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Economy in Brief

Texas Factory Sector Index Improves Modestly
by Tom Moeller  May 29, 2018

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the General Business Activity Index improved to 26.8 during May after declining sharply in April to a five-month low, down from the February high of 38.4.

Most of the sub-series improved including production and the growth in new orders. Shipments surged to the highest level since February 2006. On the labor front, employment and the workweek series rose m/m but wages fell. Each series remained up sharply from the 2016 low.

The index for finished goods prices received increased slightly following a decline to the lowest level since November. The raw materials prices measure eased, however, following improvement to the strongest point since early-2011. The cost of labor declined sharply as wages & benefits fell m/m, and remained well below the February high.

The index of expected business conditions in six months eased m/m, but was at a nine-month low, down sharply versus January's high. Movement amongst the sub-series was mixed. The future production series rose, but orders growth, shipments and employment each were fairly stable. Future wages & benefits also were fairly steady m/m, but have risen sharply since 2016.

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) May Apr Mar May'17 2017 2016 2015
Current General Business Activity Index 26.8 21.8 22.8 17.3 20.6 -8.9 -12.5
   Production 35.2 25.3 14.4 24.2 20.2 2.4 -1.0
   Growth Rate of New Orders 26.5 18.9 5.3 14.0 11.4 -7.3 -11.8
   Number of Employees 23.4 17.8 11.7 8.8 11.4 -4.9 -0.4
   Wages & Benefits 24.3 29.3 24.1 24.6 22.2 17.6 16.5
   Prices Received for Finished Goods 20.5 17.0 19.2 6.1 12.7 -1.6 -8.5
General Business Activity Index Expected in Six Months 30.0 31.9 31.6 31.1 34.5 8.9 4.1
   Production 58.0 52.3 46.0 49.9 46.8 35.8 31.1
   Growth Rate of New Orders 37.7 37.8 33.6 36.2 37.7 24.3 20.7
   Number of Employees 37.6 35.4 34.7 43.7 35.2 16.8 14.7
   Wages & Benefits 50.6 50.1 48.5 42.4 43.4 34.8 33.2
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