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Economy in Brief

Texas Factory Sector Activity Deteriorates Sharply
by Tom Moeller  January 25, 2016

The Federal Reserve Bank of Dallas indicated that economic activity in the state deteriorated sharply this month. The measure of general business activity slid to its lowest level since April 2009. The reading was pulled down by a sharply negative production figure, the first in four months. Deterioration in new orders growth was to its worst negative reading in twelve months. Shipments growth also turned sharply negative as did employment growth for the first time in four months. That left wage & benefit growth down slightly versus last year. Weakness in economic activity caused finished goods prices to fall sharply, as they have for a year.

Expectations for business activity in six months similarly deteriorated sharply to the weakest reading since the recession. Component measures deteriorated broadly, but none more so than the company outlook and the employment readings. The future production index fell to its lowest level in four months and the future shipments figure deteriorated to the weakest negative reading since September. The earlier weakness in expected new orders stabilized. On the labor front, expectations for wages & benefits deteriorated to the lowest point since September 2013. Workers were expected to log fewer hours worked for the first time in nearly a year. That was down from greatly longer hours just six months ago.

Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report that activity has increased, 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 decrease is equal. Items may not add up to 100% because of rounding. Data for the Texas Manufacturing Outlook can be found in Haver's SURVEYS database.

Texas Manufacturing Outlook Survey (SA, % Balance) Jan Dec Nov Jan'15 2015 2014 2013
Current General Business Activity Index -34.6 -21.6 -5.4 -3.7 -12.5 8.3 2.2
   Production -10.2 12.7 4.4 0.8 -1.0 14.5 9.8
   Growth Rate of Orders -17.5 -13.5 -6.6 -17.9 -11.8 4.7 0.1
   Number of Employees -4.2 10.9 10.0 8.4 -0.4 11.5 5.6
   Prices Received for Finished Goods -9.6 -15.5 -11.3 -6.8 -8.5 8.3 2.9
General Business Activity Index Expected in Six Months -24.0 -2.2 7.0 -4.7 4.1 17.4 11.0
   Production 26.5 29.6 33.7 22.3 31.1 42.7 37.1
   Growth Rate of New Orders 16.8 16.7 24.5 13.2 20.7 31.5 25.0
   Wages & Benefits 28.5 29.7 33.6 28.6 33.2 43.1 38.2
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