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May 2007
Overall Manufacturing Activity Continues
to Increase
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 continued to expand in May at about the same pace reported in April, according to the 125 business executives who responded to the Texas Manufacturing Outlook Survey. After strengthening in the first quarter, growth in overall manufacturing activity appears to have leveled off in the first two months of the second quarter. Indexes for production,
volume of new orders, volume
of shipments and company
outlook in May were very similar to those in April.
The index for general
business activity improved for the second consecutive
month in May. Index values were also higher for growth
rate of orders, unfilled
orders and number
of employees. In contrast, the index for capacity
utilization drifted lower, falling from 25.2 in
April to 19.2 in May, with 30 percent of firms reporting
an increase and 10 percent reporting a decrease.
Survey results continue to suggest
upward price pressure. The raw
materials price index edged up from 39.1 to 40.8
in May, with 44 percent of the manufacturers reporting
an increase and 3 percent reporting a decrease. The
finished goods price index
rose from 15.6 to 20 in May. Twenty-five percent of
the respondents indicated higher selling prices, and
only 5 percent reported price declines. Index values
increased for both raw materials and finished goods
prices six months from now. Forty-seven percent of responding
firms expect higher raw materials prices in the future,
while 34 percent said they believe finished goods prices
will increase six months from now.
Sentiment on future business activity
remained optimistic, although most of those indicators
were slightly below last month’s levels. Still,
just over half of responding firms expect an increase
in production and the volume of new orders six months
from now.
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 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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