Texas Manufacturing Activity Index Edges Higher in June

The general business activity index in the Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas rose to -15.1 in June and recaptured most of May’s decline to -19.4. It has been negative since May 2022. An increased 10.5% of respondents reported improved business activity this month while a lessened 25.6% of respondents reported a worsening of conditions. The company outlook index rose to -6.9 this month compared to -13.4 in May and was increased from a low of -23.0 in May 2023. Data were collected between June 10-18 from 83 Texas manufacturers.

In the survey of current conditions, the production index rose to 0.7 this month but failed to recapture the May decline to -2.8 from 4.8 in April. The shipments series improved to 2.8 from -3.0. It was increased from a January low of -16.6. The new orders growth rate rose to -4.3 from -10.1 and was increased from a November low of -24.8. The unfilled order series eased to -4.7 after rising to -3.1, which was its highest level since September of last year. The employment index edged up to -2.9 but remained below its recent high of 5.9 in February. The hours-worked reading slipped to -5.0 from -3.7, but remained higher than -11.8 in January. The employment reading of -2.9 compared to -5.3 in May after two positive readings in February & March. A modestly higher 16.7% of respondents reported more hiring while declines in hiring surged to 19.6% of firms. The wages & benefits index improved to 24.3 after it fell to 21.0 from 30.6 in April.

Inflation indicators strengthened this month. The index of prices received for finished goods rose to 14.4 in June from 4.1 in May, up from a low of -6.7 in November of last year. A higher 17.1% of respondents reported raising prices while a greatly reduced 2.7% reported lowering prices. The index of prices paid for raw materials edged up to 21.5 this month and was increased from a low of 1.1 twelve months ago.

Expectations for future manufacturing activity improved. The future general business activity index of 12.9 compared to -3.3 in May and has been trending higher since September 2022. The future production index improved from a low in April of last year while the future orders growth index surged to its highest level since March 2022. Working the other way, the future employment index fell to its lowest level in seven months. The future hours-worked index series collapsed. The expected wages & benefits reading eased edged up after falling sharply in the prior two months. The future capital spending measure eased slightly.

Each index is calculated by subtracting the percentage reporting a decrease in activity 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.