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Texas Manufacturing Activity Declines Again in June, Says Dallas Fed Survey

For immediate release: June 27, 2016

DALLASTexas factory activity declined again in June, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.

The production index—a key measure of state manufacturing conditions—posted a second consecutive negative reading but rose from –13.1 to –7.0, suggesting the pace of contraction eased somewhat from May.

Positive readings in the survey generally indicate expansion of factory activity, while readings below zero generally indicate contraction.

Other measures of current manufacturing activity also reflected continued declines this month. The new orders index held steady at –14.2. The growth rate of orders index fell four points to –18.6. The capacity utilization and shipments indexes remained negative for a second month but edged up, coming in at –9.3 and –8.6, respectively.

Perceptions of broader business conditions stayed pessimistic in June. The general business activity index has been negative since January 2015 and came in at –18.3 this month, up slightly from its May reading. The company outlook index posted a seventh consecutive negative reading but rose five points to –11.0.

Latest readings on employment and workweek length indicated a sixth month of contraction in a row in June. The employment index fell to –11.5, it lowest reading since November 2009. The hours worked index edged down one point to –12.8.

Expectations regarding future business conditions improved in June. The index of future general business activity bounced back to a positive reading of 2.6 after dipping below zero last month. The index for future company outlook also ticked up, coming in at 7.9. Most indexes for future manufacturing activity pushed further into positive territory in June.

Texas produces more than 11 percent of total manufactured goods in the United States, ranking second behind California in factory production.

For this month’s Texas Business Outlook Surveys, respondents were also asked supplemental questions on the impact of lower energy prices and concerns affecting the outlook of their company.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity.

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Media contact:
Justin Jones
Federal Reserve Bank of Dallas
Phone: 214-922-5449
Email: Justin.Jones@dal.frb.org