebounded after two months of decline. The headline current general business conditions measure moved lower but remained in positive territory, while the current sales index dropped into slightly negative territory. Meanwhile, the corresponding expectations metrics bounced up to their highest readings of the year.

The current labor demand indicators — number of workers and average workweek — showed improvement again between February and March. Meanwhile, the matching indexes reflecting respondents' expectations for labor demand six months out remained firmly in positive territory, although the hours measure eased a bit.

Each of the survey's three current business spending metrics increased in March and was among the highest readings seen over the past year. Meanwhile, the three analogous expectations measures also increased from February, but at a more measured pace.

The average increase in current prices paid edged up in March, but the average increase in prices received jumped to its highest in nearly two years. Despite the uptick in average current price increases, both of the equivalent expectations measures moved down from February's readings.

General Business Assessments

The most recent results from our Carolinas Survey of Business Activity indicate that the region's economy expanded at a slower pace in March. The headline current general business conditions indicator fell to 3 this month from 9 in February. While the metric was positive for the 14th month in a row, March's reading matched the lowest of the past year. Meanwhile, the current sales indicator declined five points from February, settling in at −3, its lowest result since January 2013. Extremely adverse winter weather likely contributed to the softening this month.

In spite of the declines in current readings, respondents were more optimistic about the future. In March, the survey's indicators reflecting expectations for general business conditions and sales six months from now both increased, with both reaching their second highest reading of the past two years.

Labor Market Conditions

The survey's labor demand indicators suggested continued hiring this month in spite of the slower pace of economic expansion. The current number of workers index increased to 7 in March from 5 in February. Meanwhile, the current average workweek metric increased for the second month in a row, to 3 from 2 a month earlier. The comparable expectations indicators suggest that respondents remain optimistic about future labor market conditions. The expected number of employees index held steady at 19 in March, well above the average of 13 established over the past 12 months. The expected average workweek metric decreased to 11 this month from 17 in February, but it too was well above the average reading over the past year. Taken together, these expectations measures point to stronger demand for labor in coming months.

Business Spending

The survey's current business spending indicators advanced across the board in March. The current business services spending measure showed the most improvement month to month as it jumped to 16 in March (its highest reading in the nearly six-year history of the survey) from 2 a month earlier. The current equipment or software spending index also reached a historical pinnacle in March, as it rose to 25 from 18 in February. The current total capital spending metric fell one point shy of its all-time series high, increasing to 21 from 16 a month ago.

Each of the three comparable business spending expectations indexes moved higher in March, although the gains were not as pronounced as those reflected in the current measures. The expected business services spending metric increased three points during the month, while the expectations for equipment or software and total capital spending each increased by one point. All three were solidly positive.


The average increase in current prices paid moved up to 1.81 percent in March from 1.75 percent in February. At the same time, the average increase in current prices received rose to 1.63 percent from 0.98 percent. These measures suggest a little less pressure on profit margins than a month earlier.

Meanwhile, the expected average increase in prices paid fell to 1.79 percent from 2.08 percent. The average increase in expected prices received dipped to 1.38 percent in March, from 1.55 percent in February.

Survey Participation, Report, and Data Questions

Jeannette Plamp
Associate Regional Economist
(804) 697-8152