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Economy in Brief

Texas Factory Sector Index Strengthens
by Tom Moeller  February 26, 2018

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the February General Business Activity Index improved to 37.2, its highest level since December 2005. Strength in production, shipments and employment led the improvement in the overall index. The workweek series ticked higher m/m and remained up sharply from the 2016 low.

Finished goods prices received held at the highest level since early-2011 following the improvement since 2015. The raw materials prices measure also strengthened versus the 2015 low. The cost of labor also increased as wages & benefits strengthened to the highest level since October 2006.

The index of expected business conditions in six months eased m/m, but remained near the 2004 high. Most of the sub-series slipped m/m but remained stable y/y. Expected wages & benefits continued to strengthen versus last year. The future employment index backed away from its record high as did the measure of expected wages & benefits.

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) Feb Jan Dec Feb'17 2017 2016 2015
Current General Business Activity Index 37.2 33.4 29.7 24.5 20.4 -8.8 -12.5
   Production 27.9 16.8 32.8 16.7 19.5 2.4 -1.0
   Growth Rate of New Orders 15.3 15.5 21.4 2.0 10.0 -7.3 -11.8
   Number of Employees 19.1 15.2 20.4 9.6 10.9 -4.9 -0.4
   Wages & Benefits 32.2 23.3 25.1 19.5 21.7 17.6 16.5
   Prices Received for Finished Goods 22.5 22.3 17.9 19.5 12.3 -1.6 -8.5
General Business Activity Index Expected in Six Months 40.6 44.5 40.9 37.0 35.1 8.9 4.1
   Production 46.0 51.6 47.4 46.4 46.6 35.8 31.1
   Growth Rate of New Orders 37.5 40.4 40.1 39.9 37.8 24.3 20.7
   Number of Employees 34.0 44.5 36.6 33.9 35.2 16.7 14.7
   Wages & Benefits 49.7 56.9 44.2 45.0 43.6 34.8 33.2
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