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Economy in Brief

Texas Factory Sector Activity Reverses Earlier Deterioration; Outlook Brightens
by Tom Moeller  July 25, 2016

The Federal Reserve Bank of Dallas indicated that its industrial activity in the state was little-changed during July, ending sharp declines since early last year. Its General Business Activity index rose to -1.3 this month from -18.3 in June, but it was at the highest level since December 2014. The level of unfilled orders surged to the highest level since November. The production series improved following two months of negative readings, and the growth rate of new orders rose to the highest level in two months. Employment also improved to its best reading in six months and the average workweek lengthened. Growth in wages & benefits, however, deteriorated sharply. Current pricing power improved versus Q4'15, but it remained restrained.

The outlook brightened significantly. The general business activity and company outlook readings, six months ahead, both surged to the highest levels in 12 months. Expected new orders and production both surged. Expected shipments and unfilled orders also gained. Hiring was expected to improve significantly along with the length of the factory workweek. Wages & benefits, however, were expected to weaken, reversing improvement since January.

Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report that activity has increased, an index will register 100. An index will register -100 when all firms report a decrease. An index will be zero when the number of firms reporting an increase or decrease is equal. Items may not add up to 100% because of rounding. Data for the Texas Manufacturing Outlook can be found in Haver's SURVEYS database.

Texas Manufacturing Outlook Survey (SA, % Balance) Jul Jun May Jul'15 2015 2014 2013
Current General Business Activity Index -1.3 -18.3 -20.8 -4.9 -12.5 8.3 2.2
   Production 0.4 -7.0 -13.1 -1.7 -1.0 14.5 9.8
   Growth Rate of Orders -11.7 -17.4 -17.5 -15.4 -11.8 4.7 0.1
   Number of Employees -9.7 -18.6 -14.7 -3.9 -0.4 11.5 5.6
   Prices Received for Finished Goods -5.7 -5.2 -3.3 -2.3 -8.5 8.3 2.9
General Business Activity Index Expected in Six Months 18.4 2.6 -1.8 19.3 4.1 17.4 11.0
   Production 45.2 27.1 24.6 37.3 31.1 42.7 37.1
   Growth Rate of New Orders 34.7 20.3 10.2 29.7 20.7 31.5 25.0
   Wages & Benefits 30.0 31.6 31.4 31.5 33.2 43.1 38.2
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