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

March 25, 2024

Texas manufacturing activity weakens in March

What’s new this month

For this month’s survey, Texas business executives were asked supplemental questions on wages, prices 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.

Texas factory activity weakened in March after stabilizing in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell five points to -4.1, a reading that suggests a slight decline in output month over month.

Other measures of manufacturing activity also indicated declines this month. The new orders index—a key measure of demand—dropped 17 points to -11.8 after briefly turning positive last month. The capacity utilization index edged down five points to -5.7, and the shipments index plunged from 0.1 to -15.4.

Perceptions of broader business conditions continued to worsen in March. The general business activity index edged down from -11.3 to -14.4, and the company outlook index slipped from -8.5 to -16.2. The outlook uncertainty index moved up 12 points to 23.0, a six-month high.

Labor market measures suggested slower job growth and shorter workweeks this month. The employment index remained positive for a second month in a row but fell four points to 1.5. Fifteen percent of firms noted net hiring, while 13 percent noted net layoffs. The hours worked index remained negative for a sixth month in a row and held fairly steady at -7.9.

Wage and prices increased this month. The wages and benefits index held steady at a near-average reading of 20.4. The raw materials prices index remained below average but moved up from 15.4 to 21.1. The finished goods prices index climbed to 11.0 after two near-zero readings, suggesting a resumption in selling price growth.

Expectations regarding future manufacturing activity generally improved in March. The future production index pushed up 10 points to 32.3, and the future general business activity index remained slightly positive, at 1.3. Several other measures of future manufacturing activity edged further positive this month.

Next release: Monday, April 29

Data were collected March 12–20, and 87 of the 126 Texas manufacturers surveyed submitted a response. 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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