Dallas Fed: Decline in Texas manufacturing slows; six-month outlook improves

For immediate release: April 27, 2009

DALLAS—The decline in Texas manufacturing activity slowed in April, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.

Texas produces more than 8 percent of the total manufactured goods in the United States, ranking second behind California in factory production.

Indexes for production, capacity utilization, volume of new orders and shipments edged upward for the second consecutive month, but they remained negative, indicating manufacturers are still retrenching.

For the most part, the gains reflect fewer companies seeing declines in these measures, not more firms reporting recoveries.

Although still negative, the business activity index—the survey’s broadest measure of state manufacturing trends—saw improvement as the share of companies reporting better market conditions rose from March to April.

Manufacturers’ labor demand continued to contract. Firms reporting job cuts exceeded those hiring workers by a 10-to-1 margin, and 36 percent of firms noted declines in work hours.

Downward price pressures persisted, but firms expect deflationary price pressures to subside over the next six months. More than two-thirds of manufacturers expect no change in finished goods prices six months from now, up from just a third in July.

Most indicators of future activity continued to improve, suggesting manufacturers expect declines in factory activity to slow further over the next six months. Indexes for future capacity utilization, shipments, new orders and growth rate of orders rose notably, and the six-month company outlook index turned positive for the first time since June 2008.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state's factory activity.

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Media contact:
Alexander Johnson
Phone: (214) 922-5288
e-mail: alexander.johnson@dal.frb.org