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Economy in Brief

Texas Factory Sector Improvement Slows
by Tom Moeller  June 26, 2017

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the General Business Activity Index eased in June to 15.0, the lowest level since November. The production reading dropped sharply to the lowest level since January, while the growth rate of new orders also slowed drastically. These figures remained up significantly, however, versus the lows of early last year. Shipments also fell sharply m/m, but remained up y/y. Working the other way, the number of employees reading improved to the highest level since February and was sharply higher versus last year. Capital spending also rose and was up y/y.

On the pricing front, the index for prices received fell to the lowest level since October, and was down sharply from the February high. Raw materials pricing power fell to the weakest point since July. On the labor pricing front, wages & benefits fell m/m and were stable y/y.

Expectations for business activity in six months held steady at a level down sharply versus January's peak. The future production reading slipped m/m, and was lower than the December peak, while expected new orders weakened. Expected shipments eased along with the future order backlogs reading. Expected employment weakened sharply, but expected wages strengthened.

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) Jun May Apr Jun'16 2016 2015 2014
Current General Business Activity Index 15.0 17.2 16.8 -17.3 -8.8 -12.5 8.4
   Production 12.3 23.3 15.4 -6.4 2.4 -1.0 14.5
   Growth Rate of Orders 4.7 12.3 5.1 -17.7 -7.3 -11.8 4.7
   Number of Employees 9.6 8.3 8.5 -12.0 -4.9 -0.4 11.5
   Prices Received for Finished Goods 3.6 5.9 12.0 -4.2 -1.6 -8.5 8.3
General Business Activity Index Expected in Six Months 31.9 31.6 27.1 3.7 8.9 4.1 17.4
   Production 47.5 49.7 39.6 27.9 35.8 31.1 42.7
   Growth Rate of New Orders 35.7 36.4 30.9 20.6 24.3 20.7 31.5
   Number of Employees 32.3 43.1 32.7 12.0 16.7 14.7 28.6
   Wages & Benefits 44.7 42.7 45.6 31.8 34.8 33.2 43.1
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