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August 29, 2022
Growth in Texas Abates Manufacturing Activity
What’s new this month?
For this month’s survey, Texas business executives were asked additional questions on supply chain disruption. The results of these questions come together from the Texas Manufacturing Outlook Survey, the Texas Service Sector Outlook Survey and the Texas Retail Outlook Survey. Read the results of the special questions.
Texas factory activity slowed in August, according to business executives who responded to the Texas Manufacturing Outlook survey. The production index, a key measure of state manufacturing conditions, fell to 1.2, suggesting little change in output.
Other measures of manufacturing activity indicated slower growth or contraction this month. The new orders index was negative for the third month in a row, indicating a slowdown in demand, although it rose from -9.2 to -4.4. The growth rate of the order index remained negative but fell from -12.0 to -14.7. The capacity utilization index fell slightly to -0.6, and the shipping index was largely unchanged at 3.4.
Perceptions of broader business conditions worsened in August. The general business activity index was negative but rose 10 points to -12.9. The company sentiment index posted its sixth consecutive negative reading to -7.6. The index of perception uncertainty was higher but retreated from 33.7 to 24.4.
Labor market measures continue to point to strong job growth and longer work weeks. The employment index fell two points to 15.6, a reading higher than the sequential average of 7.8. Twenty-seven percent of firms reported net hiring, while 12 percent observed net hiring. The hourly job index rose five points to 14.4.
Although inflationary pressures have moderated, prices and wages have continued to rise. The commodity price index fell four points to 34.4, a reading still above the average of 28.1 but below last November’s peak of 83.3. The price index of finished goods also fell from 29.3 to 26.8. The wage and benefits index, however, rose to 45.8 in August.
Expectations regarding future manufacturing activity in August were mixed. While the future production index pushed further into positive territory, entering 23.9, the future general business activity index remained negative, although it rose to nine points -8.8. Other measures of future manufacturing activity, such as capacity utilization and new orders, turned more positive in August.
Next release: Monday, September 26
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Data was collected August 16–24, and 86 Texas producers responded to the survey. The Dallas Fed conducts the Texas Manufacturing Outlook survey each month to get an up-to-date assessment of the state’s factory activity. Firms are asked whether production, employment, orders, prices and other indicators have increased, decreased or remained unchanged from the previous month. Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents who reported a decrease from the percentage who reported an increase. When the share of companies reporting increases exceeds the share of decreases, the index will be above zero, indicating that the index has increased over the previous month. If companies decline more than their reported shares, the index will be below zero, indicating that the index fell last month. The index is zero when the number of firms reporting an increase equals the number of firms reporting a decrease. Information is updated periodically as needed. |
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