Texas Manufacturing Activity Improves Modestly in June; Expectations Jump
by:Tom Moeller
|in:Economy in Brief
Summary
- Weakness in general business activity index has diminished.
- Employment & capital spending readings improve.
- Expectations for shipments & new orders rise.
- Current capital spending jumps but expectations weaken.
The rate of decline in Texas manufacturing activity ease in June, according to the Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas. The General Business Activity index rose to -12.7% this month from -15.3% in May but remained below a high of +14.1 in January. A higher 17.9% of respondents reported improved business activity in June. The Future Business Activity index rose sharply to 14.4 this month to its highest level since January. The data was collected from June 13-21 from 85 manufacturing firms.
The employment index rose in June to 5.7, its best reading since July 2024 as a higher 17.8% of respondents reported higher employment this month. Also moving higher was the new orders index to -7.3, though the level still was negative. Improving sharply, the capital expenditures index surged to 10.9, the highest level since January. The production index of 1.3 was up from 0.9 in May as an increased 31.7% of respondents reported gains in output.
The shipments reading fell to -7.3 from +0.5. The hours-worked index declined to -8.4, its lowest point since in four months. The growth rate of new orders index dropped to -17.2; it hasn’t been positive since January. The wages & benefits index declined to 13.4, down from a high of 55.0 in March 2022.
Inflation indicators strengthened this month. The index for prices received for finished goods jumped to 26.1 from 15.1 in May. It was the highest level since July 2022. A higher 29.8% of respondents reported raising prices this month while 3.7% reported lowering prices. The index of prices paid for raw materials rose to 43.0 from 40.7 this month, up from a low of 1.0 in June 2023 but still below a high of 82.2 in June 2021.
The jump in the Future Manufacturing Activity Index reflected a strengthening in expected new orders growth to 15.3 and expected shipments to 27.3, though expected production fell to 22.6. The future wages & benefits reading jumped to 32.1, its highest level since February. The future employment index rose to 15.4 and the future wages & benefits reading doubled to 32.1. The future capital spending reading, however, fell to 16.9 and the future production weakened to 22.6 and remained below a November high of 45.2. The future capital spending reading declined to 16.9 and reversed half of its May improvement.
Each index is calculated by subtracting the percentage reporting a decrease in activity 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 equals the number reporting a decrease. Data for the Texas Manufacturing Outlook, conducted by the Federal Reserve Bank of Dallas, can be found in Haver's SURVEYS database.
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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