Texas Manufacturing Outlook Survey – Dallasfed.org
December 27, 2022
Texas manufacturing growth picks up, though demand continues to decline
News of this month
For this month’s survey, Texas business executives were asked additional questions about salaries, prices and prospect concerns. Results for these questions from the Texas Manufacturing Outlook Survey, Texas Service Industry Outlook Survey, and Texas Retail Outlook Survey have been released together. Read the results of the special questions.
Texas manufacturing activity growth resumed in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose nine points to 9.7, suggesting a rebound in output growth.
Other measures of manufacturing activity showed mixed signals this month. The new orders index was negative for the seventh consecutive month, suggesting a continued decline in demand, although it rose from -20.9 to -9.2. The growth rate of the orders index rose almost 11 points to -9.3. The capacity utilization index turned positive, from -3.4 to 8.5, and the shipments index rose nine points to 1.9 after two consecutive negative readings.
Perceptions of general business conditions continued to worsen in December. The general business activity index continued to decline, from -14.4 to -18.8. The company outlook index posted its tenth consecutive negative reading, but rose two points to -12.8. The outlook uncertainty index fell five points to 15.6, in line with its average reading of 16.6.
Labor market measures pointed to higher job growth and longer work weeks. The employment index rose eight points to 14.0, a reading significantly above its series average of 7.9. Twenty-four percent of companies noted net hires, while 10 percent noted net layoffs, on par with the average proportion of respondents noting layoffs this year. The hours worked index rose eight points to 7.2.
The price and wage indices experienced little movement in December. The Commodity Price Index was largely stable at 23.7, staying below the series average of 28.1 for the second consecutive month. The finished goods price index was barely changed at 12.5, still slightly above its series average of 9.0. The wages and benefits index dropped from 36.5 to 35.0.
Expectations regarding future manufacturing activity were mixed in December. The future production index remained positive at 10.2, indicating that respondents expect production growth to continue. The future general business activity index remained negative, although it rose nine points to -8.3. Most other measures of future manufacturing activity were positive this month.
Next version: Monday, January 30
The data was collected from December 13-21 and 90 Texas manufacturers responded to the survey. The Dallas Federal Reserve conducts the monthly Texas Manufacturing Outlook Survey for 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 during the previous month.
The 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 proportion of companies reporting an increase exceeds the proportion reporting a decrease, the index will be greater than zero, suggesting that the indicator has increased over the past month. If the proportion of companies reporting a decrease exceeds the proportion reporting an increase, the index will be below zero, suggesting that the indicator has decreased over the past month. An index will be zero when the number of companies reporting an increase is equal to the number of companies reporting a decrease. Data has been seasonally adjusted as necessary.