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Economy in Brief

Texas Factory Sector Growth Moderates; Price Gains Slow Significantly
by Tom Moeller  November 26, 2018

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the General Business Activity Index declined to 17.6 during November. It was lowest level since August 2017 and well below the high of 38.4 this past February.

Most of the sub-series in the survey declined this month. The production, new orders growth, shipments and delivery times indexes all weakened significantly. On the labor front, the employment measure fell to the lowest level since March and was well below the high three months ago. Hours-worked plummeted to the lowest point since late-2016, and the wages & benefits measure weakened sharply.

The index for finished goods prices received declined to the lowest level since July 2017 and was well below its high in June of this year. The raw materials price measure also deteriorated sharply following its surge during October.

The index of expected business conditions in six months also fell sharply to the lowest level since late-2016. Movement amongst the sub-series was mixed. Expected production and employment increased, but future wages & benefits, shipments and delivery times weakened sharply. The future capital expenditures reading recovered its October decline, but remained near the midpoint of this year's readings.

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) Nov Oct Sep Nov'17 2017 2016 2015
Current General Business Activity Index 17.6 29.4 28.1 20.2 20.6 -8.9 -12.5
   Production 8.4 17.6 23.3 16.1 20.2 2.4 -1.0
   Growth Rate of New Orders 4.8 11.0 11.5 19.9 11.4 -7.3 -11.8
   Employment 15.9 23.9 17.7 7.0 11.4 -4.9 -0.4
   Wages & Benefits 24.9 32.9 33.0 15.4 22.2 17.6 16.5
   Prices Received for Finished Goods 7.5 17.5 13.6 15.9 12.7 -1.6 -8.5
General Business Activity Index Expected in Six Months 25.7 35.6 38.0 38.3 34.5 8.9 4.1
   Production 52.9 47.9 43.7 46.4 46.8 35.8 31.1
   Growth Rate of New Orders 32.1 36.5 37.2 40.9 37.7 24.3 20.7
   Employment 42.0 32.8 39.4 29.8 35.2 16.8 14.7
   Wages & Benefits 44.8 51.4 57.4 46.1 43.4 34.8 33.2
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