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Economy in Brief

Texas Factory Sector Outlook Suggests April Was Nadir in Activity
by Gerald D. Cohen  May 26, 2020

• Texas Manufacturing Outlook survey rose to -49.2% balance in May from record low -74.0% in April.

• Expectations and all of the business indicators improved.

The Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey General Business Activity Index increased to -49.2% balance from the record low -74.0% in April (data goes back to June 2004). This suggests that the manufacturing sector in Texas is still contracting, but at a slower pace than an in April; closer to the declines seen during the Great Recession of 2008-09.

All of the business indicators improved led by a 38.1 percentage point increase in new orders. This was the result of a 16.9 ppt rise in the number of firms saying new orders increased combined with a 21.2 ppt drop in firms noted a decrease. Still only 21.1% of firms are seeing orders rise while 51.7% are contracting. Meanwhile, a net 19.4% of firms are receiving lower prices.

The index of expected business conditions in six months rose to -19.0% in May from -43.0%. All of the future business indicators also improved led by a 42.9 ppt increase in the production measure, which moved back into positive territory (+29.7%). The expected employment index remained negative (-3.5%).

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) May Apr Mar May '19 2019 2018 2017
Current General Business Activity Index -49.2 -74.0 -70.1 -5.1 -1.1 25.8 20.6
   Production -28.0 -55.6 -35.6 5.7 8.9 21.4 20.2
   Growth Rate of New Orders -30.8 -62.7 -45.3 1.2 -1.1 14.8 11.4
   Employment -11.5 -22.0 -23.5 12.0 9.5 20.0 11.4
   Wages & Benefits -0.2 -3.4 4.7 26.9 23.5 29.7 22.2
   Prices Received for Finished Goods -19.4 -25.0 -9.6 0.8 2.5 17.6 12.7
General Business Activity Index Expected in Six Months -19.0 -43.0 -40.5 8.4 6.4 31.6 34.6
   Production 29.7 -13.2 -18.9 35.9 35.6 48.6 46.9
   Growth Rate of New Orders 13.0 -16.1 -20.7 25.0 25.2 35.8 37.7
   Employment -3.5 -7.9 -17.2 28.2 26.1 37.7 35.3
   Wages & Benefits 12.7 -1.1 0.2 32.8 39.7 50.4 43.4
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