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March 2007
Factory Activity Expands
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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Manufacturing activity continues
to expand, according to more than 120 business executives
responding to the March Texas Manufacturing Outlook
Survey. All indexes remain positive, but those for volume
of orders, growth of orders
and general business sentiment
recorded lower levels than in February. The production
index continued its upward path, increasing to 27.2
in March from 18.1 in February. Indicators for capacity
utilization, volume of
shipments, average employee
workweek and capital expenditures
also strengthened.
Sentiment on general business
conditions and company outlook cooled in March. The
index for general business
activity was 12.7 in March, compared with 26 in
February. The index had dipped into negative territory
during the fourth quarter of 2006 and rebounded to 4.7
in January.
Indexes for volume
of new orders, growth rate
of orders and unfilled
orders drifted lower in March, after rising markedly
last month. All three indexes continue to signal expansion,
with nearly twice as many manufacturers reporting activity
increasing than decreasing.
The index
for prices paid was unchanged, with more than a
third of respondents reporting an increase in the cost
of raw materials. The index
for prices received cooled slightly in March, with
21 percent reporting an increase in selling prices.
The wages and benefits index rose; 25 percent of respondents
cited an increase this month, and none reported a decrease.
Index values for the six-month
outlook remain significantly
higher than current values, although these indexes moderated
slightly compared with 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.
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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