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Economy

Economic Data (USA)

Monday, March 28, 2016

Texas Manufacturing Outlook Survey for March 2016

Earlier today, the Federal Reserve Bank of Dallas  (Dallas Fed) released the Texas Manufacturing Outlook Survey for this month (March 2016):

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Production Index: +3.3

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General Business Activity Index: -13.6

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Any figure below zero implies that manufacturing in the region is contracting, and vice versa.

  • Last month, the Production Index was -8.5

  • Last month, the General Business Activity Index was -31.8

From today's report:

"...Texas factory activity expanded slightly in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rebounded to positive territory this month—coming in at 3.3—after two months of negative readings.

Other indexes of current manufacturing activity also rose this month, although some remained in contractionary territory. The new orders index jumped 13 points but was still negative at -4.8, suggesting demand continued to fall but at a slower pace than last month. The growth rate of orders index has been negative since October 2014, although it did rise in March, to -11.7. The capacity utilization index bounced back to positive territory after negative readings so far this year, coming in at 3.3. Shipment volumes were largely unchanged this month as the shipments index remained near zero.

Perceptions of broader business conditions remained negative but showed signs of slight stabilization in March. The general business activity index jumped 18 points but remained negative for a 15th month, posting a reading of -13.6. The company outlook index posted a fourth negative reading in a row but edged up to -11.0.

Labor market indicators reflected continued decline in March. The employment index was largely unchanged at -10.3, with 12 percent of firms noting net hiring and 22 percent noting net layoffs. The hours worked index remained negative for a third month in a row but edged up to -5.6.

Price pressures were mixed and wages continued to rise. Abatement in downward pressure on input costs was seen in March, as the raw materials prices index moved up to zero. The finished goods prices index has been negative for more than a year and edged up to -8.2 this month. Meanwhile, the wages and benefits index stayed positive and rose from 12.3 to 14.7, suggesting a slightly accelerated rise in compensation.

Expectations regarding future business conditions improved in March. The index of future general business activity came in at 6.1, its first positive reading in four months. The index for future company outlook posted a second positive reading, at 11.6. Indexes for future manufacturing activity remained in solid positive territory..."

About this survey, from the Dallas Fed website:

"...The Texas Manufacturing Outlook Survey (TMOS) is a monthly survey of area manufacturers. Firm executives report on how business conditions have changed for a number of indicators, such as production, new orders, employment, prices and company outlook. Respondents are also asked to report on how they perceive broader economic conditions to have changed (general business activity). For all questions, participants are asked whether the indicator has increased, decreased or remained unchanged. Answers cover changes over the previous month and expectations for activity six months into the future. Participants are given the opportunity to submit comments on current issues that may be affecting their business.

About 100 manufacturers regularly participate in TMOS, which began collecting data in mid-2004. Respondents are broadly representative of manufacturing subsectors in the state economy. TMOS questionnaires are electronically transmitted to respondents in the middle of each month, and answers are collected over seven business days.

Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share of firms reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Indexes are seasonally adjusted as needed...

...Texas is important to the nation’s manufacturing output. The state produced $159 billion in manufactured goods in 2008, roughly 9.5% of the country’s manufacturing output. Texas ranks second behind California in factory production and first as an exporter of manufactured goods.

Texas turns out a large share of the country’s production of petroleum and coal products, reflecting the significance of the region’s refining industry. Texas also produces over 10 percent of the nation’s computer and electronics products and nonmetallic mineral products, such as brick, glass and cement..."

Click here to view the full Dallas Fed report.


For a national perspective on manufacturing in the United States, check out the Institute of Supply Management's Purchasing Manager's Index (PMI).

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