Texas Manufacturing Activity Less Negative in September, w/ Expectations Remaining Positive
Summary
- General business activity -9.0 in Sept. vs. -9.7 in Aug., having been negative since May ’22.
- Future general business activity 11.4 vs. 11.6, the fourth straight positive reading.
- Company outlook (-6.4, highest reading since Apr.); new orders growth (-8.6, negative for five successive mths.); and new orders (-5.2, negative for seven straight mths.).
- Production (-3.2, second contraction in three mths.) vs. Employment (2.9, second expansion in three mths.).
- Prices received index dips to 8.4 from 8.5; prices paid index falls 10.0 pts. to a five-month-low 18.2.
Manufacturing activity in Texas continued to contract in September, according to the Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas. The overall measure, the general business activity index, increased to -9.0 in September, the highest reading since January 2023, from -9.7 in August and -17.5 in July. The September reading was an improvement compared to -19.2 in September 2023. The index had been negative since May 2022. A lessened 9.9% of respondents reported improved business activity in September, down from 16.5% in August. An 18.9% of respondents reported a worsening of business conditions, down from August's 26.2%. The company outlook index improved to -6.4 in September after increasing to -9.6 in August, having remained negative since March 2022 but at a less severe pace since April. A lessened 10.6% of respondents expected improved company outlook this month while 17.0% expected deterioration. Data were collected from September 17-25 from 83 Texas manufacturers.
The production index, a key measure of state manufacturing conditions, declined to -3.2 in September after rising to an expansion-level 1.6 in August, indicating production contracted for the second time in three months to the lowest level since March. A lessened 22.6% of respondents reported higher production this month while an increased 25.8% reported a decline. The growth rate of orders index fell to -8.6 in September, the fifth straight negative reading, after increasing to -5.1 in August; it was down from its recent high of 3.8 in April and significantly below a peak of 30.4 in April 2021. The new orders index declined to -5.2 this month after improving to -4.2 in August, indicating a continued drop in demand for seven consecutive months; it was down from its recent high of 5.2 in February and well below a record-high 38.5 in April 2021. The unfilled orders index plunged to -18.0 in September, the 11th negative reading in 12 months, after increasing to 1.0 in August; it was well below a high of 6.2 in July 2022 and a high of 22.4 in April 2021. The shipments index fell to -7.0 this month, the second negative reading in three months, after improving to 0.8 in August. The capacity utilization index decreased to -7.0 in September, the fifth successive negative reading, after increasing to -2.5 in August; it was well below 19.4 in May 2022 and a record-high 46.3 in March 2021. The delivery time index dropped to -7.5 this month, the lowest reading since May, from -1.0 in August.
Labor market indexes showed some employment growth but slightly shorter workweeks in September. The employment index rebounded to 2.9 this month after a 7.8-point drop to -0.7 in August, indicating employment expanded for the second time in three months. The latest reading remained well below a high of 18.2 in January 2023 and a record-high 32.0 in April 2021. An increased 19.8% of respondents reported net hiring in September while 16.9% reported net layoffs. The hours worked index was at -2.5 this month, marginally up from -2.6 in August; it was well below a high of 13.6 in August 2022 and a record-high 24.6 in April 2021. The wages & benefits index fell to 18.5 in September after rising to 22.0 in August, registering the lowest level since February 2021 and roughly in line with the historical average.
Inflation indicators declined this month. The index for prices received for finished goods ticked down to 8.4 in September following a 5.1-point rise to 8.5 in August; it was meaningfully below a high of 47.9 in March 2022 and a peak of 51.3 in October 2021. An increased 17.5% of respondents reported raising prices in September while 9.1% reported lowering prices. The index of prices paid for raw materials dropped to 18.2 this month, the lowest level since April, after a 5.1-point rise to 28.2 in August. The index, while up from a low of 1.1 in June 2023, was significantly below 73.2 in March 2022 and a record-high 84.2 in November 2021.
Expectations on future manufacturing activity remained positive this month. The future general business activity index eased to 11.4 in September, the fourth consecutive positive reading, from 11.6 in August. The future production index rose to a solid 35.2, the highest level since March 2022, from August’s 33.7. Other indexes of future manufacturing activity also rose in September: wages & benefits (41.9 vs. 38.1), new orders (33.3 vs. 30.7), and growth rate of new orders (28.9 vs. 17.7). Meanwhile, the future company outlook index dropped to 11.1 in September from 18.5 in August, registering the lowest reading since May but having remained in positive territory since December 2023. The future employment index eased to 19.0 this month after rising to 22.0 in August, having remained positive since June 2020. The future shipments index fell to 28.8 in September after increasing to 30.1 in August, having remained positive since May 2020.
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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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