Texas Manufacturing Outlook Survey – Dallasfed.org

August 29, 2022

Growth in manufacturing activity in Texas is slowing

What’s new this month

For this month’s survey, Texas business leaders were asked additional questions about supply chain disruptions. Results for these questions from the Texas Manufacturing Outlook Survey, the Texas Service Sector Outlook Survey and the Texas Retail Outlook Survey were released together. Read the results of special questions.

Growth in Texas factory activity slowed in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The manufacturing index, a key measure of government manufacturing conditions, eased to 1.2, a reading suggesting very little change in output.

Other gauges of manufacturing activity signaled slower growth or declines this month. The new orders index was negative for a third month in a row – suggesting a continued decline in demand – although it rose from -9.2 to -4.4. The growth rate of the orders index also remained negative, but decreased from -12.0 to -14.7. The capacity utilization index fell slightly to -0.6 and the supply index was almost unchanged at 3.4.

Perceptions of broader business conditions continued to deteriorate in August. The general index of business activity remained negative, but shot up 10 points to -12.9. The company’s outlook index posted its sixth consecutive negative reading and rose to -7.6. The outlook uncertainty index remained elevated, but eased from 33.7 to 24.4.

Labor market measures continue to show robust employment growth and longer work weeks. The employment index fell two points to 15.6, well above the series average of 7.8. Twenty-seven percent of businesses saw net hiring, while 12 percent saw net layoffs. The hours worked index rose five points to 14.4.

Prices and wages continued to increase, although price pressures eased. The commodity price index fell four points to 34.4, still above the average of 28.1 but well below its peak of 83.3 last November. The finished goods price index also fell from 29.3 to 26.8. However, the wage and benefits index rose in August to 45.8.

Expectations for future manufacturing activity in August were mixed. While the index of future production rose further into positive territory, reaching 23.9, the index of future general business activity remained negative, although it rose nine points to -8.8. Other measures of future manufacturing activity, such as capacity utilization and new orders, pushed further positive in August.

Next version: Monday, September 26

Data was collected from August 16-24 and 86 Texas growers responded to the survey. The Dallas Federal Reserve conducts a monthly Texas Manufacturing Outlook Survey to obtain a timely assessment of factory activity in the state. Firms are asked whether production, employment, orders, prices and other indicators increased, decreased or remained unchanged in 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 that the indicator has increased from the previous month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting that the indicator has decreased compared to the previous month. The index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data are seasonally adjusted if necessary.

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