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Economy in Brief

Texas Factory Sector Growth Continues to Improve
by Tom Moeller  October 30, 2017

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the October General Business Activity Index rose to 27.6 from 21.3 in September. The index was at the highest point since March 2006. The production index increased to a three-year high while new orders volumes strengthened. The inventories measure also rose. The jobs index inched up to the highest level since April 2014. The workweek and shipments series each slipped m/m, but remained in their recent uptrend.

Finished goods prices received also eased m/m but remained in its uptrend. The raw material prices measure dipped m/m but was up sharply versus the 2016 low. The same pattern was exhibited by the wages & benefits measure.

The index of expected business conditions in six months rose to the highest level since the beginning of the year. Expected shipments volume strengthened along with expected capacity utilization. The future employment index eased and has been moving sideways all year. The measure of expected wages & benefits declined sharply to the lowest level in twelve months.

Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report that activity has increased, an index will register 100. An index will register -100 when all firms report a decrease. An index will be zero when the number of firms reporting an increase or decrease is equal. Items may not add up to 100% because of rounding. Data for the Texas Manufacturing Outlook can be found in Haver's SURVEYS database.

Texas Manufacturing Outlook Survey (SA, % Balance) Oct Sep Aug Oct'16 2016 2015 2014
Current General Business Activity Index 27.6 21.3 17.0 0.6 -8.8 -12.5 8.4
   Production 25.6 19.5 20.3 7.7 2.4 -1.0 14.5
   Growth Rate of Orders 12.3 9.7 11.7 -2.6 -7.3 -11.8 4.7
   Number of Employees 16.7 16.3 9.9 -0.4 -4.9 -0.4 11.5
   Prices Received for Finished Goods 15.3 17.5 10.2 2.9 -1.6 -8.5 8.3
General Business Activity Index Expected in Six Months 38.5 34.5 29.2 5.6 8.9 4.1 17.4
   Production 46.0 46.5 43.1 33.4 35.8 31.1 42.7
   Growth Rate of New Orders 36.7 35.8 37.1 24.4 24.3 20.7 31.5
   Number of Employees 34.2 41.3 30.8 13.9 16.7 14.7 28.6
   Wages & Benefits 36.9 39.8 44.3 37.3 34.8 33.2 43.1
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