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Texas Manufacturing Outlook Survey


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April 29, 2013

Growth in Texas Manufacturing Activity Stalls

What's New This Month

For this month's survey, manufacturers were asked supplemental questions on the impact of health care reform on employment and employee compensation plans. Read Special Questions.

Texas factory activity was flat in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 9.9 to -0.5. The near-zero reading indicates output was little changed from March levels.

Ebbing growth in manufacturing activity was reflected in other survey measures as well. The capacity utilization index came in at 2.7, down from 5.5, and the shipments index fell to zero after rising to 10.6 in March. The new orders index fell nearly 14 points to -4.9, posting its first negative reading this year.

Perceptions of broader business conditions worsened in April. The general business activity index plummeted from 7.4 to -15.6, reaching its lowest level since July 2012. The company outlook index turned negative as well, declining from 9.6 to -2.2.

Labor market indicators remained mixed. The employment index has been in positive territory so far in 2013 and moved up to 6.3 in April. Twenty percent of firms reported hiring new workers compared with 14 percent reporting layoffs. The hours worked index pushed further negative, from -2.4 to -6.5.

Price pressures abated in April. The raw materials price index dropped from 19.1 to 2.5, posting its lowest reading since last July. The finished goods price index dipped to -3 after posting positive readings throughout the first quarter. The wages and benefits index edged down from 18.5 to 17.7, although the great majority of manufacturers continued to note no change in compensation costs. Looking ahead, 34 percent of respondents anticipate further increases in raw materials prices over the next six months, while 21 percent expect higher finished goods prices.

Expectations regarding future business conditions fell markedly in April. The index of future general business activity fell 22 points to -6.7, its first negative reading in five months. The index of future company outlook also plunged, dropping from 21.6 to 6. Indexes for future manufacturing activity fell slightly this month.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected April 16–24, and 94 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.

Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.

Next release: May 28, 2013

April 29, 2013
 

Click on links in the table for greater details. Historical data are available from June 2004 to the most current release month.

Business Indicators Relating to Facilities and Products in Texas
Current (versus previous month)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
-0.5
9.9
-10.4
Decreasing
1
20.2
59.1
20.7
Capacity Utilization
2.7
5.5
-2.8
Increasing
5
19.9
62.9
17.2
New Orders
-4.9
8.7
-13.6
Decreasing
1
22.3
50.5
27.2
Growth Rate of Orders
-12.0
-3.2
-8.8
Decreasing
5
11.5
65.0
23.5
Unfilled Orders
-7.9
-5.6
-2.3
Decreasing
10
11.0
70.1
18.9
Shipments
-0.4
10.6
-11.0
Decreasing
1
19.6
60.4
20.0
Delivery Time
-6.4
2.2
-8.6
Decreasing
1
3.2
87.2
9.6
Materials Inventories
7.7
2.2
+5.5
Increasing
2
19.7
68.3
12.0
Finished Goods Inventories
2.1
9.9
-7.8
Increasing
3
13.8
74.5
11.7
Prices Paid for Raw Materials
2.5
19.1
-16.6
Increasing
45
18.0
66.5
15.5
Prices Received for Finished Goods
-3.0
7.2
-10.2
Decreasing
1
12.0
73.0
15.0
Wages and Benefits
17.7
18.5
-0.8
Increasing
41
20.2
77.3
2.5
Employment
6.3
2.6
+3.7
Increasing
4
19.9
66.5
13.6
Hours Worked
-6.5
-2.4
-4.1
Decreasing
3
12.1
69.2
18.6
Capital Expenditures
4.2
13.7
-9.5
Increasing
9
13.2
77.8
9.0
General Business Conditions
Current (versus previous month)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
-2.2
9.6
-11.8
Worsening
1
13.1
71.6
15.3
-15.6
7.4
-23.0
Worsening
1
5.8
72.8
21.4
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
32.8
35.6
-2.8
Increasing
50
43.2
46.4
10.4
Capacity Utilization
29.0
32.7
-3.7
Increasing
50
36.5
56.0
7.5
New Orders
32.4
33.8
-1.4
Increasing
50
41.2
49.9
8.8
Growth Rate of Orders
18.8
25.8
-7.0
Increasing
50
26.6
65.6
7.8
Unfilled Orders
6.8
9.3
-2.5
Increasing
5
13.5
79.8
6.7
Shipments
29.0
35.1
-6.1
Increasing
50
38.4
52.2
9.4
Delivery Time
-2.8
-2.9
+0.1
Decreasing
15
7.9
81.4
10.7
Materials Inventories
2.2
5.8
-3.6
Increasing
5
14.6
73.0
12.4
Finished Goods Inventories
2.2
1.2
+1.0
Increasing
4
14.4
73.3
12.2
Prices Paid for Raw Materials
31.1
41.9
-10.8
Increasing
49
34.4
62.2
3.3
Prices Received for Finished Goods
13.4
23.2
-9.8
Increasing
10
21.3
70.8
7.9
Wages and Benefits
38.2
35.1
+3.1
Increasing
107
38.3
61.6
0.1
Employment
22.2
30.6
-8.4
Increasing
44
28.9
64.4
6.7
Hours Worked
-3.1
5.1
-8.2
Decreasing
1
11.7
73.5
14.8
Capital Expenditures
13.4
18.8
-5.4
Increasing
41
25.8
61.8
12.4
General Business Conditions
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
6.0
21.6
-15.6
Improving
48
19.3
67.4
13.3
-6.7
15.5
-22.2
Worsening
1
10.7
71.9
17.4

*Indicator direction refers to this month's index. If index is positive (negative), indicator is increasing (decreasing) or improving (worsening). If zero, indicator is unchanged.
**Number of months moving in current direction.
Data have been seasonally adjusted as necessary.

April 29, 2013

Current and future production

Downloadable chart: Low-res (72 dpi) | Hi-res (300 dpi)

April 29, 2013

Comments from Survey Respondents

These comments are from respondents' completed surveys and have been edited for publication.

Fabricated Metal Manufacturing

  • Since November 2012, low-rise (fewer than five stories) building products shipments have been flat year over year, while leading indicators, such as vacancy rates, lending standards and loan applications, and the Architectural Billings Index for the commercial/industrial sector have all been positive. Our quoting activity is positive, but bookings have only just shown year-over-year improvement during the month of April.
  • We had a busy first quarter, but uncertainty seems to be setting in with our customer base.

Chemical Manufacturing

  • Our customers, who are largely chemical or petrochemical companies, have been expecting 2013 to be a good year. However, early results have been somewhat disappointing as there has not been the demand growth so far.
  • Uncertainty around the impact of health care costs is still impacting hiring decisions.

Machinery Manufacturing

  • While our space (midstream and downstream maintenance activities) remains steady, it is our sense that overall economic activity levels are beginning to soften a bit. While housing improvement is a great positive catalyst, overall uncertainty about taxes, health care reform, regulation and global economic health are all inhibiting a "more normal" recovery growth trajectory.
  • Replacement orders have increased from the normal level, indicating some catch-up for the last few years when replacements were delayed.

Computer and Electronic Product Manufacturing

  • The general trend has been improvement from the beginning of the year. There are new concerns that the broader recovery has no follow-through, and the potential for a slowdown is more possible now than 30 days ago.

Printing and Related Support Activities

  • Over the past few years, offset printing has decreased and is continuing to decline. On the other hand, digital printing is increasing in sales. The problem is the cost difference between offset and digital is not enough to keep an offset printing company alive and growing. Small digital shops are increasing sales and profits due to less overhead cost. The larger printing companies that can offer their customers more services and better technology at a good price have a better chance of surviving in today's economy.

Food Manufacturing

  • We are currently upgrading our facility to become more efficient, and we expect to accomplish more production with fewer personnel over the next six months.

Beverage and Tobacco Product Manufacturing

  • Sales are weak. The weakness started last July through August. General and fleet insurance as well as health insurance costs are up high double-digits again.

 

Historical Data

Historical data can be downloaded dating back to June 2004.

Indexes

Download indexes for all indicators. For the definitions of all variables, see Data Definitions.

Unadjusted excel
Seasonally adjusted excel

All Data

Download indexes and components of the indexes (percentage of respondents reporting increase, decrease, or no change). For the definitions of all variables, see Data Definitions.

Unadjusted excel
Seasonally adjusted excel

Questions regarding the Texas Manufacturing Outlook Survey can be addressed to Emily Kerr at emily.kerr@dal.frb.org.

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