Global| Jun 01 2021Texas Manufacturing Activity & Expectations Weaken in May
by:Tom Moeller
|in:Economy in Brief
Summary
• Current production, new orders growth and employment ease. • Pricing power remains strong. The Texas Manufacturing Outlook Survey, conducted by the Federal Reserve Bank of Dallas, indicated that its General Business Activity Index [...]
• Current production, new orders growth and employment ease.
• Pricing power remains strong.
The Texas Manufacturing Outlook Survey, conducted by the Federal Reserve Bank of Dallas, indicated that its General Business Activity Index fell to 34.9 in May from 37.3 in April. A strengthened 47.8% of respondents reported improved business activity, up from 29.0% three months earlier. A higher 12.9% of respondents reported that conditions had worsened versus 11.8% three months ago. The survey was conducted from May 18-26 amongst 103 employers.
The growth rate of the new orders reading weakened to 19.5 from April's record of 32.3. (The series dates back to June 2004.) A near-record 44.5% of respondents reported faster new orders growth, up from 22.1% twelve months earlier. The employment index fell to 22.7 from 31.3 as a lessened 29.0% of firms reported more hiring. Wages & benefits increased to a record 39.0. The production index reading to 15.7, the lowest point since January. The shipments measure fell to a three-month low as did unfilled orders.
The finished goods prices measure eased to 38.4 from the record 39.1. The May decrease reflected 43.0% of respondents reporting higher prices while 4.6% reported price declines. The index of prices paid for raw materials surged to a record 79.9, up from 2.9 twelve months earlier.
The headline reading of expectations for overall business activity in six months eased to 31.4 after rising to 36.6 in April. The expected employment measure backed away slightly from April's record high, while expected hours-worked fell. Expectations for production were strong and little changed versus April but expectations for new orders growth fell. Expected wages strengthened to a near-record high.
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) | May | Apr | Mar | May '20 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Current General Business Activity Index | 34.9 | 37.3 | 28.9 | -47.6 | -10.6 | -1.2 | 25.8 |
| Production | 15.7 | 34.0 | 48.0 | -26.9 | 3.7 | 8.9 | 21.4 |
| Growth Rate of New Orders | 19.5 | 32.3 | 22.7 | -29.9 | -5.3 | -1.1 | 14.8 |
| Employment | 22.7 | 31.3 | 18.8 | -10.3 | 1.6 | 9.5 | 20.0 |
| Wages & Benefits | 39.0 | 37.1 | 28.0 | 0.2 | 11.5 | 23.5 | 29.7 |
| Prices Received for Finished Goods | 38.4 | 39.1 | 32.2 | -18.8 | -1.7 | 2.5 | 17.6 |
| General Business Activity Index Expected in Six Months | 31.4 | 36.6 | 33.7 | -17.9 | 6.6 | 6.4 | 31.6 |
| Production | 47.6 | 47.2 | 38.3 | 29.8 | 31.3 | 35.6 | 48.6 |
| Growth Rate of New Orders | 34.4 | 43.2 | 34.0 | 14.0 | 23.9 | 25.2 | 35.8 |
| Employment | 47.6 | 48.2 | 38.4 | -2.6 | 15.5 | 26.0 | 37.7 |
| Wages & Benefits | 56.4 | 49.9 | 42.4 | 13.2 | 26.7 | 39.7 | 50.4 |
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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