Skip to content

Texas Manufacturing Outlook Survey

February 22, 2021

Texas Manufacturing Activity Picks Up

What’s New This Month

For this month’s survey, Texas business executives were asked supplemental questions on the impact of COVID-19. Results for these questions from the Texas Manufacturing Outlook Survey, Texas Service Sector Outlook Survey and Texas Retail Outlook Survey have been released together. Read the special questions results.

Texas factory activity expanded at a markedly faster pace in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, surged 15 points to 19.9, indicating a sharp acceleration in output growth.

Other measures of manufacturing activity also point to more rapid growth this month. The new orders index rose seven points to 13.0, and the growth rate of orders index rose six points to 11.6. The capacity utilization index pushed up from 9.2 to 16.5, and the shipments index edged up three points to 16.1.

Perceptions of broader business conditions continued to improve in February. The general business activity index shot up 10 points to 17.2. The company outlook index held steady at 10.7, an above-average reading. Uncertainty regarding companies’ outlooks continued to rise, though the index retreated notably, from 19.3 to 8.5.

Labor market measures indicated robust but slightly slower growth in employment and work hours. The employment index came in at 12.7, down from 16.6 but still indicative of increased head counts. Twenty-one percent of firms noted net hiring, while 8 percent noted net layoffs. The hours worked index inched down to 11.3.

Price pressures rose while wage pressures held mostly steady in February. The raw materials prices index edged up to a 10-year high of 57.4 amid widespread reports of supply-chain disruptions driving up costs. The finished goods prices index climbed nine points to 23.0. The wages and benefits index was largely unchanged at 16.1.

Expectations regarding future manufacturing activity remained positive in February, though some key indexes weakened slightly from their January readings. The future production index ticked down from 43.7 to 40.2, but the future general business activity index moved up four points to 33.9. Most other measures of future manufacturing activity edged down but remained solidly in positive territory.

Next release: Monday, March 29

Data were collected Feb. 9–17, and 96 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.

February 22, 2021

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)
IndicatorFeb IndexJan IndexChangeSeries
Average
Trend*% Reporting Increase% Reporting No Change% Reporting Decrease

Production

19.9

4.6

+15.3

10.0

9(+)

36.3

47.2

16.4

Capacity Utilization

16.5

9.2

+7.3

7.7

9(+)

30.8

54.9

14.3

New Orders

13.0

6.3

+6.7

5.9

9(+)

31.5

50.0

18.5

Growth Rate of Orders

11.6

5.9

+5.7

–0.2

8(+)

28.2

55.2

16.6

Unfilled Orders

12.4

5.7

+6.7

–2.7

8(+)

20.8

70.8

8.4

Shipments

16.1

13.5

+2.6

8.8

9(+)

32.7

50.7

16.6

Delivery Time

9.5

9.2

+0.3

–0.3

8(+)

18.9

71.7

9.4

Finished Goods Inventories

–12.8

–9.3

–3.5

–3.4

23(–)

7.4

72.3

20.2

Prices Paid for Raw Materials

57.4

55.0

+2.4

24.5

10(+)

59.3

38.8

1.9

Prices Received for Finished Goods

23.0

13.9

+9.1

6.1

7(+)

25.5

72.0

2.5

Wages and Benefits

16.1

17.6

–1.5

18.3

10(+)

17.0

82.1

0.9

Employment

12.7

16.6

–3.9

6.3

8(+)

20.6

71.5

7.9

Hours Worked

11.3

12.6

–1.3

2.5

8(+)

21.8

67.7

10.5

Capital Expenditures

13.7

12.1

+1.6

6.2

7(+)

21.7

70.3

8.0

General Business Conditions
Current (versus previous month)
IndicatorFeb IndexJan IndexChangeSeries
Average
Trend**% Reporting Improved% Reporting No Change% Reporting Worsened

Company Outlook

10.7

10.3

+0.4

6.5

9(+)

24.4

61.9

13.7

General Business Activity

17.2

7.0

+10.2

2.2

7(+)

29.0

59.2

11.8

IndicatorFeb IndexJan IndexChangeSeries
Average
Trend*% Reporting Increase% Reporting No Change% Reporting Decrease

Outlook Uncertainty†

8.5

19.3

–10.8

13.0

33(+)

24.5

59.6

16.0

Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
IndicatorFeb IndexJan IndexChangeSeries
Average
Trend*% Reporting Increase% Reporting No Change% Reporting Decrease

Production

40.2

43.7

–3.5

38.3

10(+)

51.8

36.6

11.6

Capacity Utilization

37.1

44.2

–7.1

35.1

10(+)

46.5

44.0

9.4

New Orders

32.3

40.1

–7.8

36.0

10(+)

44.6

43.1

12.3

Growth Rate of Orders

25.8

29.8

–4.0

26.7

10(+)

37.3

51.2

11.5

Unfilled Orders

4.5

4.0

+0.5

3.9

9(+)

15.5

73.5

11.0

Shipments

36.0

40.9

–4.9

36.8

10(+)

47.4

41.2

11.4

Delivery Time

5.9

–0.3

+6.2

–1.5

1(+)

15.6

74.7

9.7

Finished Goods Inventories

11.5

4.0

+7.5

–0.3

4(+)

18.4

74.7

6.9

Prices Paid for Raw Materials

52.9

53.9

–1.0

33.4

11(+)

59.8

33.3

6.9

Prices Received for Finished Goods

44.9

41.2

+3.7

19.3

10(+)

48.3

48.3

3.4

Wages and Benefits

52.1

48.3

+3.8

37.7

10(+)

53.2

45.7

1.1

Employment

30.8

31.9

–1.1

21.9

9(+)

39.0

52.8

8.2

Hours Worked

11.0

17.2

–6.2

9.3

10(+)

21.5

68.0

10.5

Capital Expenditures

22.8

26.2

–3.4

19.6

9(+)

30.2

62.4

7.4

General Business Conditions
Future (six months ahead)
IndicatorFeb IndexJan IndexChangeSeries
Average
Trend**% Reporting Increase% Reporting No Change% Reporting Worsened

Company Outlook

32.3

27.7

+4.6

20.5

9(+)

42.3

47.8

10.0

General Business Activity

33.9

29.6

+4.3

14.2

9(+)

45.9

42.1

12.0

*Shown is the number of consecutive months of expansion or contraction in the underlying indicator. Expansion is indicated by a positive index reading and denoted by a (+) in the table. Contraction is indicated by a negative index reading and denoted by a (–) in the table.

**Shown is the number of consecutive months of improvement or worsening in the underlying indicator. Improvement is indicated by a positive index reading and denoted by a (+) in the table. Worsening is indicated by a negative index reading and denoted by a (–) in the table.

†Added to survey in January 2018.

Data have been seasonally adjusted as necessary, with the exception of the outlook uncertainty index, which does not yet have a sufficiently long time series to test for seasonality.

February 22, 2021

Production Index

Downloadable chart

February 22, 2021

Comments from Survey Respondents

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

Chemical Manufacturing

  • The change of administration and negative bent toward the oil and gas industry are issues affecting our business.
  • Right now, some answers are probably skewed with the issues of the winter storm. Our facility is completely shut down, and we’ll work on restart planning as soon as the storm passes. Damage from the storm will hamper the restart and affect customer orders. The natural gas shortage and curtailment situation must improve for restart. Electrical grid concerns with ice moving into the region is a huge issue and could impact supply.

Fabricated Metal Manufacturing

  • The regulatory impact of the Biden administration is unknown at this time. This is the cause of the uncertainty.
  • Consistency of the available workforce is hurt by the need to quarantine because of family exposure to COVID-19. Thank goodness for our early cross-training of personnel.
  • COVID-related employee absences and quarantines are impacting output and increasing order backlog and delivery dates. In the restaurant and hospitality segments, orders and increasing interest are stimulated by the second-round PPP [Paycheck Protection Program] and SBA [Small Business Administration] funding to customers for outdoor venue expansions. Retail projects deferred from last year’s start are moving forward. Bad debt and slow payments are escalating within certain market segments.

Machinery Manufacturing

  • A $15 minimum wage would kill our small business. We are producing a lot, but cash flow is slow because our customers cannot pay us.
  • We finally received some work, but one month does not a year make. We are still very pessimistic on the future, especially in the energy sector we depend on, under Biden's regressive policies.
  • We are still waiting on oil and gas production to open up and stabilize. There is a sluggishness that is likely in part due to working through surplus excess equipment and uncertainty of the future that is slowing the restart of the industry in the U.S.
  • We had a record year last year, and we should blow it away this year. The electronics and medical sectors are booming.
  • Customers are once again requesting quotes at a rate much higher than what we have seen over the past 12 months. This is a very good indicator for future business. Generally, quotes turn into orders within 60–90 days. We also expect that the size of the order will be greater based on the requested quotes.

Computer and Electronic Product Manufacturing

  • Early signs point to February being better than January for revenue. We still believe there will be a second-half-of-the-year recovery for premises-based equipment sales.

Transportation Equipment Manufacturing

  • Production is down only because of a supplier problem; otherwise it would be great.
  • Price increases are due to disruption of the supply chain and COVID-19 inefficiencies. The negative outlook for oil and gas affects our industry. Runaway government spending is expected to fuel inflation.
  • We are very surprised about the weakness of the grid and other infrastructure revealed by the current meteorological event. We will need to understand what will be done to address this for future significant and unusual events.

Paper Manufacturing

  • Corrugated packaging is currently experiencing a paper shortage that is affecting production and sales.

Printing and Related Support Activities

  • The influence of COVID-19 has normalized itself. As vaccinations increase, we expect to see increases in volume from certain market segments and decreases in others. The net effect will be a slight increase. Demand and production of packaging for consumer packaged goods (food) as well as for institutional use (schools, hotels, restaurants) have been strong throughout the pandemic.
  • Even though we continue to be very slow as compared to a year ago, February will be a much better billing month than January, and we are hopeful things will soon start to improve. Having access to PPP 2.0 monies will be a huge benefit to our workers, who otherwise would be almost guaranteed of working reduced hours and getting paid only for the hours worked. Now we will be able to pay them for more than we would have otherwise due to low activity levels.
  • Weather and the Texas electric grid issues have depressed February.

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.

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