Global| Feb 24 2020Texas Factory Activity Improvement Led by Production
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve Bank of Dallas reported in its Texas Manufacturing Outlook Survey that the General Business Activity Index increased to 1.2 this month from -0.2 in January. The figure is a diffusion index with readings above zero [...]
The Federal Reserve Bank of Dallas reported in its Texas Manufacturing Outlook Survey that the General Business Activity Index increased to 1.2 this month from -0.2 in January. The figure is a diffusion index with readings above zero indicating positive growth. The amount of growth last month was limited, but improved versus the negative readings of the prior four months.
The production measure strengthened to 16.4 for February and was the highest reading in six months. The wages & benefits reading strengthened as well to 22.6. New orders growth slowed, however, and the employment index eased to -0.9, the first negative reading since December 2016. It was below September's 18.8. Shipments held m/m at 8.5, but were about half the level six months earlier.
Pricing power remained weak. The finished goods prices received index improved to -0.1 from -1.9, but remained below the June 2018 high of 26.2. The raw materials prices paid index of 12.8 similarly has moved erratically sideways since early last year.
The index of expected business conditions in six months continued to show expected improvement in activity. The index level of 18.0 was its highest point since April of last year. The expectations index for new orders growth strengthened, while both expected production and shipments fell. The trend in expected employment reading has moved sideways, but wages & benefits on average have recently improved.
Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When all respondents report rising activity, the index will register 100. The index will register -100 when all respondents report a decrease. The index will be zero when the number of respondents reporting an increase equals the number reporting a decrease. Items may not add up to 100% because of rounding. Data for the Texas Manufacturing Outlook can be found in Haver's SURVEYS database.
An Assessment of Economic Conditions and the Stance of Monetary Policy from Robert S. Kaplan, President, Federal Reserve Bank of Dallas can be found here.
| Texas Manufacturing Outlook Survey (SA, % Balance) | Feb | Jan | Dec | Feb'19 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Current General Business Activity Index | 1.2 | -0.2 | -3.2 | 11.6 | -0.7 | 25.8 | 20.6 |
| Production | 16.4 | 10.5 | 3.6 | 9.2 | 9.0 | 21.4 | 20.2 |
| Growth Rate of New Orders | 3.6 | 6.1 | -5.0 | 3.5 | -0.8 | 14.8 | 11.4 |
| Employment | -0.9 | 1.9 | 6.2 | 11.7 | 9.4 | 20.0 | 11.4 |
| Wages & Benefits | 22.6 | 16.3 | 14.6 | 28.8 | 24.0 | 29.7 | 22.2 |
| Prices Received for Finished Goods | -0.1 | -1.9 | 0.7 | 4.8 | 2.4 | 17.6 | 12.7 |
| General Business Activity Index Expected in Six Months | 18.0 | 7.6 | 6.4 | 16.4 | 7.2 | 31.6 | 34.5 |
| Production | 35.0 | 38.9 | 36.9 | 44.5 | 36.1 | 48.5 | 46.8 |
| Growth Rate of New Orders | 30.0 | 27.0 | 26.8 | 30.4 | 25.6 | 35.9 | 37.7 |
| Employment | 20.4 | 25.3 | 17.8 | 32.9 | 26.7 | 37.6 | 35.2 |
| Wages & Benefits | 39.7 | 42.4 | 28.4 | 46.8 | 39.9 | 50.4 | 43.4 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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