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April 2007
Factory Activity Remains Solid
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 $139.7 billion worth of manufactured goods in 2006, 8.7 percent of the U.S. total. Texas ranks second behind California in factory production and first as an exporter of manufactured products.
According to 2005 estimates, Texas turns out 19 percent of U.S. petroleum and coal products and nearly 15 percent of chemical products. The state also produces just over 13 percent of the nation's output of computer and electronics products, nearly 10 percent machinery, and 10 percent nonmetallic mineral products, such as brick, glass and cement. |
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The Texas Manufacturing Outlook
Survey suggests that factory activity continued to expand
in April. Indexes for production,
capacity utilization and
volume of shipments inched
lower since last month but remain higher than the January
and February values.
Indexes for volume
of new orders and growth
rate of orders also drifted lower in April, the
second straight monthly decline since peaking in February.
The index for unfilled orders
dipped slightly negative, falling from 7.5 in March
to –0.9 in April.
The index for company
outlook eased slightly from 19.1 to 18.2, with 28
percent of business leaders reporting improved conditions
in April. The general business
activity index increased from 12.7 to 15.9.
Survey results suggest the majority
of manufacturers faced upward price pressures in April.
The indexes for prices of raw
materials and finished
goods are at their highest levels since August 2006.
The prices paid for raw materials index rose from 29.7
to 39.1, with 42 percent of responding firms saying
prices had increased since March; only some of these
firms passed higher input costs on to final selling
prices. Twenty-two percent of manufacturers said finished
goods prices increased in April, pushing that index
up from March. Forty-two percent of responding firms
expect raw materials prices to increase six months from
now, but only 25 percent anticipate higher finished
goods prices.
Firms remain optimistic about
the outlook for business activity. While indexes for
future production, volume
of new orders and shipments
were all slightly lower in April, the majority of respondents
expect increases in these measures six months from now.
The index for the level of
general business activity six months from now also
was higher, rising from 14.8 in March to 20.7 in April.
The Dallas Fed conducts the Texas
Manufacturing Outlook Survey monthly to obtain a timely
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.
For additional perspective
on the survey, see
"The Texas Manufacturing Outlook Survey: A Tool
for Understanding the Economy" and "Made
in Texas: The Natural Selection of Manufacturing."
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 is available. |
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