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Economy in Brief

Texas Factory Index Nears 2005 High
by Tom Moeller  January 29, 2018

Business in Texas is strengthening. The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the January General Business Activity Index increased to 33.4, its highest level in more than 12 years, suggesting firm growth in the factory sector. The shipments and the inventories measures both strengthened. The production and new orders indexes declined, but remained firm versus 2017.  The jobs index eased, but remained up sharply y/y. The workweek series displayed similar behavior.

Finished goods prices received surged to the highest level since early-2011 and the raw material prices measure remained firm. Both remained up sharply versus earlier lows. The wages & benefits measure eased m/m but also strengthened y/y.

The index of expected business conditions in six months improved to the highest level since December 2004. Expected production was strong as were expected orders and shipments. The future employment index jumped to a record high. The measure of expected wages & benefits also increased to a record high.

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) Jan Dec Nov Jan'17 2017 2016 2015
Current General Business Activity Index 33.4 29.7 19.4 22.1 20.4 -8.8 -12.5
   Production 16.8 32.8 15.1 11.9 19.5 2.4 -1.0
   Growth Rate of New Orders 15.5 21.4 18.1 6.7 10.0 -7.3 -11.8
   Number of Employees 15.2 20.4 6.3 6.1 10.9 -4.9 -0.4
   Wages & Benefits 23.3 25.1 14.2 20.8 21.7 17.6 16.5
   Prices Received for Finished Goods 22.3 17.9 15.1 17.7 12.3 -1.6 -8.5
General Business Activity Index Expected in Six Months 44.5 40.9 39.0 43.7 35.1 8.9 4.1
   Production 51.6 47.4 46.1 53.9 46.6 35.8 31.1
   Growth Rate of New Orders 40.4 40.1 40.9 48.4 37.8 24.3 20.7
   Number of Employees 44.5 36.6 29.8 37.7 35.2 16.7 14.7
   Wages & Benefits 56.9 44.2 46.6 42.5 43.6 34.8 33.2
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