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Economy in Brief

Texas Factory Sector Index Improves Sharply; Pricing Power Strengthens
by Tom Moeller  June 25, 2018

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the General Business Activity Index rose to 36.5 during June after increasing to 26.8 in May. The rise brought it to the highest level since February and up from 21.8 in April.

Movement amongst the sub-series was mixed. Production, shipments and growth in new orders declined. On the labor front, employment was little changed but the workweek series slipped. The delivery time series rose and indicated the slowest product delivery speeds since October 2015. Each series remained up sharply from 2016 lows.

The index for finished goods prices received strengthened to the highest level since July 2008. The raw materials price measure increased to the highest point since April 2011. The cost of labor rose sharply as the wages & benefits index increased to the highest point in four months.

The index of expected business conditions in six months rose m/m, but remained near its nine-month low. Movement amongst the sub-series was mixed. The future production series eased, but orders growth was unchanged. Future shipments fell while employment improved. Future wages & benefits rose to a five-month 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) Jun May Apr Jun'17 2017 2016 2015
Current General Business Activity Index 36.5 26.8 21.8 15.0 20.6 -8.9 -12.5
   Production 23.3 35.2 25.3 12.8 20.2 2.4 -1.0
   Growth Rate of New Orders 22.2 26.5 18.9 6.5 11.4 -7.3 -11.8
   Number of Employees 23.9 23.4 17.8 10.2 11.4 -4.9 -0.4
   Wages & Benefits 31.4 24.3 29.3 21.7 22.2 17.6 16.5
   Prices Received for Finished Goods 26.2 20.5 17.0 3.8 12.7 -1.6 -8.5
General Business Activity Index Expected in Six Months 35.9 30.0 31.9 31.7 34.5 8.9 4.1
   Production 47.9 58.0 52.3 47.6 46.8 35.8 31.1
   Growth Rate of New Orders 37.7 37.7 37.8 35.6 37.7 24.3 20.7
   Number of Employees 39.8 37.6 35.4 32.6 35.2 16.8 14.7
   Wages & Benefits 53.2 50.6 50.1 44.6 43.4 34.8 33.2
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