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Economy in Brief

Texas Manufacturing Activity & Expectations Improve During April
by Tom Moeller  April 26, 2021

• New orders growth & employment remain on rising trend.

• Prices received & labor costs also rise.

• Expectations strengthen led by new orders growth.

Texas manufacturing activity continued to strengthen during April. The Texas Manufacturing Outlook Survey, conducted by the Federal Reserve Bank of Dallas, indicated that the General Business Activity Index rose to 37.3 this month from 28.9 in March. It was the highest level since June 2018. Forty-six percent of respondents reported improved business activity, up from 24.0% three months earlier. A lessened nine percent of respondents reported that conditions had worsened. The survey was conducted from April 13-21 amongst 107 employers.

The growth rate of the new orders index surged to a record 32.3% from 22.7%. (The series dates back to June 2004.) A record 41.8% of respondents reported faster new orders growth, up from 6.0% twelve months earlier. The employment index improved to 31.3% from 18.8% as a higher 34.6% of firms reported more hiring. Wages & benefits surged to a record 37.1%. Offsetting these gains, the production index fell to 34.0% and reversed half of its March rise. The shipments measure eased m/m as did unfilled orders, though both readings remained elevated.

The measure of prices received for finished goods rose sharply to a record 39.1% from 32.2%. The April increase reflected 41.3% of respondents reporting higher prices while just 2.2% reported price declines. The index of prices paid for raw materials surged to 71.4%, also a record and up from price deflation twelve months earlier. Seventy-four percent of respondents reported higher prices.

The headline index of expectations for overall business activity in six months improved to 36.6% after easing to 33.7% in March. The expected employment measure surged to a record high, while expected hours-worked also jumped. Expectations for production improved and expectations for new orders growth surged. Expected wages also rose and remained up versus early last year.

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 or a decrease is equal. Data for the Texas Manufacturing Outlook can be found in Haver's SURVEYS database.

Texas Manufacturing Outlook Survey (SA, % Balance) Apr Mar Feb Apr '20 2020 2019 2018
Current General Business Activity Index 37.3 28.9 17.2 -72.2 -10.6 -1.2 25.8
   Production 34.0 48.0 19.9 -54.9 3.7 8.9 21.4
   Growth Rate of New Orders 32.3 22.7 11.6 -62.4 -5.3 -1.1 14.8
   Employment 31.3 18.8 12.7 -21.8 1.6 9.5 20.0
   Wages & Benefits 37.1 28.0 16.1 -3.3 11.5 23.5 29.7
   Prices Received for Finished Goods 39.1 32.2 23.0 -24.5 -1.7 2.5 17.6
General Business Activity Index Expected in Six Months 36.6 33.7 33.9 -42.5 6.6 6.4 31.6
   Production 47.2 38.3 40.2 -12.9 31.3 35.6 48.6
   Growth Rate of New Orders 43.2 34.0 25.8 -15.4 23.9 25.2 35.8
   Employment 48.2 38.4 30.8 -7.7 15.5 26.0 37.7
   Wages & Benefits 49.9 42.4 52.1 -0.6 26.7 39.7 50.4
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