Texas Manufacturing Activity Index Stays Negative in January
by:Tom Moeller
|in:Economy in Brief
Summary
- New orders, shipments & production are under pressure.
- Employment improvement picks up steam.
- Pricing power continues to weaken.
Factory sector activity in Texas continued lackluster in January, according to the Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas. The general business activity index stood in negative territory at -8.4, after registering -20.0 in December. The index remained below the high of 37.6 in April 2021. The company outlook reading of -2.5 compared to -13.7 in December and was the eleventh straight negative reading. Data were collected from January 17-25 from 102 Texas manufacturers.
The growth rate of orders index fell to -12.3 in January from -9.3 in December. It was down from a high of 31.0 in April 2021. The production measure dropped to 0.2 from 9.1. A lessened 27.0% of respondents reported higher production while an increased 26.8% reported a decline. The shipments index fell to -6.3, down from a high of 33.8 in March 2021.
The labor market improved this month. The employment index rose to 17.6 from 13.6 in December and stood at the highest reading in six months. A greatly improved 31.0% of respondents reported more hiring this month while an increased 13.4% reported fewer hires. The wages & benefits index continued weak, falling to 30.5 from 34.2. It reached a high of 54.9 in March of last year. The hours worked index eased to 3.8 from 5.6 in December, down from a high of 24.3 in July 2021.
On the inflation front, the index for prices received for finished goods declined to 9.9 in January from 10.9. These readings are well below their October 2021 high of 51.3. A lessened 18.2% of respondents reported raising prices while an increased 8.3% reported lowering prices. The index of prices paid for raw materials fell to 20.5 from 21.9. It reached a high of 84.1 in November 2021.
The future general business activity index of -9.1 was the ninth consecutive negative reading. The future production index improved during the last three months. The future orders & shipments series also rose along with future employment.
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.
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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