Global| May 26 2020Texas Factory Sector Outlook Suggests April Was Nadir in Activity
Summary
• Texas Manufacturing Outlook survey rose to -49.2% balance in May from record low -74.0% in April. • Expectations and all of the business indicators improved. The Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey [...]
• Texas Manufacturing Outlook survey rose to -49.2% balance in May from record low -74.0% in April.
• Expectations and all of the business indicators improved.
The Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey General Business Activity Index increased to -49.2% balance from the record low -74.0% in April (data goes back to June 2004). This suggests that the manufacturing sector in Texas is still contracting, but at a slower pace than an in April; closer to the declines seen during the Great Recession of 2008-09.
All of the business indicators improved led by a 38.1 percentage point increase in new orders. This was the result of a 16.9 ppt rise in the number of firms saying new orders increased combined with a 21.2 ppt drop in firms noted a decrease. Still only 21.1% of firms are seeing orders rise while 51.7% are contracting. Meanwhile, a net 19.4% of firms are receiving lower prices.
The index of expected business conditions in six months rose to -19.0% in May from -43.0%. All of the future business indicators also improved led by a 42.9 ppt increase in the production measure, which moved back into positive territory (+29.7%). The expected employment index remained negative (-3.5%).
Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report rising activity, 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) | May | Apr | Mar | May '19 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Current General Business Activity Index | -49.2 | -74.0 | -70.1 | -5.1 | -1.1 | 25.8 | 20.6 |
| Production | -28.0 | -55.6 | -35.6 | 5.7 | 8.9 | 21.4 | 20.2 |
| Growth Rate of New Orders | -30.8 | -62.7 | -45.3 | 1.2 | -1.1 | 14.8 | 11.4 |
| Employment | -11.5 | -22.0 | -23.5 | 12.0 | 9.5 | 20.0 | 11.4 |
| Wages & Benefits | -0.2 | -3.4 | 4.7 | 26.9 | 23.5 | 29.7 | 22.2 |
| Prices Received for Finished Goods | -19.4 | -25.0 | -9.6 | 0.8 | 2.5 | 17.6 | 12.7 |
| General Business Activity Index Expected in Six Months | -19.0 | -43.0 | -40.5 | 8.4 | 6.4 | 31.6 | 34.6 |
| Production | 29.7 | -13.2 | -18.9 | 35.9 | 35.6 | 48.6 | 46.9 |
| Growth Rate of New Orders | 13.0 | -16.1 | -20.7 | 25.0 | 25.2 | 35.8 | 37.7 |
| Employment | -3.5 | -7.9 | -17.2 | 28.2 | 26.1 | 37.7 | 35.3 |
| Wages & Benefits | 12.7 | -1.1 | 0.2 | 32.8 | 39.7 | 50.4 | 43.4 |
Gerald D. Cohen
AuthorMore in Author Profile »Gerald Cohen provides strategic vision and leadership of the translational economic research and policy initiatives at the Kenan Institute of Private Enterprise.
He has worked in both the public and private sectors focusing on the intersection between financial markets and economic fundamentals. He was a Senior Economist at Haver Analytics from January 2019 to February 2021. During the Obama Administration Gerald was Deputy Assistant Secretary for Macroeconomic Analysis at the U.S. Department of Treasury where he helped formulate and evaluate the impact of policy proposals on the U.S. economy. Prior to Treasury, he co-managed a global macro fund at Ziff Brothers Investments.
Gerald holds a bachelor’s of science from the Massachusetts Institute of Technology and a Ph.D. in Economics from Harvard University and is a contributing author to 30-Second Money as well as a co-author of Political Cycles and the Macroeconomy.
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