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February 2007
Manufacturing Activity Strengthens
Further
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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Factory activity picked up in
February, according to business leaders responding to
the Dallas Fed’s Texas Manufacturing Outlook Survey.
All indexes of current activity were in positive territory.
Nearly 30 percent of the respondents indicated that
production and capacity utilization had increased, and
almost 40 percent reported an upsurge in the volume
of new orders. The six-month outlook also became more
favorable, with a rise in the expectation of future
business activity.
The production index strengthened
in February, rising to 18.1 from 13.8 in January. The
survey suggests that capacity utilization and volume
of new orders grew strongly, with indexes increasing
fourfold during the month. General business sentiment
also gained steam, climbing to 26 from its January level
of 4.7. This view was supported by an upsurge in the
number of manufacturers citing an improvement in overall
business activity.
The index for raw material prices
remained mostly unchanged in February; however, the
index for finished goods prices increased markedly.
Twenty-one percent of responding manufacturers indicated
rising prices for finished goods, and more than 30 percent
reported expectations of further increases.
Respondents continue to express
optimism in their outlook for future business activity.
The index for business activity six months from now
rose to 39.4, the highest it has been since March 2005.
In addition, most forward-looking indicators rose from
January to February, and about half of the participants
said they expected an increase in production, volume
of new orders, capacity utilization, shipments, employment
and capital expenditures in six months.
In the February survey, the indexes
for production, volume
of shipments, growth rate
of orders and delivery
time remained positive and rose slightly. The index
for unfilled orders turned
positive from zero. The indexes for capacity
utilization, volume of
new orders, prices of finished
goods, number of employees
and capital expenditures
increased sharply. The index for average
employee workweek turned around, rising into positive
territory from its negative reading in January. The
indexes for materials inventories,
finished goods inventories,
raw material prices and
wages and benefits remained
positive but declined from the levels posted last month.
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.
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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