Texas Manufacturing Activity Index Remains Weak in November

The factory sector in Texas weakened in November, according to the Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas. The general business activity index was -14.4 this month after registering -19.4 in October. The index remained below the high of 38.1 in April 2021. An increased 17.3% of respondents indicated improved business activity this month and a lessened 31.7% of respondents reported a worsening. The company outlook index deteriorated in November to -15.2 from -9.1, the ninth straight negative reading. Data were collected from November 14-22 from 95 Texas manufacturers.

The growth rate of orders reading fell sharply to -19.9 in November, making it the weakest reading since May 2020. It was down from a high of 31.6 last April. The production measure dropped to 0.8 from 6.0. A lessened 20.7% of respondents reported higher production while a smaller 19.9% reported a decline. The shipments index fell to -7.5, down from 33.2 in July of last year. The capacity utilization measure fell to -3.4 from 9.1.

The labor market weakened significantly this month. The employment index declined to 5.9 from 17.1 in October and remained down from a high of 31.1 in December. It was the lowest reading since April 2020. A lessened 21.5% of respondents reported more hiring this month while an increased 15.6% reported fewer hires. The wages & benefits index was fairly steady m/m at 36.5. It reached a high of 55.2 in March. The hours worked index eased to -1.0 from -0.1, down from a high of 24.5 in both July & August of last year.

On the inflation front, the index for prices received for finished goods declined to 13.9 in November after rising to 22.2 in October. Recent readings are well below their October 2021 high of 50.9. A lessened 25.0% of respondents reported raising prices while an increased 11.1% reported lowering price. The index of prices paid for raw materials fell to 22.6, its lowest level in just over two years. It reached a high of 83.3 last November.

The future general business activity index of -17.5 was the seventh consecutive negative reading. The future production index improved slightly after collapsing in October. Most other series anticipating future factory-sector activity also improved slightly m/m but remained weak.

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 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.