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Economy in Brief

Texas Factory Sector Outlook Indicates Improvement in June
by Tom Moeller  June 29, 2020

• Component increases are broad-based.

• Expectations also improve broadly.

The Dallas Federal Reserve reported in its Texas Manufacturing Outlook Survey that the General Business Activity Index increased to -6.1% from the near-record low of -49.2% in May (data extend back to June 2004).

All of the business indicators improved this month as the production index rose to 13.6% following three straight negative figures. The growth rate of new orders index improved to -5.8% from -30.8% while the unfilled orders index improved to -2.3% from -17.4% in May. The shipments index also rebounded, following a severe May drop, and the delivery times measure also improved.

The employment index rose to -1.5% this month, its highest level since January. The wages & benefits measure improved to 6.8% following two months of negative readings.

The index of prices received improved to a still-negative -4.7%. but indicated the slowest rate of price deflation since February. The raw materials price measure of 12.3% was its second consecutive positive reading and the highest since December of last year.

The index of expected business conditions in six months rose to 19.7% in June from -19.0% in May. Each of the future business indicators improved but the future new orders and future shipments readings were notably improved. The expected employment index surged to 18.6%, its first positive measure in four months. The future capital expenditures also rose.

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) Jun May Apr Jun '19 2019 2018 2017
Current General Business Activity Index -6.1 -49.2 -74.0 -12.6 -1.1 25.8 20.6
   Production 13.6 -28.0 -55.6 9.2 8.9 21.4 20.2
   Growth Rate of New Orders -5.8 -30.8 -62.7 -6.4 -1.1 14.8 11.4
   Employment -1.5 -11.5 -22.0 9.2 9.5 20.0 11.4
   Wages & Benefits 6.8 -0.2 -3.4 22.0 23.5 29.7 22.2
   Prices Received for Finished Goods -4.7 -19.4 -25.0 1.4 2.5 17.6 12.7
General Business Activity Index Expected in Six Months 19.7 -19.0 -43.0 -3.3 6.4 31.6 34.6
   Production 38.7 29.7 -13.2 24.9 35.6 48.6 46.9
   Growth Rate of New Orders 32.8 13.0 -16.1 16.6 25.2 35.8 37.7
   Employment 18.6 -3.5 -7.9 19.8 26.1 37.7 35.3
   Wages & Benefits 21.6 12.7 -1.1 39.5 39.7 50.4 43.4
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