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Economy in Brief

Texas Factory Activity Falls Again in December
by Sandy Batten  December 30, 2019

The Federal Reserve Bank of Dallas reported in its Texas Manufacturing Outlook Survey that the General Business Activity Index fell in December to -3.2 from -1.3 in November. For this index, zero is the critical value that separates expansion from contraction. The December reading, then, indicates that manufacturing activity in Texas continued to fall in December and at a slightly faster rate than in November. For all of Q4, the index fell to -3.2, its third consecutive quarterly average below zero. The company outlook measure, however, rose above zero to 1.3 in December after having fallen to -2.1 in November, the first month below zero since July.

The details of the report were not as weak as the headline figure. The production measure rebounded to 3.6 In December after plummeting to -2.4 in November. New orders continued to fall, but at a slower pace than in November. The December reading was -5.0 versus -9.3 in November. The employment index strengthened to 6.2 in December from a meager 0.9 in November. And shipments rebounded to 3.0 in December from -4.5 the previous month. Wages and benefits continued to rise in December, but at a much slower pace than in the November.

Price measures remained positive, but declined in December from November. The finished goods prices received index fell to 0.7 from 1.9, indicating the finished goods prices are just barely increasing. The prices paid index for raw materials also weakened to 14.5 in December from 17.8 In November.

The index of expected business conditions in six months continued to show expected improvement in activity ahead but that expectations were not as ebullient as in November. The expectations index slipped to 6.4 in December from 7.3 in November. More upbeat, both expected production and orders rose in December from November.

Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When all respondents report rising activity, the index will register 100. The index will register -100 when all respondents report a decrease. The index will be zero when the number of respondents reporting an increase equals the number reporting a decrease. 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'18 2019 2018 2017
Current General Business Activity Index -3.2 -1.3 -5.1 -6.9 -0.7 25.8 20.6
   Production 3.6 -2.4 4.5 6.2 9.0 21.4 20.2
   Growth Rate of New Orders -5.0 -9.3 -5.9 5.5 -0.8 14.8 11.4
   Employment 6.2 0.9 11.0 10.3 9.4 20.0 11.4
   Wages & Benefits 14.6 21.1 22.2 29.5 24.0 29.7 22.2
   Prices Received for Finished Goods 0.7 1.9 4.8 6.2 2.4 17.6 12.7
General Business Activity Index Expected in Six Months 6.4 7.3 2.4 1.5 7.2 31.6 34.5
   Production 36.9 31.3 29.6 33.3 36.1 48.5 46.8
   Growth Rate of New Orders 26.8 19.3 26.1 22.6 25.6 35.9 37.7
   Employment 17.8 20.6 23.6 27.8 26.7 37.6 35.2
   Wages & Benefits 28.4 36.5 39.0 44.5 39.9 50.4 43.4
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