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Economy in Brief

Texas Factory Sector Index Plummets; Outlook Worsens
by Tom Moeller  January 2, 2019

The Federal Reserve Bank of Dallas reported in its Texas Manufacturing Outlook Survey that the General Business Activity Index declined to -5.1 during December from 17.6 in November. It was the lowest level since June 2016. The index had been easing for six months.

Lower production, shipments and delivery times indexes accounted for the decline, all of which were down sharply versus earlier highs. The employment measure fell to the lowest level since March and was well below its high during August. Hours-worked have been fairly steady for two months but were sharply below the May high. The wages & benefits measure recovered some of its sharp decline during November, and continued the improvement during the last two years.

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 fell sharply.

The index of expected business conditions in six months also declined significantly to the lowest level since May 2016. Movement amongst the sub-series was mixed. Expected orders, production, shipments and capital spending fell sharply. Expected employment decreased to a two-year low and was off sharply following strength during November. The future wages & benefits reading remained below its 2018 high.

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) Dec Nov Oct Dec'17 2018 2017 2016
Current General Business Activity Index -5.1 17.6 29.4 30.5 26.1 20.6 -8.9
   Production 7.3 8.4 17.6 33.8 21.8 20.2 2.4
   Growth Rate of New Orders 5.8 4.8 11.0 23.2 14.8 11.4 -7.3
   Employment 11.0 15.9 23.9 21.1 19.9 11.4 -4.9
   Wages & Benefits 29.2 24.9 32.9 26.3 29.4 22.2 17.6
   Prices Received for Finished Goods 6.6 7.5 17.5 18.7 17.7 12.7 -1.6
General Business Activity Index Expected in Six Months 3.2 25.7 35.6 40.2 32.2 34.5 8.9
   Production 32.7 52.9 47.9 47.8 48.1 46.8 35.8
   Growth Rate of New Orders 23.1 32.1 36.5 40.1 35.7 37.7 24.3
   Employment 28.2 42.0 32.8 36.6 37.8 35.2 16.8
   Wages & Benefits 45.0 44.8 51.4 43.7 50.5 43.4 34.8
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