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Economy in Brief

Texas Factory Sector Index Improves but Expectations Ease
by Tom Moeller  October 29, 2018

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the General Business Activity Index rose to 29.4 during October and recovered most of its September decline. Nevertheless, the index has moved erratically sideways for more than a year.

Movement amongst the sub-series was mixed last month. The employment, unfilled orders and delivery times readings improved. The shipments, production and hours-worked readings, however, declined sharply. Other component readings held fairly steady. The capital expenditures reading recovered most of its sharp decline during the prior month.

The index for finished goods prices received rose but remained well below its June high. The raw materials price measure recovered its September decline and rose to the highest level since 2011.

The index of expected business conditions in six months improved m/m, but continued on its sideways trend of the last two years. Movement amongst the sub-series remained mixed. Expected production, shipments and hours-worked  rose, but the expected employment, wages & benefits and unfilled orders declined. The future capital expenditures reading fell sharply.

Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report rising activity, 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'17 2017 2016 2015
Current General Business Activity Index 29.4 28.1 30.9 28.2 20.6 -8.9 -12.5
   Production 17.6 23.3 29.3 26.3 20.2 2.4 -1.0
   Growth Rate of New Orders 11.0 11.5 19.9 14.0 11.4 -7.3 -11.8
   Employment 23.9 17.7 28.9 17.6 11.4 -4.9 -0.4
   Wages & Benefits 32.9 33.0 33.4 23.6 22.2 17.6 16.5
   Prices Received for Finished Goods 17.5 13.6 15.3 16.1 12.7 -1.6 -8.5
General Business Activity Index Expected in Six Months 35.6 38.0 34.7 37.9 34.5 8.9 4.1
   Production 47.9 43.7 46.6 46.1 46.8 35.8 31.1
   Growth Rate of New Orders 36.5 37.2 40.4 36.7 37.7 24.3 20.7
   Employment 32.8 39.4 42.2 34.0 35.2 16.8 14.7
   Wages & Benefits 51.4 57.4 45.5 36.2 43.4 34.8 33.2
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