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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
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 |