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November 2006
Factory Activity Continues to Expand
The Texas Manufacturing Outlook
Survey found that the state’s manufacturing activity
continued to expand in November, but several indexes were
weaker than last month.
Texas Manufacturing:
A Primer
The Texas Manufacturing
Outlook Survey takes the pulse of an important
segment of the nation’s industrial
sector. The state produced $133.5 billion
worth of manufactured goods in 2005, 8.9
percent of the U.S. total. Texas ranks
second behind California in factory production
and first as an exporter of manufactured
products.
Texas turns out 29
percent of U.S. production of petroleum
and coal products.
The state
also has nearly 10 percent of the nation’s
output of computer and electronics products
and nonmetallic mineral products, such
as brick, glass and cement.
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Manufacturers were more optimistic
about their companies’ operations than the rest
of the economy. The majority of firms expect increases
in production and the volume
of new orders and shipments six months from now. Sentiment on general business
activity remained slightly negative in November.
The manufacturing index for current
production was essentially unchanged in November, but
it has been trending down from a high of 45.3 in January
to 8.5 in November. The pattern reflects a Texas economy
that has slowed some after expanding strongly over
the past year.
The share of responding companies
increasing output rose from 27 percent in October to
29 percent in November. On the other hand, the percent
of firms decreasing production also increased, from
18 percent to 20 percent. The results suggest some
industries are doing better than others. Overall, Texas’ manufacturing
base continues to be among the fastest growing in the
nation. The state’s factories are adding workers,
while manufacturers are shedding jobs in other parts
of the country.
In the November survey, the indexes
for new orders and growth
rate of orders remained negative
and fell further. The unfilled
orders index remained
negative but improved slightly. The indexes for number
of employees, materials
inventories, finished
goods inventories and
volume of shipments remained
positive but were lower. The raw
materials price index was virtually
unchanged and still positive, with just over a third
of responding firms still reporting increases in the
prices they’re paying for inputs. The finished
goods price index was positive and up
from last month.
The Dallas Fed conducts the Texas
Manufacturing Outlook Survey monthly to obtain a quick
assessment of the state’s factory activity. Firms
are asked whether output, employment, orders, prices
and other indicators increased, decreased or remained
unchanged over the previous month. Readings above zero
point to expansion, while negative levels indicate
contraction.
Click on links in the table for
greater details, including historical data .
| Questions
regarding the Texas Manufacturing Outlook
Survey can be addressed to Fiona Sigalla at
Fiona.Sigalla@dal.frb.org
or 214-922-5166.
Note
The Texas Manufacturing
Outlook Survey does not yet have a sufficiently
large sample size to permit seasonal adjustment
of the indexes. Thus, while respondents
are asked to adjust for normal seasonal
variation, the month-to-month values of
these indexes may include some normal seasonal
variation that is not indicative of changes
in the business cycle. Other Federal Reserve
Bank business outlook indexes benefit from
seasonal adjustment, and the Texas indexes
will be seasonally adjusted when a sufficient
series are available. |
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