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August 2007
Texas Manufacturing Rebounds
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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Texas factory activity bounced back strongly in August, according to the 111 business executives who responded to the Texas Manufacturing Outlook Survey. Unusually wet weather contributed to weakened factory activity in July, but nearly all indicators of current production rose sharply in August, returning to their early summer levels.
After falling into negative territory in July, indexes for production, capacity utilization, volume of new orders and volume of shipments strengthened significantly to near May 2007 levels.
The production index rose from –9.7 to 21.6, with a third of factories reporting an increase. Capacity utilization rebounded from –11.5 to 19.1. More than 40 percent of firms said the volume of shipments increased in August, pushing that index from –8 to 27. Thirty-two percent said the volume of new orders increased, boosting that index from –15.9 to 14.4.
The labor market showed slight improvement. After falling to –16 in July, the index for average employee workweek returned to positive territory this month, rising to 0.9. For the second month in a row, the index for number of employees was zero because an equal number of firms reported increases and decreases.
Texas manufacturers remain cautious about general business conditions. After falling to –2.7 last month, the company outlook index pulled to zero in August. The index for the current level of general business activity remained negative but inched up from –3.6 to –1.8.
Upward price pressures continued to recede. The raw materials price index declined from 31.8 to 21.6, with 27 percent of the manufacturers reporting higher costs in August. The finished goods prices index edged downward to 7.2 in August, compared with its previous reading of 13.3. Only 13 percent of factories reported increases in finished goods prices in August.
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. Readings above zero point to expansion, while negative levels indicate contraction.
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 has not been produced for
a long enough time period to assess the
appropriateness of seasonal adjustment.
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
if appropriate. |
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