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Economy in Brief

Texas Factory Sector Activity Strengthens
by Tom Moeller  November 28, 2016

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the General Business Activity index jumped to 10.2 during November, following negative readings extending back to December 2015. The worst of those indications occurred this past January at -34.6. The production figure of 8.8 was higher than -13.1 six months ago. The growth rate of new orders also improved to -0.8, up from -17.5 in January. Hiring activity has been strengthening. The latest reading of 4.5 compared to a June low of -11.5. The workweek reading rose to 2.5 versus a low of -12.8, also in June. Growth in wages & benefits also improved with the index reading at 18.4 against a July low of 10.5. Shipments deteriorated, however, as indicated by a negative 1.9 versus a June high of 20.1. Pricing power has been steadily improving. With the prices received reading at 8.0, it was up versus a low of -15.5 in December. Raw materials pricing similarly jumped. All of the figures are seasonally adjusted.

Optimism about future conditions was apparent throughout the report. The index of future business activity jumped to 31.6, its highest level since January 2011. The future production series similarly surged to 52.3, up sharply versus a January 2015 low. Expected orders and shipments growth surged as well. The employment reading doubled m/m to 30.6, its highest point since October 2014. The index of expected wages & benefits to be paid in six months similarly strengthened to the highest level since the middle of last year.

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.

The Minutes of the latest FOMC meeting can be found here.

Texas Manufacturing Outlook Survey (SA, % Balance) Nov Oct Sep Nov'15 2015 2014 2013
Current General Business Activity Index 10.2 -1.5 -3.7 -5.4 -12.5 8.3 2.2
   Production 8.8 6.7 16.7 4.4 -1.0 14.5 9.8
   Growth Rate of Orders -0.8 -5.1 -5.8 -6.6 -11.8 4.7 0.1
   Number of Employees 4.5 0.2 2.3 10.0 -0.4 11.5 5.6
   Prices Received for Finished Goods 8.0 1.2 -0.9 -11.3 -8.5 8.3 2.9
General Business Activity Index Expected in Six Months 31.6 4.8 9.3 7.0 4.1 17.4 11.0
   Production 52.3 33.0 30.5 33.7 31.1 42.7 37.1
   Growth Rate of New Orders 42.4 23.5 19.1 24.5 20.7 31.5 25.0
   Wages & Benefits 40.4 36.4 31.2 33.6 33.2 43.1 38.2
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