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Texas Manufacturing Outlook Survey


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June 29, 2015

Texas Manufacturing Activity Still Contracting

What's New This Month

For this month's survey, Texas business executives were asked supplemental questions on the impact of lower energy prices. Results for these questions from the Texas Manufacturing Outlook Survey (TMOS), Texas Service Sector Outlook Survey (TSSOS) and Texas Retail Outlook Survey (TROS) have been released together. Read Special Questions results.

Texas factory activity declined again in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose to -6.5 but remained in negative territory, suggesting a fourth consecutive month of contracting output.

A similar pattern was seen among other measures of current manufacturing activity in June. The capacity utilization index increased to -6.1 and the shipments index increased to -8.8. These negative index levels indicate continued contraction, but the upward movement this month suggests the pace of decline slowed. The new orders index moved up to -10.3, while the growth rate of orders index edged down to -16.5.

Perceptions of broader business conditions worsened further, although not as sharply in June as in prior months. The general business activity index jumped nearly 14 points to -7, its highest reading since January. The company outlook index moved to -7.4, up from -10.5 last month.

Labor market indicators reflected slight employment declines and shorter workweeks. The June employment index was negative for a second month in a row but pushed up 7 points to -1.2. Fourteen percent of firms reported net hiring, compared with 15 percent reporting net layoffs. The hours worked index inched up from -11.6 to -10.7.

There was upward pressure on input prices and wages in June, and downward pressure on selling prices eased. The raw materials prices index jumped 9 points to 7.4 after five months of negative readings. The finished goods prices index remained negative for a sixth month but moved up to -1.9, suggesting an abatement of downward pressure. Meanwhile, the wages and benefits index remained positive and little changed at 16.4.

Expectations regarding future business conditions improved in June. The index of future general business activity edged up to 8.1 and the index of future company outlook came in at 13.4. Indexes of future manufacturing activity moved down slightly but remained in solid positive territory.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected June 16–24, and 115 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.

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 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. Data have been seasonally adjusted as necessary.

Next release: July 27, 2015

June 29, 2015
 

Click on links in the table for greater details. Historical data are available from June 2004 to the most current release month.

Business Indicators Relating to Facilities and Products in Texas
Current (versus previous month)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
-6.5
-13.5
+7.0
Decreasing
4
24.7
44.2
31.2
Capacity Utilization
-6.1
-11.6
+5.5
Decreasing
5
22.7
48.5
28.8
New Orders
-10.3
-14.1
+3.8
Decreasing
6
24.1
41.5
34.4
Growth Rate of Orders
-16.5
-15.2
-1.3
Decreasing
8
15.5
52.5
32.0
Unfilled Orders
-17.1
-10.6
-6.5
Decreasing
7
10.2
62.5
27.3
Shipments
-8.8
-13.2
+4.4
Decreasing
5
24.3
42.6
33.1
Delivery Time
-3.1
-10.2
+7.1
Decreasing
5
9.7
77.5
12.8
Materials Inventories
1.5
-1.7
+3.2
Increasing
1
21.4
58.7
19.9
Finished Goods Inventories
-3.6
-4.5
+0.9
Decreasing
3
17.5
61.4
21.1
Prices Paid for Raw Materials
7.4
-1.7
+9.1
Increasing
1
15.9
75.6
8.5
Prices Received for Finished Goods
-1.9
-8.7
+6.8
Decreasing
6
11.9
74.3
13.8
Wages and Benefits
16.4
14.7
+1.7
Increasing
67
19.0
78.4
2.6
Employment
-1.2
-8.2
+7.0
Decreasing
2
13.8
71.2
15.0
Hours Worked
-10.7
-11.6
+0.9
Decreasing
6
12.9
63.5
23.6
Capital Expenditures
1.6
3.4
-1.8
Increasing
3
13.4
74.8
11.8
General Business Conditions
Current (versus previous month)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
-7.4
-10.5
+3.1
Worsening
6
15.2
62.2
22.6
-7.0
-20.8
+13.8
Worsening
6
16.1
60.8
23.1
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
35.2
38.6
-3.4
Increasing
76
47.4
40.5
12.2
Capacity Utilization
31.7
35.5
-3.8
Increasing
76
43.0
45.8
11.3
New Orders
33.9
35.3
-1.4
Increasing
76
47.3
39.3
13.4
Growth Rate of Orders
21.1
27.3
-6.2
Increasing
76
35.4
50.3
14.3
Unfilled Orders
-2.9
4.0
-6.9
Decreasing
1
13.5
70.1
16.4
Shipments
31.5
33.3
-1.8
Increasing
76
45.0
41.6
13.5
Delivery Time
1.2
1.3
-0.1
Increasing
2
11.0
79.2
9.8
Materials Inventories
-0.9
-6.4
+5.5
Decreasing
5
17.4
64.2
18.3
Finished Goods Inventories
-2.8
-13.8
+11.0
Decreasing
6
15.7
65.7
18.5
Prices Paid for Raw Materials
19.3
21.1
-1.8
Increasing
75
26.6
66.1
7.3
Prices Received for Finished Goods
5.5
10.1
-4.6
Increasing
36
15.6
74.3
10.1
Wages and Benefits
31.0
30.6
+0.4
Increasing
133
31.8
67.4
0.8
Employment
16.9
14.1
+2.8
Increasing
31
27.1
62.7
10.2
Hours Worked
6.1
11.1
-5.0
Increasing
4
15.5
75.1
9.4
Capital Expenditures
13.0
10.5
+2.5
Increasing
67
25.0
63.0
12.0
General Business Conditions
Future (six months ahead)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
13.4
15.1
-1.7
Improving
75
26.1
61.2
12.7
8.1
4.9
+3.2
Improving
2
21.7
64.7
13.6

*Indicator direction refers to this month's index. If index is positive (negative), indicator is increasing (decreasing) or improving (worsening). If zero, indicator is unchanged.
**Number of months moving in current direction.
Data have been seasonally adjusted as necessary.

June 29, 2015

Current and future production

Downloadable chart: Low-res (72 dpi) | Hi-res (300 dpi)

June 29, 2015

Comments from Survey Respondents

These comments are from respondents' completed surveys and have been edited for publication.

Chemical Manufacturing

  • We are picking up business from other competitors. We have been awarded business based on quality activities.

Fabricated Metal Manufacturing

  • We currently believe we are seeing the bottom of the downturn in oil and gas. So far, it appears it is holding true as new orders received in June are equal to the prior month for the first time in 2015.
  • Sales and orders are increasing, but costs are increasing at a greater rate.
  • First we faced strikes, now storms. It is tough out there.
  • Signs of some stability in oil and gas exploration and production are emerging. If that continues, then our business conditions will benefit in the coming months.
  • Weather in the Texas region continues to slow home building and renovation. Due to the wet conditions, most of my customers are unable to work on projects and their backlog continues to grow.

Machinery Manufacturing

  • Our dollars quoted for new sales is down significantly. We also see customers delaying purchasing new products. For example, orders that our salesmen thought they would receive in late May or early June have been pushed out until August. Customers just continue to procrastinate—we think due to their own uncertainty about the price of oil.
  • The decrease in the cost of energy is a positive for consumer-oriented businesses. We believe that recent proposed regulations by the Environmental Protection Agency will be a large negative to manufacturing and business in general.

Transportation Equipment Manufacturing

  • We plan to install new equipment in December to better supply our customer.
  • Imports from Asia continue to take business from our manufacturing capacities.

Wood Product Manufacturing

  • May's rains will impact construction activity over the next couple of months.

Paper Manufacturing

  • June has continued the slow pace of May (and year to date). So far, the predicted uptick has not materialized. We are now far enough behind 2014 to not be able to catch up this year. 2015 is guaranteed to be behind 2014 at this point.

Printing and Related Support Activities

  • After a strong start to the year, we've hit a dead spot: sales are off 40 percent and possibly worse for July. For the first time in a long while, we've had multiple employees poached by competitors with higher wage and "you'll get first shift" offers. This has stirred up the rumor mill on the shop floor, and employee dissatisfaction seems to be rising.

Food Manufacturing

  • There is a lack of work force. Every business seems to be having the same problem in our area.

Miscellaneous Manufacturing

  • We feel that the government tax and regulatory environment is awful. We are spending too much effort on non-value generating activities, and it’s getting worse.

 

Historical Data

Historical data can be downloaded dating back to June 2004.

Indexes

Download indexes for all indicators. For the definitions of all variables, see Data Definitions.

Unadjusted excel
Seasonally adjusted excel

All Data

Download indexes and components of the indexes (percentage of respondents reporting increase, decrease, or no change). For the definitions of all variables, see Data Definitions.

Unadjusted excel
Seasonally adjusted excel

Questions regarding the Texas Manufacturing Outlook Survey can be addressed to Emily Kerr at emily.kerr@dal.frb.org.

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