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Texas Manufacturing Outlook Survey


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May 27, 2014

Texas Manufacturing Grows but at a Slower Pace

What's New This Month

For this month's survey, manufacturers were asked supplemental questions on employment expectations and the labor market. Read Special Questions.

Texas factory activity increased again in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 24.7 to 11, indicating output grew but not strongly as in April.

Other measures of current manufacturing activity also reflected slower growth. The new orders index fell sharply to 3.8, hitting its lowest level this year. The capacity utilization index fell 9 points to 9.4 but remained slightly above its average level over the history of the survey. The shipments index edged down to 11, a reading also slightly above its overall average.

Perceptions of broader business conditions were less optimistic in May. The general business activity index remained elevated but moved down from 11.7 to 8. The company outlook index plummeted to 4.1 after rising sharply in April. Although both these indexes fell from last month, both were up strongly from their negative readings a year ago.

Labor market indicators reflected a tapering of growth in employment levels and workweek length. The May employment index dropped to 2.9, its lowest reading in nearly a year. Thirteen percent of firms reported net hiring compared with more than 10 percent reporting net layoffs. The hours worked index fell from 13.9 to 2.8, indicating only a slight increase in workweek length from April.

Strong upward pressure was seen for input prices and wages in May, while price pressures eased for selling prices. The raw materials price index jumped 16 points to 26.3 after falling sharply to an 8-month low last month. Meanwhile, the finished goods price index declined from 8 to 5.6, reaching its lowest level in six months. Looking ahead, 41 percent of respondents anticipate further increases in raw materials prices over the next six months, while 30 percent expect higher finished goods prices. The wages and benefits index held fairly steady at 20.1. This index has been consistently elevated since December, suggesting six months of strong upward pressure on compensation costs.

Expectations regarding future business conditions were a little less optimistic in May. The index of future general business activity fell nearly 13 points to 11.8, while the index of future company outlook fell from 26.9 to 20. Indexes for future manufacturing moved down but remained in solid positive territory.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected May 13–21, and 100 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: June 30, 2014

May 27, 2014
 

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 May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
11.0
24.7
-13.7
Increasing
13
24.9
61.2
13.9
Capacity Utilization
9.4
18.7
-9.3
Increasing
18
22.1
65.2
12.7
New Orders
3.8
21.3
-17.5
Increasing
13
21.8
60.2
18.0
Growth Rate of Orders
2.8
13.4
-10.6
Increasing
5
18.7
65.4
15.9
Unfilled Orders
-8.1
3.1
-11.2
Decreasing
1
7.9
76.1
16.0
Shipments
11.0
12.4
-1.4
Increasing
13
28.4
54.2
17.4
Delivery Time
-7.7
3.2
-10.9
Decreasing
1
3.3
85.7
11.0
Materials Inventories
5.7
10.2
-4.5
Increasing
7
19.2
67.3
13.5
Finished Goods Inventories
-1.0
5.6
-6.6
Decreasing
1
16.0
67.0
17.0
Prices Paid for Raw Materials
26.3
10.2
+16.1
Increasing
58
28.2
69.9
1.9
Prices Received for Finished Goods
5.6
8.0
-2.4
Increasing
10
12.0
81.6
6.4
Wages and Benefits
20.1
21.3
-1.2
Increasing
58
21.3
77.5
1.2
Employment
2.9
19.7
-16.8
Increasing
12
13.4
76.1
10.5
Hours Worked
2.8
13.9
-11.1
Increasing
5
13.7
75.4
10.9
Capital Expenditures
14.9
14.3
+0.6
Increasing
32
19.0
76.9
4.1
General Business Conditions
Current (versus previous month)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
4.1
23.4
-19.3
Improving
12
16.0
72.1
11.9
8.0
11.7
-3.7
Improving
12
18.7
70.6
10.7
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Production
36.9
47.1
-10.2
Increasing
63
47.3
42.3
10.4
Capacity Utilization
37.2
39.1
-1.9
Increasing
63
45.8
45.6
8.6
New Orders
37.3
43.9
-6.6
Increasing
63
45.0
47.3
7.7
Growth Rate of Orders
30.4
37.0
-6.6
Increasing
63
37.8
54.8
7.4
Unfilled Orders
5.1
5.9
-0.8
Increasing
10
15.5
74.1
10.4
Shipments
37.4
43.3
-5.9
Increasing
63
45.7
46.0
8.3
Delivery Time
-4.8
-2.6
-2.2
Decreasing
3
8.5
78.2
13.3
Materials Inventories
1.1
2.9
-1.8
Increasing
10
16.3
68.5
15.2
Finished Goods Inventories
-9.7
1.0
-10.7
Decreasing
1
8.6
73.1
18.3
Prices Paid for Raw Materials
37.7
31.4
+6.3
Increasing
62
40.9
55.9
3.2
Prices Received for Finished Goods
27.9
21.2
+6.7
Increasing
23
30.1
67.7
2.2
Wages and Benefits
43.5
39.8
+3.7
Increasing
120
46.2
51.1
2.7
Employment
29.0
30.8
-1.8
Increasing
57
33.3
62.4
4.3
Hours Worked
7.5
10.3
-2.8
Increasing
12
15.5
76.5
8.0
Capital Expenditures
23.9
17.7
+6.2
Increasing
54
30.4
63.0
6.5
General Business Conditions
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
20.0
26.9
-6.9
Improving
62
28.3
63.4
8.3
11.8
24.5
-12.7
Improving
12
21.3
69.2
9.5

*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.

May 27, 2014

Current and future production

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

May 27, 2014

Comments from Survey Respondents

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

Fabricated Metal Manufacturing

  • The big thaw has occurred from the bitter winter of 2013–14. Customers are beginning to place more orders and filling up our open capacities. We are increasing prices to our low-margin customers as a result of our confidence in this market.
  • We are hearing a lot of threatened raw material price increases due to nickel prices increasing, but we haven't seen it just yet.
  • We are still awaiting the much anticipated 2014 increase in business activity.

Machinery Manufacturing

  • Business is steady, but we are still looking for a spark from new Gulf Coast energy facilities.
  • Our orders are stronger than normal at this time of the year due to both current customers and new customers.

Chemical Manufacturing

  • It is hard to get excited about the economy when housing starts are still below recession levels.

Nonmetallic Mineral Product Manufacturing

  • We are experiencing a labor shortage.

Food Manufacturing

  • Continued drought in West Texas continues to reduce throughput of our mill.
  • Record high dairy prices are significantly decreasing our margins.
  • We believe that recent increases in agriculture and protein products are going to drive food cost inflation in the next six months.

Paper Manufacturing

  • Business continues to grow, and we are almost at the point of turning some marginal business away.

 

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 Laila Assanie at laila.assanie@dal.frb.org.

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