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Texas Manufacturing Outlook Survey


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July 29, 2013

Texas Manufacturing Activity Increases but at a Slower Pace

Texas factory activity continued to expand in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 17.1 to 11.4, suggesting output growth continued but at a slower pace than in June.

Some other measures of current manufacturing activity also indicated slower growth in July. The new orders index was positive for the third month in a row, although it edged down from 13 to 10.8. The capacity utilization index also slipped slightly, falling three points to 12.2. However, the shipments index inched up to 17.7, reaching its highest reading in six months.

Perceptions of broader business conditions improved again in July. The general business activity index posted a second consecutive positive reading, although it edged down from 6.5 to 4.4. The company outlook index also remained positive but fell, coming in at 4.5.

Labor market indicators reflected a pickup in labor demand. The employment index rose to 9.3, its highest reading in nearly a year. Eighteen percent of firms reported hiring new workers compared with 9 percent reporting layoffs. The hours worked index remained in positive territory.

Input prices and wages rose in July while selling prices were little changed. The raw materials price index came in at 15.9, slightly above its June reading of 14.3. The wages and benefits index was positive but edged down from 20 to 16.4, although the great majority of manufacturers continued to note no change in compensation costs. The finished goods price index was -1, suggesting fairly steady selling prices. Looking ahead, 37 percent of respondents anticipate further increases in raw materials prices over the next six months, while 24 percent expect higher finished goods prices.

Expectations regarding future business conditions remained optimistic in July. The indexes of future general business activity and future company outlook fell five points but remained in strongly positive territory. Indexes for future manufacturing activity also remained solidly positive.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected July 16–24, and 85 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: August 26, 2013

July 29, 2013
 

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 Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
11.4
17.1
-5.7
Increasing
3
23.5
64.4
12.1
Capacity Utilization
12.2
15.3
-3.1
Increasing
8
22.6
67.0
10.4
New Orders
10.8
13.0
-2.2
Increasing
3
28.7
53.4
17.9
Growth Rate of Orders
2.7
7.1
-4.4
Increasing
2
19.5
63.7
16.8
Unfilled Orders
-2.7
-0.4
-2.3
Decreasing
13
12.5
72.3
15.2
Shipments
17.7
15.4
+2.3
Increasing
3
29.2
59.3
11.5
Delivery Time
-1.2
3.2
-4.4
Decreasing
1
9.4
80.0
10.6
Materials Inventories
-2.4
0.3
-2.7
Decreasing
1
15.7
66.2
18.1
Finished Goods Inventories
-1.2
-2.1
+0.9
Decreasing
2
14.1
70.6
15.3
Prices Paid for Raw Materials
15.9
14.3
+1.6
Increasing
48
21.3
73.3
5.4
Prices Received for Finished Goods
-1.0
-2.1
+1.1
Decreasing
4
7.2
84.6
8.2
Wages and Benefits
16.4
20.0
-3.6
Increasing
44
17.0
82.4
0.6
Employment
9.3
0.2
+9.1
Increasing
2
17.9
73.5
8.6
Hours Worked
1.3
4.8
-3.5
Increasing
2
15.6
70.1
14.3
Capital Expenditures
3.5
9.9
-6.4
Increasing
12
13.9
75.7
10.4
General Business Conditions
Current (versus previous month)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
4.5
13.3
-8.8
Improving
2
18.7
67.1
14.2
4.4
6.5
-2.1
Improving
2
18.3
67.8
13.9
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
42.0
40.6
+1.4
Increasing
53
49.5
42.9
7.5
Capacity Utilization
41.4
37.2
+4.2
Increasing
53
47.7
46.0
6.3
New Orders
30.8
33.2
-2.4
Increasing
53
40.6
49.6
9.8
Growth Rate of Orders
23.1
26.3
-3.2
Increasing
53
32.2
58.7
9.1
Unfilled Orders
-4.9
6.6
-11.5
Decreasing
1
9.6
75.9
14.5
Shipments
36.2
36.9
-0.7
Increasing
53
46.4
43.5
10.2
Delivery Time
0.7
-3.2
+3.9
Increasing
1
13.1
74.5
12.4
Materials Inventories
0.0
-2.2
+2.2
Unchanged
1
18.1
63.9
18.1
Finished Goods Inventories
1.2
0.0
+1.2
Increasing
1
14.6
72.0
13.4
Prices Paid for Raw Materials
32.5
29.2
+3.3
Increasing
52
37.3
57.8
4.8
Prices Received for Finished Goods
14.5
20.9
-6.4
Increasing
13
24.1
66.3
9.6
Wages and Benefits
31.5
36.7
-5.2
Increasing
110
33.6
64.3
2.1
Employment
25.3
23.1
+2.2
Increasing
47
34.9
55.4
9.6
Hours Worked
9.3
8.0
+1.3
Increasing
2
17.4
74.5
8.1
Capital Expenditures
14.5
18.9
-4.4
Increasing
44
21.7
71.1
7.2
General Business Conditions
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
16.7
21.8
-5.1
Improving
51
30.6
55.5
13.9
9.6
14.7
-5.1
Improving
2
24.0
61.6
14.4

*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.

July 29, 2013

Current and future production

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

July 29, 2013

Comments from Survey Respondents

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

Paper Manufacturing

  • We are investing in new equipment at two of our facilities and a new building at another. Prices on equipment are still below levels from 2007, and so are construction costs.

Chemical Manufacturing

  • Business for July and August has increased, but it is still too early to know if this is a step increase in business or just a blip. Many of our raw material prices are commodities that are tied to the world market. Commodities seem to be at a low at this point, and it is difficult to expect prices to go lower, unless the economies outside the U.S. slow down more.

Fabricated Metal Manufacturing

  • Skilled labor is becoming extremely short in supply. Our hourly headcount has dropped by 10 percent, and we are unable to find replacements. Wage pressure is high.
  • The much anticipated increase in the volume of nonresidential construction starts has not materialized. Forward indicators remain positive, but improvement is elusive.
  • New orders have dropped by 20 percent just in the last two months. This was surprising, as we shifted from a state of not enough capacity to too much capacity in very little time.
  • Uncertainty in federal spending and health care reform causes a number of our customers to put off expansion.

Machinery Manufacturing

  • The delay in the Affordable Care Act employer mandate until 2015 has improved the outlook for the start of 2014.
  • Health care uncertainty is real, and health care costs are going to rise in 2014. Health care's increasing costs are of real concern as we have utilized Health Savings Accounts (HSAs) to help our associates manage their own health care spending. HSAs are being phased out or limited under the Affordable Care Act.

Food Manufacturing

  • Increasing governmental regulations in all areas are choking us. Manufacturing is being encouraged to leave the U.S.
  • We are hurt by high diesel prices. A good corn crop in the Midwest would help a lot of us that are agricultural businesses.

 

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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