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Texas Manufacturing Outlook Survey

April 26, 2021

Growth in Texas Manufacturing Activity Remains Robust, Outlooks Improve Further

What’s New This Month

For this month’s survey, Texas business executives were asked supplemental questions on the impact of COVID-19, as well as wages, prices and hiring impediments. 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 solid clip in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 14 points to 34.0, a reading still well above average and indicative of robust output growth. Other measures of manufacturing activity also pointed to strong growth this month, with demand, labor, price and wage indexes reaching all-time highs.

The new orders index rose eight points to 38.5, and the growth rate of orders index climbed 10 points to 32.3. Both readings were the highest in the survey’s 17-year history. The capacity utilization index remained high, slipping from 46.1 to 34.6. The shipments index held steady at 32.6.

Perceptions of broader business conditions improved markedly in April, and uncertainty subsided. The general business activity index came in at 37.3, up eight points from its March reading. The company outlook index edged up three points to 29.1, a reading four times higher than the series average. The outlook uncertainty index moved down to zero, indicating that uncertainty is no longer on the rise.

Labor market measures indicated robust growth in employment and work hours. The employment index came in at 31.3, up notably from 18.8 and its highest reading since the survey began in 2004. Thirty-five percent of firms noted net hiring, while 3 percent noted net layoffs. The hours worked index held steady at 23.7.

Price and wage pressures accelerated further in April. The raw materials prices index rose from 66.0 to 71.4, near an all-time high. The finished goods prices index did reach an all-time high, climbing seven points to 39.1. The wages and benefits index also posted its highest reading on record, increasing nine points to 37.1.

Expectations regarding future manufacturing activity pushed further positive in April. The future production index moved up to 47.2, and the future general business activity index inched up to 36.6. Most other measures of future manufacturing activity also rose, and all remained solidly in positive territory.

Next release: Tuesday, June 1

Data were collected April 13–21, and 107 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.

April 26, 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)
IndicatorApr IndexMar IndexChangeSeries
Average
Trend*% Reporting Increase% Reporting No Change% Reporting Decrease

Production

34.0

48.0

–14.0

10.3

11(+)

49.1

35.8

15.1

Capacity Utilization

34.6

46.1

–11.5

8.1

11(+)

47.9

38.8

13.3

New Orders

38.5

30.5

+8.0

6.2

11(+)

49.9

38.8

11.4

Growth Rate of Orders

32.3

22.7

+9.6

0.1

10(+)

41.8

48.8

9.5

Unfilled Orders

23.1

24.5

–1.4

–2.5

10(+)

31.7

59.7

8.6

Shipments

32.6

33.1

–0.5

9.1

11(+)

42.9

46.8

10.3

Delivery Time

24.0

31.2

–7.2

0.0

10(+)

37.4

49.2

13.4

Finished Goods Inventories

–5.7

–2.7

–3.0

–3.4

25(–)

16.0

62.3

21.7

Prices Paid for Raw Materials

71.4

66.0

+5.4

24.9

12(+)

74.1

23.2

2.7

Prices Received for Finished Goods

39.1

32.2

+6.9

6.4

9(+)

41.3

56.5

2.2

Wages and Benefits

37.1

28.0

+9.1

18.5

12(+)

37.8

61.5

0.7

Employment

31.3

18.8

+12.5

6.5

10(+)

34.6

62.1

3.3

Hours Worked

23.7

23.4

+0.3

2.7

10(+)

29.1

65.5

5.4

Capital Expenditures

19.8

24.3

–4.5

6.4

9(+)

24.8

70.2

5.0

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

Company Outlook

29.1

25.8

+3.3

6.7

11(+)

39.2

50.7

10.1

General Business Activity

37.3

28.9

+8.4

2.5

9(+)

45.9

45.5

8.6

IndicatorApr IndexMar IndexChangeSeries
Average
Trend*% Reporting Increase% Reporting No Change% Reporting Decrease

Outlook Uncertainty†

0.0

5.5

–5.5

12.5

1()

18.1

63.8

18.1

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

Production

47.2

38.3

+8.9

38.3

12(+)

52.2

42.8

5.0

Capacity Utilization

45.0

35.8

+9.2

35.2

12(+)

49.6

45.7

4.6

New Orders

42.6

44.6

–2.0

36.1

12(+)

47.1

48.4

4.5

Growth Rate of Orders

43.2

34.0

+9.2

26.8

12(+)

47.1

48.9

3.9

Unfilled Orders

10.2

7.4

+2.8

4.0

11(+)

22.0

66.1

11.8

Shipments

44.4

41.9

+2.5

36.9

12(+)

49.9

44.6

5.5

Delivery Time

4.0

3.7

+0.3

–1.5

3(+)

17.7

68.6

13.7

Finished Goods Inventories

24.0

11.2

+12.8

–0.1

6(+)

27.1

69.8

3.1

Prices Paid for Raw Materials

54.1

55.0

–0.9

33.6

13(+)

60.4

33.3

6.3

Prices Received for Finished Goods

40.2

43.9

–3.7

19.5

12(+)

45.4

49.5

5.2

Wages and Benefits

49.9

42.4

+7.5

37.8

12(+)

49.9

50.1

0.0

Employment

48.2

38.4

+9.8

22.1

11(+)

51.0

46.2

2.8

Hours Worked

15.9

5.4

+10.5

9.3

12(+)

17.3

81.3

1.4

Capital Expenditures

28.4

25.7

+2.7

19.7

11(+)

32.1

64.2

3.7

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

Company Outlook

36.6

26.2

+10.4

20.6

11(+)

42.5

51.6

5.9

General Business Activity

36.6

33.7

+2.9

14.4

11(+)

42.5

51.6

5.9

*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.

April 26, 2021

Production Index

Downloadable chart

April 26, 2021

Comments from Survey Respondents

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

Chemical Manufacturing

  • Shipping is restricting business activity—there’s a shortage of intermodal containers, space on ships, and truck availability.
  • The aftereffects of the [February] ice storm are hitting now. Our inventory has now expired, and raw material supply and pricing out of the Gulf region are restricting business activities.
  • We had major supply-chain issues from COVID-19 and then the ice storm.
  • We are under a significant amount of price pressure due to rapidly rising raw material pricing.

Nonmetallic Mineral Product Manufacturing

  • It is very difficult to find employees to handle the significantly increased demand. We have never had this problem before in our 44-year history. Our human resources department reports that even at a starting pay for non-skilled-level workers of $14 per hour, we cannot fill our 20-plus open positions. People don’t want to go to work when they can stay home and collect $400 or more per week in unemployment.
  • We are experiencing rapid increases in the price of steel, lumber and cement. This is increasing costs of production and will lead to higher prices eventually. We are also having shortages at various times in getting these materials.

Primary Metal Manufacturing

  • Office rents are down. This will make it difficult for banks to lend on new office buildings. Commercial construction should decline in 2022.
  • We are having raw material supply constraints and rapidly increasing costs occurring, leading to concern regarding inflation.

Fabricated Metal Manufacturing

  • We are providing a lot of quotes, but there still seems to be a lot of reluctance to actually start projects.
  • As a precision machine shop, we saw our sales decrease in 2020 by 30 percent. We are finally starting to see purchase orders and activity return to 2019 levels. We actually received an order from a customer in the power generation field for the first time in 18 months. We serve the power generation, automotive, medical, satellite communication, oil/gas/mining, and packaging industries.
  • Market demand is outstripping our ability to fulfill orders in the time requested. Production capacity is the limiting factor. Steel and labor supply are also factors. At the current time, there is no way to know how long this market will last. With lead times on equipment being extended (up to over a year), we are hesitant to invest in the additional capacities to meet current demand.
  • The supply chain and the reliability and availability of shipping are concerning.
  • We need employees! It is hard to find anybody willing to work.

Plastics and Rubber Products Manufacturing

  • The challenge now is finding enough new employees. Our recovery came quicker than anticipated, and we need more people as quickly as possible.

Machinery Manufacturing

  • Our second-wave PPP [Paycheck Protection Program] money is about to run out; I'm not sure if things will improve. We need to hire people, but it’s difficult when people are making $15 per hour to stay at home on unemployment.
  • We are seeing material inflation—prices for raw goods (steel) are rising dramatically.
  • We are seeing purchase activities increase substantially. Therefore, we are trying to hire to keep up with demand. But as usual, the government is getting in the way of our success with the unemployment benefits that turn employees into lazy Americans looking for handouts instead of depending on their efforts to improve their lives.
  • Activity is up; the size of orders is not. I see a good second half of 2021 and a continued slow ramp-up in the second quarter.
  • We are currently running at near-capacity and building more production machinery.

Computer and Electronic Product Manufacturing

  • Year-over-year comparisons for April and May are expected to show great improvement, but business is about the same as it has been since third quarter 2020. I expect business to improve during the latter half of 2021.

Transportation Equipment Manufacturing

  • Material shortages are crippling. Government payments are damaging the job market. Unchecked government spending is a time bomb. Unfulfilled demand is the only positive, and it will dissipate.

Furniture and Related Product Manufacturing

  • The winter storm contributed to a great deal of repair work and new projects. Wood prices and skilled labor continue to be challenging.

Wood Product Manufacturing

  • The increase in business, both organically and from new business, is putting a huge strain on the supply chain in building products across the whole spectrum.

Paper Manufacturing

  • We have seen a measurable uptick in orders and production (albeit from a low bar) that seems to be representing the next six months. The cost of raw materials is in a demand-pull inflation time period.

Printing and Related Support Activities

  • We have gotten much busier in April than we were in March, but some of this is work we already knew about. Government stimulus money has been very helpful and allows us to make sure our employees get 40 hours a week. We actually have four temporary workers in here for the first time in over a year. Inflation is real; raw material prices are going goofy, and everyone is blaming it on COVID-19 and the freeze. It sounds like a good time to raise my prices then as well.

Food Manufacturing

  • The timing and arrival of what has to now be imbedded inflation is concerning.
  • Freight costs have risen dramatically, having a dramatic impact on the cost of moving goods both in and out. Ocean freight has gone up four to five times in cost. Trucking supply is increasingly tight. Government stimulus money given to individuals has drastically reduced the number of people seeking a job and reduced the incentive to show up and do their job. Labor is becoming a real problem as a direct result of the handouts.
  • We began cycling against the spike in sales in March 2020 for our products and are encouraged that the demand has stayed very strong. This is the reason for the improved outlook month over month.

Apparel Manufacturing

  • More military uniform orders have been received.

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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