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Economy in Brief

Texas Factory Sector Activity Deteriorates; Production Increases
by Tom Moeller  August 29, 2016

The Federal Reserve Bank of Dallas indicated that its General Business Activity index declined to -6.2 this month from -1.3 in July. These figures represent improvement, however, from readings as low as -34.6 in January. The production figure of 4.5 was up from -13.1 three months ago. The growth rate of new orders also improved to 2.1, the best reading since October 2014. In addition, shipments strengthened. Hiring did not improve, however, as the employment index remained negative as it has been all year. Growth in wages & benefits deteriorated. Pricing power improved as indicated by the prices received index at -1.3, up from -15.5 in December.

The index of future business activity deteriorated to 7.0, but indicated improvement versus a low of -24.0 in January. The future production series fell to 32.8 from 45.2, but remained up from the 24.6 low six months ago. Expected orders and shipments growth also deteriorated m/m, but remained greatly improved versus three months ago. The index of expected wages & benefits to be paid in six months jumped sharply to the highest level since last September.

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) Aug Jul Jun Aug'15 2015 2014 2013
Current General Business Activity Index -6.2 -1.3 -18.3 -16.3 -12.5 8.3 2.2
   Production 4.5 0.4 -7.0 -1.5 -1.0 14.5 9.8
   Growth Rate of Orders 2.1 -9.7 -18.6 -12.7 -11.8 4.7 0.1
   Number of Employees -5.0 -2.6 -11.5 -3.6 -0.4 11.5 5.6
   Prices Received for Finished Goods -1.3 -5.7 -5.2 -15.0 -8.5 8.3 2.9
General Business Activity Index Expected in Six Months 7.0 18.4 2.6 3.6 4.1 17.4 11.0
   Production 32.8 45.2 27.1 27.6 31.1 42.7 37.1
   Growth Rate of New Orders 27.2 34.7 20.3 18.4 20.7 31.5 25.0
   Wages & Benefits 38.1 30.0 31.6 32.8 33.2 43.1 38.2
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