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Economy in Brief

Texas Manufacturing Sector Activity Continues to Decline in April
by Tom Moeller  April 27, 2020

• COVID-19 depresses business.

• Outlook worsens.

The Federal Reserve Bank of Dallas reported in its Texas Manufacturing Outlook Survey for April that the Current General Business Activity Index weakened to a record low of -73.7 from -70.0 in March. The decline continued to mirror reports of extreme economic weakness by other regional Federal Reserve banks in recent weeks. The figures are diffusion indexes with readings above zero indicating positive growth. The survey dates back to 2004.

The production, shipments, new orders and wages indexes each were increasingly negative this month. The delivery times measure registered the quickest product delivery speeds in over ten years. The employment measure remained below zero with only three percent of respondents reporting an increase in hiring while 24% indicated a decline.

Pricing power weakened sharply during April to the lowest level since May 2009. Only three percent of respondents raised prices while 28% lowered prices.

Readings for expected business conditions in six months were more negative. Indexes roughly equaled their record lows, led by readings below zero for orders, shipments, production and employment. A reading for expected prices is not available in this survey, but expected growth in wages & benefits deteriorated to a record low.

Capital spending plans also fell to a near-record low.

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) Apr Mar Feb Apr '19 2019 2018 2017
Current General Business Activity Index -73.7 -70.0 1.2 2.0 -0.7 25.8 20.6
   Production -55.3 -35.3 16.4 12.4 9.0 21.4 20.2
   Growth Rate of New Orders -62.2 -44.9 3.6 5.2 -0.8 14.8 11.4
   Employment -21.2 -23.0 -0.9 4.6 9.4 20.0 11.4
   Wages & Benefits -2.7 5.5 22.6 28.2 24.0 29.7 22.2
   Prices Received for Finished Goods -24.6 -9.2 -0.1 6.0 2.4 17.6 12.7
General Business Activity Index Expected in Six Months -42.1 -39.5 18.0 18.4 7.2 31.6 34.5
   Production -13.1 -18.7 35.0 41.3 36.1 48.5 46.8
   Growth Rate of New Orders -16.1 -20.7 30.0 27.5 25.6 35.9 37.7
   Employment -7.1 -16.7 20.4 33.4 26.7 37.6 -35.2
   Wages & Benefits -0.6 0.7 39.7 38.8s 39.9 50.4 43.4
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