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Texas Manufacturing Outlook Survey

March 28, 2022

Texas Manufacturing Expansion Carries On, Wage Growth Pushes to New High

What’s New This Month

For this month’s survey, Texas business executives were asked supplemental questions on wages and prices, as well as impacts related to the Russia–Ukraine war. 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 continued to increase at solid pace in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, held mostly steady at 13.2, indicative of slightly above-average output growth.

Other measures of manufacturing activity showed mixed movements but remained positive, signaling continued expansion. The new orders index fell from 23.1 to 10.5, its lowest reading in over a year, while the growth rate of orders index held steady at 13.7. The capacity utilization index rose four points to 15.1, while the shipments index declined 17 points to 7.0.

Perceptions of broader business conditions also were a bit mixed in March. The general business activity index fell five points to 8.7, a reading still well above average. The company outlook index retreated to near zero, meaning firms were nearly evenly split on whether their outlooks improved versus worsened over the past month. The uncertainty index pushed up from 17.0 to 20.5.

Labor market measures indicated robust employment growth and longer workweeks. The employment index pushed up seven points to a highly elevated reading of 25.5. Thirty-two percent of firms noted net hiring, while 7 percent noted net layoffs. The hours worked index edged down to 15.4.

Prices and wages continued to increase strongly in March, with the indexes at or near historical highs. The raw materials prices index was largely unchanged at 74.0, and the finished goods prices index inched up to 47.8. The wages and benefits index shot up 11 points to a new high of 55.2.

Expectations regarding future manufacturing activity generally eased but remained positive. The future production index ticked down from 42.1 to 40.1, and the future general business activity index retreated 12 points to 8.2. Other measures of future manufacturing activity such as capital expenditures and employment showed mixed movements but remained solidly in positive territory.

Next release: Monday, April 25

Data were collected March 15–23, and 89 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.

March 28, 2022

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)
IndicatorMar IndexFeb IndexChangeSeries
Average
Trend*% Reporting Increase% Reporting No Change% Reporting Decrease

Production

13.2

14.5

–1.3

10.9

22(+)

26.4

60.4

13.2

Capacity Utilization

15.1

11.5

+3.6

8.7

22(+)

26.0

63.1

10.9

New Orders

10.5

23.1

–12.6

7.0

22(+)

27.4

55.7

16.9

Growth Rate of Orders

13.7

12.6

+1.1

0.8

21(+)

26.0

61.7

12.3

Unfilled Orders

12.4

7.7

+4.7

–1.5

21(+)

24.7

63.0

12.3

Shipments

7.0

23.5

–16.5

9.7

22(+)

23.1

60.8

16.1

Delivery Time

23.2

21.4

+1.8

1.2

21(+)

32.2

58.8

9.0

Finished Goods Inventories

2.3

–5.2

+7.5

–3.4

1(+)

18.0

66.3

15.7

Prices Paid for Raw Materials

74.0

73.4

+0.6

27.5

23(+)

77.7

18.6

3.7

Prices Received for Finished Goods

47.8

44.6

+3.2

8.3

20(+)

49.0

49.8

1.2

Wages and Benefits

55.2

44.0

+11.2

19.9

23(+)

55.2

44.8

0.0

Employment

25.5

18.4

+7.1

7.5

21(+)

32.0

61.5

6.5

Hours Worked

15.4

19.0

–3.6

3.7

21(+)

23.5

68.4

8.1

Capital Expenditures

19.5

16.1

+3.4

6.8

20(+)

24.7

70.1

5.2

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

Company Outlook

–0.7

6.4

–7.1

6.8

1(–)

15.8

67.7

16.5

General Business Activity

8.7

14.0

–5.3

3.1

20(+)

17.5

73.7

8.8

IndicatorMar IndexFeb IndexChangeSeries
Average
Trend*% Reporting Increase% Reporting No Change% Reporting Decrease

Outlook Uncertainty†

20.5

17.0

+3.5

14.4

11(+)

34.1

52.3

13.6

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

Production

40.1

42.1

–2.0

38.7

23(+)

46.7

46.7

6.6

Capacity Utilization

35.6

41.8

–6.2

35.5

23(+)

44.2

47.1

8.6

New Orders

39.6

39.1

+0.5

36.3

23(+)

44.3

51.0

4.7

Growth Rate of Orders

30.1

27.1

+3.0

27.0

23(+)

36.1

57.9

6.0

Unfilled Orders

4.2

–0.1

+4.3

3.8

1(+)

17.0

70.2

12.8

Shipments

38.2

39.2

–1.0

37.1

23(+)

45.7

46.8

7.5

Delivery Time

8.5

3.6

+4.9

–1.1

7(+)

23.7

61.2

15.2

Finished Goods Inventories

7.5

12.7

–5.2

0.5

17(+)

19.8

67.9

12.3

Prices Paid for Raw Materials

58.0

51.1

+6.9

34.7

24(+)

60.5

37.0

2.5

Prices Received for Finished Goods

59.2

45.4

+13.8

20.9

23(+)

61.7

35.8

2.5

Wages and Benefits

64.8

74.3

–9.5

38.9

23(+)

64.8

35.2

0.0

Employment

38.0

45.2

–7.2

23.3

22(+)

42.1

53.8

4.1

Hours Worked

16.1

10.4

+5.7

9.5

23(+)

22.7

70.7

6.6

Capital Expenditures

35.8

29.9

+5.9

20.1

22(+)

40.7

54.4

4.9

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

Company Outlook

10.4

18.1

–7.7

20.6

22(+)

27.2

56.0

16.8

General Business Activity

8.2

20.6

–12.4

14.8

22(+)

22.8

62.6

14.6

*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.

March 28, 2022

Production Index

Downloadable chart

March 28, 2022

Comments from Survey Respondents

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

Chemical Manufacturing

  • The impacts of higher gas and oil prices have yet to make it down the value chain, but we expect increases.
  • The volatility and impact of rising raw material costs (oil, etc.) and continued supply-chain disruptions are causing a rise in overall costs. Labor market constraints are also a concern. Inflation and a rise in interest rates are also concerns, and an impact to consumer buying behavior could curtail demand.

Nonmetallic Metal Product Manufacturing

  • Bad weather decreased our production in February. We have had continued increases in raw materials, especially steel and fuel costs, which compressed margins even further. The inability to acquire long-term commitments for raw material inputs is a huge problem.

Primary Metal Manufacturing

  • While we continue to see increased orders and new quoting activity, production and overall output is still limited due to supply-chain disruptions, workforce shortages and numerous price increases on raw materials. Despite several opportunities that continue to arise, uncertainty due to foreign issues, domestic administrative policies and the anti-fossil-fuels approach from D.C. is truly hurting domestic manufacturing.
  • There are some indications that orders may drop off in the future due to inflation and the overall cost of aluminum being at an all-time high.

Fabricated Metal Product Manufacturing

  • Supply-chain problems and inflation and the shortage of materials caused by the Buy American laws on iron and steel are limiting the number of infrastructure projects that can be funded and built. American jobs in the manufacturing, distribution, engineering and construction sectors are being lost due to these short-sighted laws and regulations.
  • Requests for quotations have remained steady, but there is a slowdown on starts, reflecting uncertainty by owner companies.

Machinery Manufacturing

  • It seems that we have a government with little regard for American industries. They would rather negotiate with [other countries] than work with our own oil companies with secure sources of energy. This to me is very upsetting since I’ve supported this government and the oil companies for over five decades. Trying to financially plan for the future is all but uncertain when you consider what choices we have from taxes to investments in our businesses.
  • We are still extremely busy; however, we remain cautiously optimistic about the future. There are simply too many variables both domestically and internationally to be certain about what business will actually be like in six months.
  • Rising freight costs are a huge concern. The Ukraine situation is going to add to steel cost inflation.
  • We have an increase in orders but are still struggling with getting paid timely and getting raw materials. We’re also having a hard time hiring people who want to work.

Computer and Electronic Product Manufacturing

  • We have had a real issue with lead times to us increasing without notification. Prices are also increasing after we have placed orders.
  • The supply chain for electronics parts continues to be a tremendous challenge and is hindering our ability to produce our customers’ products. Demand is higher than we can supply because we cannot locate and receive the parts necessary in all cases. Having 80 of 82 required parts still yields zero output of finished goods. Production scheduling is constantly changing based on component availability, and vendor timeliness is at an all-time low.

Transportation Equipment Manufacturing

  • The economy, international tensions, horrible energy policy and the Fed slamming on the brakes because of inflation they helped cause makes business planning almost impossible.

Food Manufacturing

  • We have experienced no material supply-chain issues, other than a limited number of our inputs are on the boats off Long Beach [California]. Logistics costs continue to rise, and driver availability is an issue. We also have issues in skilled positions.
  • Labor shortages/higher wages continue to be a main concern. An increase in the cost and availability of freights is also stressing the business model.

Textile Product Mills

  • We are a luxury consumer goods business, so there is some worry that inflation and consumer anxiety over the markets/uncertainty will negatively impact our sales. We’ve been growing double digits the last two years, but we’re not sure that rate will continue if uncertainty stays as is or things deteriorate. We’re also expecting continued long lead times for our inventory made and shipped from overseas. We’re planning on six-month lead times (used to be three months).

Wood Product Manufacturing

  • Business is booming.

Printing and Related Product Manufacturing

  • It’s sort of crazy how busy we are, and we continue to get inquires for quotes from companies we have not done business with before. I guess it has something to do with inbound container issues from overseas as well as sourcing built in America, but whatever the reason, we are very busy and appear to be that way for quite a while to come.

Miscellaneous Manufacturing

  • Our current biggest hurdle is raw material pricing and lead times. Many vendors are not providing quotes due to market volatility, or are providing quotes that are valid for under 24 hours. This makes existing contracts and new purchase orders issued very difficult to accept. We are working closely with vendors and customers to ensure minimal impact.

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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