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Texas Manufacturing Outlook Survey


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November 24, 2014

Texas Manufacturing Activity Posts Slower Growth

What's New This Month

For this month’s survey, Texas business executives were asked supplemental questions on employment expectations and the labor market. 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 increased again in November, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 13.7 to 6, indicating output growth slowed in November.

Other measures of current manufacturing activity also reflected slower growth during the month. The capacity utilization index fell sharply from 18.1 to 9.8. The new orders index also declined notably from 14.2 to 5.6, although more than a quarter of firms continued to note increases in new orders over October levels. The shipments index was 12.1, nearly unchanged from its October reading.

Perceptions of broader business conditions remained positive this month, while outlooks were less optimistic. The general business activity index held steady at a solid reading of 10.5. The company outlook index dropped from 18.2 to 8.8, due to a smaller share of firms noting an improved outlook in November than in October.

Labor market indicators reflected continued employment growth and longer workweeks. The November employment index posted a sixth robust reading, coming in at 9.6. Twenty-one percent of firms reported net hiring, compared with 11 percent reporting net layoffs. The hours worked index slipped from 8.3 to 5.7, indicating a smaller increase in hours worked than last month.

Upward pressures on wages and prices were mixed. The raw materials prices index fell from 19.7 to 15.3, its lowest reading in seven months. The finished goods prices index edged up from 7.1 to 9.7. The wages and benefits index was little changed, at a reading of 23.9, with 76 percent of manufacturers noting no change in wages and benefits this month.

Expectations regarding future business conditions remained optimistic in November. The index of future general business activity rose 5 points to 18.3, while the index of future company outlook held steady at 23.1. Indexes for future manufacturing activity held steady or improved in November.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected Nov.10–19, and 108 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: December 29, 2014

November 24, 2014
 

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 Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
6.0
13.7
-7.7
Increasing
19
25.8
54.4
19.8
Capacity Utilization
9.8
18.1
-8.3
Increasing
24
24.1
61.6
14.3
New Orders
5.6
14.2
-8.6
Increasing
19
26.0
53.6
20.4
Growth Rate of Orders
-2.9
7.4
-10.3
Decreasing
1
17.1
62.9
20.0
Unfilled Orders
1.0
0.8
+0.2
Increasing
2
13.1
74.8
12.1
Shipments
12.1
12.8
-0.7
Increasing
19
29.3
53.5
17.2
Delivery Time
-2.2
4.2
-6.4
Decreasing
1
10.0
77.8
12.2
Materials Inventories
15.3
9.4
+5.9
Increasing
2
26.4
62.5
11.1
Finished Goods Inventories
-1.9
4.5
-6.4
Decreasing
1
15.7
66.7
17.6
Prices Paid for Raw Materials
15.3
19.7
-4.4
Increasing
64
23.3
68.7
8.0
Prices Received for Finished Goods
9.7
7.1
+2.6
Increasing
16
17.0
75.7
7.3
Wages and Benefits
23.9
24.5
-0.6
Increasing
64
24.0
75.9
0.1
Employment
9.6
10.2
-0.6
Increasing
18
20.8
68.0
11.2
Hours Worked
5.7
8.3
-2.6
Increasing
11
17.0
71.7
11.3
Capital Expenditures
13.3
10.8
+2.5
Increasing
38
18.7
75.9
5.4
General Business Conditions
Current (versus previous month)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
8.8
18.2
-9.4
Improving
18
18.6
71.6
9.8
10.5
10.5
0.0
Improving
18
18.5
73.4
8.0
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
40.9
41.2
-0.3
Increasing
69
48.9
43.0
8.0
Capacity Utilization
35.1
33.9
+1.2
Increasing
69
44.4
46.4
9.3
New Orders
37.6
38.1
-0.5
Increasing
69
46.0
45.6
8.4
Growth Rate of Orders
29.8
22.3
+7.5
Increasing
69
39.2
51.4
9.4
Unfilled Orders
8.9
3.5
+5.4
Increasing
16
19.6
69.7
10.7
Shipments
38.7
34.2
+4.5
Increasing
69
46.0
46.7
7.3
Delivery Time
-0.2
1.7
-1.9
Decreasing
1
7.8
84.2
8.0
Materials Inventories
8.9
6.7
+2.2
Increasing
3
21.8
65.3
12.9
Finished Goods Inventories
7.9
-1.0
+8.9
Increasing
1
17.8
72.3
9.9
Prices Paid for Raw Materials
28.0
31.4
-3.4
Increasing
68
34.0
60.0
6.0
Prices Received for Finished Goods
23.5
15.2
+8.3
Increasing
29
29.4
64.7
5.9
Wages and Benefits
42.3
40.8
+1.5
Increasing
126
43.1
56.1
0.8
Employment
27.5
31.7
-4.2
Increasing
63
37.3
52.9
9.8
Hours Worked
14.2
6.3
+7.9
Increasing
18
19.5
75.2
5.3
Capital Expenditures
21.0
20.6
+0.4
Increasing
60
30.0
61.0
9.0
General Business Conditions
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
23.1
23.6
-0.5
Improving
68
31.0
61.1
7.9
18.3
13.3
+5.0
Improving
18
26.0
66.3
7.7

*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.

November 24, 2014

Current and future production

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

November 24, 2014

Comments from Survey Respondents

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

Fabricated Metal Manufacturing

  • The drop in oil prices has created a lot of uncertainty.
  • We have recently added a significant number of new customers, which makes our outlook optimistic. From a larger perspective, though, the declining price of oil is concerning, but we are not yet ready to declare an impending downturn in our business because of it.
  • Modest single-digit improvement in shipments is occurring in the short term. Expectations—supported by bookings, backlogs and shipping schedules—point to a mid-single digit improvement in the next six months on a year-over-year basis comparison.

Machinery Manufacturing

  • After the election, we have seen an increase in optimism and capital equipment purchasing.
  • Weaker global energy demand is resulting in lower energy prices, which is having a negative effect on demand for our products and services.
  • Volume of business varies based on the end customer's business level. Overall, the industry is growing moderately; however, certain brands are growing rapidly and others are growing slowly or even shrinking.
  • A stable oil price will help, but our medium-term outlook is still positive that oil prices will rebound and our business will be steady after the fourth quarter lull.
  • We expect to benefit from expanding activity from our midstream and downstream energy customers (refining, petrochemical, power and pipelines).

Computer and Electronic Product Manufacturing

  • Without a real positive government policy to incentivize businesses to invest in this economy, we see stagnation for another two years.

Paper Manufacturing

  • We are not ready to commit to the next six months based on the better environment in November versus October.

Printing and Related Support Activities

  • There has been no particular change month to month. Longer-term prospects remain strong, and capital expenditures are increasing.

Plastics and Rubber Products Manufacturing

  • Our manufacturing business annually slows in November and December and then picks up starting in January.

 

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 Laila Assanie at laila.assanie@dal.frb.org.

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