Texas Manufacturing Activity Index Deteriorates in April

Manufacturing activity in Texas continued to weaken this month, according to the Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas. The general business activity index of -23.4 compared to -15.7 in March and has been negative since last May.

The latest reading was little changed from a low of -23.7 in July of last year. A lessened 7.4% of respondents reported improved business activity in April, down from 12.6% in March. An increased 30.8% of respondents reported a worsening of business conditions, the most in four months. The company outlook index of -15.6 in April compared to --13.3 in March and has been negative since March, 2022. Data were collected in the April 11-19 period from 82 Texas manufacturers.

The employment index weakened to 8.0 from 10.4, up from -1.0 in February. A lessened 20.2% of respondents reported a rise in hiring, while a lessened 12.2% reported a decline. The production index fell to 0.9 in April from 2.5 in March. A slightly increased 26.3% of respondents reported higher production while a greatly increased 25.4% reported a decline. The unfilled orders series weakened to -11.3 from -9.4 in March.

Many of the other series remained negative. The growth rate of orders index of –11.1 compared to -15.2 in March and has been negative since May of last year. The shipments series rose to -2.8 from -10.5 as an improved 25.3% of respondents reported more shipments and a slightly lessened 28.1% reported a decline. The wages & benefits series improved to 37.6 from 30.5 but was below a high of 54.9 in January, 2022. The capital expenditure series held at 2.8, down from a high of 19.3 in March of last year.

Inflation indicators were mixed this month. The index for prices received for finished goods rose to 8.4 from 7.0 but remained near the lowest reading since November 2020. It was down from a high of 51.3 high in October 2021. A fairly steady 18.3% of respondents reported raising prices while an increased 9.9% reported lowering prices. The index of prices paid for raw materials weakened to 19.5 this month, the lowest level since July 2020 significantly below 73.4 reached last March and an 84.1 high in November 2021.

Expectations for future manufacturing activity deteriorated this month. The future general business activity index of -16.6 in April was its 12th consecutive negative reading. The future production index collapsed to 3.0 from 13.5, but the future employment index improved modestly. The future shipments index weakened significantly. Falling slightly was the future capital spending measure.

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 equals the number reporting a decrease. Data for the Texas Manufacturing Outlook, conducted by the Federal Reserve Bank of Dallas, can be found in Haver's SURVEYS database.