ATLANTA -- Southeastern manufacturers' production rebounded during July, but the Asian economic crisis is holding prices down and weakening exports, according to a report released Wednesday by the Federal Reserve.
"We're definitely seeing some price weakness that is related to the Asian crisis. Price weakness is showing up in lumber, paper, printing, chemicals and metals," said Mark Rogers, author of the monthly survey of plant executives.
Asian companies have lowered prices to cope with their battered currencies, forcing their American competitors to respond with lower prices as well. Such fierce price competition prevents the executives surveyed from solving their tight labor conditions by raising wages, according to Mr. Rogers, a research economist with the Federal Reserve Bank of Atlanta.
"The inflation picture for goods is extremely favorable. The inflation rate is negligible," he said. "There are some cases where there is pressure for higher wages, but there are constrained on what producers can pay because of their price competition."
Many Southeastern managers are considering buying additional equipment to boost production rather than hiring new workers, he said.
Good news about inflation probably means the Fed's Open Market Committee meeting next Tuesday won't result in higher interest rates.
Georgia manufacturers have reason for a brighter outlook than farmers, warned Agriculture Commissioner Tommy Irvin.
He announced Wednesday that crop damage in the state has exceeded $500 million and could climb higher even though some areas have received rain recently.
Lack of rain has retarded cotton boll development and sparked an armyworm population increase. But it has come in time to nourish peanuts during their critical "pegging" stage.