Texas manufacturing ends year on a strong note, says Dallas Fed survey
For Immediate Release: December 26, 2017
DALLAS—Texas factory activity expanded robustly in December, with several key survey indexes reaching 11 year highs, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.
“This month’s manufacturing report was impressively strong, continuing a trend we’ve seen throughout 2017 of accelerating manufacturing activity in Texas,” said Emily Kerr, Dallas Fed senior business economist. “It’s worth noting that price expectations increased markedly for a second month in a row, and capital spending plans increased noticeably as well—half of firms expect increased capital expenditures six months from now, the highest share since 2006.
“Looking ahead, comments from survey respondents indicate the tax bill may be a tailwind for manufacturing, while difficulty hiring remains a headwind,” Kerr added.
Data were collected Dec. 12–20, and 104 Texas manufacturers responded to the survey. Here are more key takeaways from this month’s report:
Several measures of manufacturing activity pointed to more rapid growth. The production index, a key measure of state manufacturing conditions, spiked 18 points to 32.8, reaching its highest level in more than 11 years. The new orders index also reached an 11-year high, jumping 10 points to 30.1, and the growth rate of orders index moved up to 21.4. The capacity utilization and shipments indexes also saw gains.
Perceptions of broader business conditions were markedly more positive. The general business activity and company outlook indexes posted double-digit increases, coming in at 29.7 and 31.5, respectively. Both represent highs last seen in 2006.
Labor market measures suggested more rapid employment growth. The employment index came in at 20.4, up 14 points from November. The hours worked index shot up to 23.3, a 12-year high.
Upward pressure on prices continued, and wage pressures escalated. The raw materials prices index held steady at 32.5 and the finished goods prices index edged up to 17.9. Meanwhile the wages and benefits index jumped 11 points to 25.1.
Texas produces more than 11 percent of total manufactured goods in the United States, ranking second behind California in factory production.
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:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org