• 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.