Texas Manufacturing Outlook Survey - Dallasfed.org - Federal Reserve Bank of Dallas

August 29, 2022

Growth in Texas Manufacturing Activity Abates

What’s New This Month

For this month’s survey, Texas business executives were asked supplemental questions on supply-chain disruptions. Results for these questions from the Texas Manufacturing Outlook Survey, Texas Service Sector Outlook Survey and Texas Retail Outlook Survey have been released together. Read the special questions results.

Growth in Texas factory activity abated in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, ticked down to 1.2, a reading suggestive of very little change in output.

Other measures 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 decrease in demand—though it moved up from -9.2 to -4.4. The growth rate of orders index also remained negative but moved down from -12.0 to -14.7. The capacity utilization index fell slightly to -0.6, and the shipments index was largely unchanged at 3.4.

Perceptions of broader business conditions continued to worsen in August. The general business activity index remained negative but shot up 10 points to -12.9. The company outlook index posted a sixth consecutive negative reading and edged up to -7.6. The outlook uncertainty index remained elevated but retreated from 33.7 to 24.4.

Labor market measures continued to indicate robust employment growth and longer workweeks. The employment index ticked down two points to 15.6, a reading significantly above its series average of 7.8. Twenty-seven percent of firms noted net hiring, while 12 percent noted net layoffs. The hours worked index pushed up five points to 14.4.

Prices and wages continued to increase, though price pressures moderated. The raw materials prices index fell four points to 34.4, a reading still above its average of 28.1 but far below its high of 83.3 last November. The finished goods prices index also moved down, from 29.3 to 26.8. The wages and benefits index, however, pushed higher in August to 45.8.

Expectations regarding future manufacturing activity were mixed in August. While the future production index pushed further into positive territory, coming in at 23.9, the future general business activity index remained negative, though it rose nine points to -8.8. Other measures of future manufacturing activity, like capacity utilization and new orders, pushed further positive in August.

Next release: Monday, September 26

Data were collected Aug. 16–24, and 86 Texas manufacturers responded to the survey. The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. 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.

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