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Economy in Brief

Texas Manufacturing Growth & Outlook Rebound in October
by Tom Moeller  October 25, 2021

• Current new orders growth & employment improve.

• Production falters but expected output increases.

• Price & wage strength intensify.

The Texas Manufacturing Outlook Survey, conducted by the Federal Reserve Bank of Dallas, indicated that its General Business Activity Index rebounded to 14.6 in October after falling to 4.6 in September. It was the highest level in three months.  An increased 25.3% of respondents reported improved business activity this month, the most also since July. A lessened 10.7% of respondents reported a worsening of business conditions, down from 16.5% in September. The survey was conducted from October 12-20 amongst 101 Texas manufacturers.

The new orders growth index rose to 13.6 this month after deteriorating to a 2020 low of 2.5 in September, and the unfilled orders series jumped to 20.9 from a seven-month low of 14.9. The delivery times reading rose to 25.9, suggesting the slowest delivery speeds since June. Despite these increases, the shipments index fell to a nine-month low of 13.8 and production also declined to 18.3, a five-month low. (These series date back to June 2004.)

The employment index strengthened to 28.3 in October, the highest level in six months. A lessened 32.2% of firms reported more hiring this month while a fewer 3.9% reported less. The wages & benefits index improved to 44.1 this month, up from 17.0 twelve months earlier, as 45.2% of respondents paid higher wages, up from 18.9% twelve months ago. Only 1.1% paid less this month, about the same as last October.

The finished goods prices measure rose to a record 49.8 in October, up from 7.5 twelve months ago. It reflected a record 50.5% of respondents reporting higher prices while virtually none reported price declines. The index of prices paid for raw materials eased to 76.3 in October but remained higher than 31.3 twelve months ago.

The headline reading of expectations for overall business activity in six months rose to 15.0 in October. It remained down, nevertheless, from a recovery high of 37.3 reached in June. Most of the component readings improved except the future employment, the expected workweek and future delivery times indices.

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 a decrease is equal. Data for the Texas Manufacturing Outlook can be found in Haver's SURVEYS database

Texas Manufacturing Outlook Survey (SA, % Balance) Oct Sep Aug Oct '20 2020 2019 2018
Current General Business Activity Index 14.6 4.6 9.0 21.2 -10.6 -1.2 25.8
   Production 18.3 24.2 20.8 26.9 3.7 8.9 21.4
   Growth Rate of New Orders 13.6 2.5 10.7 14.3 -5.3 -1.1 14.8
   Employment 28.3 26.3 21.9 9.8 1.6 9.5 20.0
   Wages & Benefits 44.1 42.7 43.4 17.0 11.5 23.5 29.7
   Prices Received for Finished Goods 49.8 44.0 38.1 7.5 -1.7 2.5 17.6
General Business Activity Index Expected in Six Months 15.0 11.5 15.1 29.2 6.6 6.4 31.6
   Production 46.8 41.8 44.3 47.6 31.3 35.6 48.6
   Growth Rate of New Orders 29.3 25.9 29.0 39.2 23.9 25.2 35.8
   Employment 35.1 49.8 44.5 24.0 15.5 26.0 37.7
   Wages & Benefits 60.3 50.4 60.6 30.5 26.7 39.7 50.4

 

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