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

September 26, 2022

Texas Manufacturing Growth Picks Up, Though Demand Continues to Decline

What’s New This Month

For this month’s survey, Texas business executives were asked supplemental questions on credit conditions and outlook concerns. 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 picked up in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose eight points to 9.3, a reading suggestive of stronger output growth.

Other measures of manufacturing activity showed mixed signals this month. The new orders index ticked down to -6.4―the fourth month in a row in negative territory—suggesting a continued decrease in demand. The growth rate of orders index also remained negative but moved up 13 points to -1.7. The capacity utilization index jumped to 13.4 after posting a near-zero reading in August, and the shipments index moved up to 7.1.

Perceptions of broader business conditions continued to worsen in September. The general business activity index pushed further negative, from -12.9 to -17.2. The company outlook index moved down three points to -10.7. The outlook uncertainty index remained elevated and inched up to 27.2.

Labor market measures continued to indicate robust employment growth and longer workweeks. The employment index was largely unchanged at 15.0, a reading significantly above its series average of 7.8. Twenty-four percent of firms noted net hiring, while 9 percent noted net layoffs. The hours worked index remained slightly elevated but moved down six points to 8.0.

Prices and wages continued to increase at an elevated pace. The raw materials prices index ticked up from 34.4 to 37.1, ending a three-month trend of easing price pressures. The finished goods prices index, however, continued its downward trend and fell nine points to 18.1, a reading still well above average. The wages and benefits index also fell nine points, coming in at 36.6.

Expectations regarding future manufacturing activity were mixed in September. While the future production index pushed further into positive territory at 28.3, the future general business activity index remained negative and dropped 14 points to -22.4. Other measures of future manufacturing activity, like new orders and employment, pushed further positive in September.

Next release: Monday, October 31

Data were collected Sept. 13–21, and 89 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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