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Texas Manufacturing Outlook Survey

Report in PDF

November 27, 2017

Manufacturing Expansion Slows but Remains Solid

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 the Special Questions results.

Texas factory activity continued to expand in November, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 10 points from its October reading but remained elevated at 15.1.

Other measures of manufacturing activity also pointed to November growth that was slightly slower than in October but still well above average. The new orders index moved down five points to 20.0, and the capacity utilization and shipments indexes similarly fell to 17.3 and 16.7, respectively. Meanwhile, the growth rate of orders index signaled a stronger pickup in demand, climbing six points to 18.1. This represents the index’s highest reading since 2010.

Perceptions of broader business conditions remained highly positive in November. The general business activity index came in at 19.4, down eight points from October. The company outlook index posted its 15th consecutive positive reading but dipped to 18.5.

Labor market measures suggested slower employment growth and longer workweeks this month. The employment index fell 10 points from October to 6.3, reflecting a more normal index level after several months of elevated readings. Nineteen percent of firms noted net hiring, compared with 13 percent noting net layoffs. The hours worked index edged down but remained positive at 11.5, indicating a continued lengthening of workweeks.

Upward pressure on prices and wages continued in November. The raw materials prices and finished goods prices indexes held steady at 32.2 and 15.1, respectively. The wages and benefits index moved down eight points to 14.2, slightly below the average reading for that index.

Expectations regarding future business conditions remained highly optimistic. The index of future general business activity held steady at 39.0, while the index of future company outlook edged up to 40.8. Other indexes for future manufacturing activity showed mixed movements but remained solidly in positive territory.

Next release: Tuesday, December 26

Data were collected Nov. 13–21, and 101 Texas manufacturers responded to the survey. The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. 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.

November 27, 2017

Results Summary

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)
IndicatorNov IndexOct IndexChangeIndicator Direction*Trend** (Months)% Reporting Increase% Reporting
No Change
% Reporting Decrease

Production

15.1

25.6

–10.5

Increasing

17

32.2

50.7

17.1

Capacity Utilization

17.3

22.5

–5.2

Increasing

17

29.4

58.5

12.1

New Orders

20.0

24.8

–4.8

Increasing

13

36.5

47.0

16.5

Growth Rate of Orders

18.1

12.3

+5.8

Increasing

11

30.3

57.5

12.2

Unfilled Orders

11.4

10.4

+1.0

Increasing

11

21.3

68.8

9.9

Shipments

16.7

20.9

–4.2

Increasing

12

35.0

46.8

18.3

Delivery Time

4.8

3.0

+1.8

Increasing

5

15.4

74.0

10.6

Materials Inventories

6.8

10.6

–3.8

Increasing

5

23.1

60.6

16.3

Finished Goods Inventories

0.0

9.9

–9.9

Unchanged

1

18.8

62.4

18.8

Prices Paid for Raw Materials

32.2

32.3

–0.1

Increasing

21

34.8

62.6

2.6

Prices Received for Finished Goods

15.1

15.3

–0.2

Increasing

16

21.8

71.5

6.7

Wages and Benefits

14.2

22.5

–8.3

Increasing

96

18.1

78.0

3.9

Employment

6.3

16.7

–10.4

Increasing

11

19.3

67.7

13.0

Hours Worked

11.5

13.7

–2.2

Increasing

13

22.8

65.9

11.3

Capital Expenditures

15.8

13.3

+2.5

Increasing

15

22.1

71.6

6.3

General Business Conditions
Current (versus previous month)
IndicatorNov IndexOct IndexChangeIndicator Direction*Trend** (Months)% Reporting Improved% Reporting
No Change
% Reporting Worsened

Company Outlook

18.5

25.8

–7.3

Improving

15

28.8

60.9

10.3

General Business Activity

19.4

27.6

–8.2

Improving

14

28.3

62.8

8.9

Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
IndicatorNov IndexOct IndexChangeIndicator Direction*Trend** (Months)% Reporting Increase% Reporting
No Change
% Reporting Decrease

Production

46.1

46.0

+0.1

Increasing

105

51.7

42.7

5.6

Capacity Utilization

45.4

47.2

–1.8

Increasing

105

49.4

46.6

4.0

New Orders

48.9

45.3

+3.6

Increasing

105

53.2

42.5

4.3

Growth Rate of Orders

40.9

36.7

+4.2

Increasing

105

43.9

53.1

3.0

Unfilled Orders

14.2

10.1

+4.1

Increasing

26

21.7

70.8

7.5

Shipments

43.2

50.8

–7.6

Increasing

105

49.1

45.0

5.9

Delivery Time

3.8

0.5

+3.3

Increasing

12

14.5

74.8

10.7

Materials Inventories

13.2

3.7

+9.5

Increasing

12

24.0

65.2

10.8

Finished Goods Inventories

6.2

–0.9

+7.1

Increasing

1

20.6

64.9

14.4

Prices Paid for Raw Materials

48.4

36.5

+11.9

Increasing

104

51.5

45.4

3.1

Prices Received for Finished Goods

35.8

18.9

+16.9

Increasing

22

43.2

49.5

7.4

Wages and Benefits

46.6

36.9

+9.7

Increasing

162

49.0

48.6

2.4

Employment

29.8

34.2

–4.4

Increasing

60

40.5

48.8

10.7

Hours Worked

22.1

13.8

+8.3

Increasing

18

27.0

68.1

4.9

Capital Expenditures

34.1

30.2

+3.9

Increasing

96

41.5

51.1

7.4

General Business Conditions
Future (six months ahead)
IndicatorNov IndexOct IndexChangeIndicator Direction*Trend** (Months)% Reporting Increase% Reporting
No Change
% Reporting Worsened

Company Outlook

40.8

39.0

+1.8

Improving

22

46.1

48.6

5.3

General Business Activity

39.0

38.5

+0.5

Improving

18

41.5

56.0

2.5

*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 27, 2017

Production Index

Downloadable chart

November 27, 2017

Comments from Survey Respondents

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

Primary Metal Manufacturing

  • We have unusually high order bookings for this time of the year.

Fabricated Metal Product Manufacturing

  • We are feeling slightly optimistic with the recent increase in the price of crude but will need to see what the refiners’ budget for maintenance work for 2018 will be.
  • The end of year has slipped as far as orders for goods. We are trying a new sales approach for increase in another profit area.
  • The global economies and U.S. economy are very weak and uncertain.
  • We have just completed our restoration efforts in our plant and should see full production efficiencies in November. We have our highest backlog of orders in over nine months.

Machinery Manufacturing

  • We have seen a 60 percent decrease in booked orders from September to October. We are anticipating the same for November.

Computer and Electronic Product Manufacturing

  • General activity continues to strengthen broadly.

Printing and Related Support Activities           

  • October was a busy month, and while we are busy now, we don’t have as many temporary workers. We continue to be very concerned with low activity levels in our industry, and a competitor in New York that looked a lot like us is closing this month and auctioning off its equipment.

Apparel Manufacturing

  • Military apparel orders have increased exponentially.

Food Manufacturing

  • Lack of available labor continues to be the biggest impediment to growth. We simply cannot find manufacturing labor or technical skilled employees.
  • On capacity utilization, there is a shortage of labor in the area of our Mexico operation, so we are transferring more work to China and also doing some more (minor) work here in Texas.

Miscellaneous Manufacturing

  • We really need tax reforms based on President Trump’s plan. The Republicans and Democrats don't understand how uncompetitive the U.S. tax structure is compared to the international.
  • The Christmas rush in our business is over.

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
Seasonally adjusted

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
Seasonally adjusted

Questions regarding the Texas Manufacturing Outlook Survey can be addressed to Emily Kerr at emily.kerr@dal.frb.org.

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