FRB Dallas Home » Research & Data » Texas Business Outlook Surveys » Texas Manufacturing Outlook Survey
 
 

Research & Data

Texas Manufacturing Outlook Survey


  • Current Report
  • Results Table
  • Production Chart
  • Comments
  • Historical Data
Report in PDF
October 28, 2013

Texas Manufacturing Activity Strengthens

What's New This Month

For this month's survey, manufacturers were asked supplemental questions on credit availability. Read Special Questions.

Texas factory activity picked up further in October, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 11.5 to 13.3, suggesting output increased at a slightly faster pace than in September.

Other measures of current manufacturing activity also indicated a slightly stronger expansion in October. The new orders index came in at 6.2, slightly above its September level, and marked a sixth consecutive month of increased demand. The capacity utilization index edged up to 11.9, and the shipments index rose 3 points to 13.2.

Perceptions of broader business conditions were less optimistic in October. The general business activity index remained positive but fell to 3.6 after rising sharply to 12.8 in September. The company outlook index posted a fifth consecutive positive reading but moved down to 5.4.

Labor market indicators reflected continued employment growth and longer workweeks. The October employment index was 9.6, largely unchanged from its September level. Seventeen percent of firms reported hiring new workers compared with 7 percent reporting layoffs. The hours worked index turned positive for the first time in three months, coming in at 3.9, indicating an increase in average workweek length.

Upward pressure on prices continued in October, and compensation costs picked up notably. The raw materials price index moved up to 22.7, posting its highest reading in nine months. The finished goods price index remained positive for the third month in a row but fell 7 points to 3.5. The wages and benefits index rose sharply from 9.7 to 20.4, reaching its highest level since July 2012. Looking ahead, 39 percent of respondents anticipate further increases in raw materials prices over the next six months, while 34 percent expect higher finished goods prices.

Expectations regarding future business conditions remained optimistic in October. The indexes of future general business activity and future company outlook declined from September levels but remained in strongly positive territory. Most indexes for future manufacturing activity also fell while remaining 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 Oct. 15–23, and 82 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: November 25, 2013

October 28, 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 Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
13.3
11.5
+1.8
Increasing
6
30.0
53.3
16.7
Capacity Utilization
11.9
10.7
+1.2
Increasing
11
26.3
59.3
14.4
New Orders
6.2
5.0
+1.2
Increasing
6
30.7
44.8
24.5
Growth Rate of Orders
-0.1
0.9
-1.0
Decreasing
1
21.5
56.9
21.6
Unfilled Orders
-3.9
1.1
-5.0
Decreasing
1
13.0
70.1
16.9
Shipments
13.2
10.3
+2.9
Increasing
6
29.8
53.6
16.6
Delivery Time
-3.6
-1.1
-2.5
Decreasing
4
11.0
74.4
14.6
Materials Inventories
-3.0
-7.9
+4.9
Decreasing
4
14.6
67.8
17.6
Finished Goods Inventories
1.2
-10.0
+11.2
Increasing
1
14.6
72.0
13.4
Prices Paid for Raw Materials
22.7
17.6
+5.1
Increasing
51
28.3
66.1
5.6
Prices Received for Finished Goods
3.5
10.6
-7.1
Increasing
3
12.7
78.1
9.2
Wages and Benefits
20.4
9.7
+10.7
Increasing
47
21.7
77.0
1.3
Employment
9.6
10.0
-0.4
Increasing
5
16.7
76.2
7.1
Hours Worked
3.9
-0.6
+4.5
Increasing
1
20.8
62.3
16.9
Capital Expenditures
11.8
5.9
+5.9
Increasing
15
20.5
70.8
8.7
General Business Conditions
Current (versus previous month)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
5.4
7.9
-2.5
Improving
5
22.5
60.4
17.1
3.6
12.8
-9.2
Improving
5
22.9
57.8
19.3
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
26.1
33.3
-7.2
Increasing
56
38.8
48.6
12.7
Capacity Utilization
28.5
31.5
-3.0
Increasing
56
37.7
53.1
9.2
New Orders
24.6
32.7
-8.1
Increasing
56
35.6
53.4
11.0
Growth Rate of Orders
17.1
25.4
-8.3
Increasing
56
29.5
58.1
12.4
Unfilled Orders
7.6
4.6
+3.0
Increasing
3
16.5
74.7
8.9
Shipments
33.8
31.0
+2.8
Increasing
56
43.0
47.9
9.2
Delivery Time
-0.2
3.7
-3.9
Decreasing
1
9.3
81.2
9.5
Materials Inventories
10.2
4.6
+5.6
Increasing
3
20.3
69.6
10.1
Finished Goods Inventories
5.1
-1.2
+6.3
Increasing
1
16.5
72.2
11.4
Prices Paid for Raw Materials
32.9
31.0
+1.9
Increasing
55
39.2
54.4
6.3
Prices Received for Finished Goods
27.9
13.9
+14.0
Increasing
16
34.2
59.5
6.3
Wages and Benefits
38.4
28.6
+9.8
Increasing
113
40.0
58.4
1.6
Employment
13.9
21.9
-8.0
Increasing
50
25.3
63.3
11.4
Hours Worked
5.5
9.5
-4.0
Increasing
5
16.8
71.9
11.3
Capital Expenditures
17.9
16.1
+1.8
Increasing
47
28.2
61.5
10.3
General Business Conditions
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
15.3
17.3
-2.0
Improving
54
33.9
47.6
18.6
8.1
13.3
-5.2
Improving
5
27.1
53.9
19.0

*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.

October 28, 2013

Current and future production

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

October 28, 2013

Comments from Survey Respondents

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

Paper Manufacturing

  • This is our busy time of year, but it is not meeting our expectations. We expect higher costs for benefits in 2014. We expect a better year in 2014 based on better alignment of sales and production per plant. We have increased our sales push, with results to be seen.

Nonmetallic Mineral Product Manufacturing

  • October 2013 will end up our busiest month ever. This is the sixth new record month this year.
  • The housing sector of the economy has shown improvement in recent months, and our expectation is for this to continue in 2014. Concern for downside risk related to interest rates and inflation continues, given the slow economic recovery and the potential negative impact of the Affordable Care Act.

Primary Metal Manufacturing

  • We have seen reduced feed material to the plant, resulting in slightly reduced production.
  • The federal government needs to run better.

Fabricated Metal Manufacturing

  • Refineries are pushing some turnaround work, and as a result, emergency repair work is increasing, which is higher-margin work.
  • Bookings since August have improved after nine months of slightly negative monthly year-over-year comparisons.
  • Although our level of requests for quotations has increased dramatically, we are not receiving confirmation of purchase orders, which indicates owners are delaying decisions and/or designing/shopping for lower alternatives.
  • The government budget mess is dramatically affecting our business. Our primary clients include the federal government, government contractors, public schools, public hospitals and large commercial businesses. All have put new orders on hold, and some existing orders are not being processed properly.
  • The government shutdown and possible default of the U.S. on its debt and the ramifications of that have us stopped dead on capital spending. We had planned on over $2 million over the next 12 months. All of that is on hold now.
  • The slowdown came faster and deeper than the normal fourth quarter slowing due to uncertainty in the government/budget/debt policy concerns.

Machinery Manufacturing

  • We are beginning to experience some upward wage pressures in several markets (particularly in the Gulf Coast area) as general contractors begin recruiting to staff major construction projects.
  • Current threat of an increase in interest rates appears to have subsided; that is good in the short run but may prevent long-term growth.

Computer and Electronic Product Manufacturing

  • The effects of the sequestration on the Department of Defense are anticipated to bring more declines in 2014.
  • We were expecting things to be a bit stronger in the fourth quarter but would characterize the fourth quarter as in the range of a seasonal decline. Generally speaking, orders are down but consistent with a seasonally weaker fourth quarter.

Transportation Equipment Manufacturing

  • There is increasing global competition with new foreign competitors depressing prices and margins. There is only minor growth potential without taking market share. We are focusing on overall cost competitiveness to maintain our new order intake. We anticipate a relatively flat rate of year-over-year growth.

Food Manufacturing

  • Dairy products have a direct elasticity connection to the prices consumers pay, and the rising farm raw milk costs will continue to depress volumes manufactured and consumed. The battle for the consumers’ stomach against an array of drinks and water items will intensify this problem. It appears as though the increase in exports of dairy manufactured powder, butter and the like has managed to keep milk prices at higher levels domestically and possibly for the foreseeable future.

Miscellaneous Manufacturing

  • We manufacture and sell class rings and yearbooks, which are a consumer discretionary spend. In addition, we see negative trends for traditional commemorative products.

 

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.

Sign up for our free e-mail alert to be automatically notified as soon as the latest Texas Manufacturing Outlook Survey is released on the web.

 

Federal Reserve Bank of Dallas Seal
Federal Reserve Bank of Dallas

2200 N. Pearl St., Dallas, Texas 75201 | 214.922.6000 or 800.333.4460
Disclaimer / Privacy Policy

Federal Reserve Centennial