Economy

Dallas Fed Shows Improvements in Texas Manufacturing in November

Jon C. Ogg

Published: November 30, 2015 12:05 pm

Last Updated: January 13, 2020 4:40 pm

The oil and gas sector may not be enjoying higher oil prices like we had seen prior to 2015, but the Federal Reserve Bank of Dallas released marginally better manufacturing trends for the month of November 2015. Monday’s release was the Texas Manufacturing Outlook Survey, showing that overall Texas regional factory activity increased for the second consecutive month after exhibiting weakness in the first three quarters.

The Texas Manufacturing Outlook Survey is compiled from responses by business executives. Data were collected between November 16 and November 24, and 124 Texas manufacturers responded to the survey. Business executives are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.

The production index, which is the first headline reading and is the key measure of state manufacturing conditions, ticked up to 5.2 from 4.8 in November. Still, the General Activity Index came in under the growth mark at -4.9. Bloomberg had a consensus estimate of -11.0, and the report for October’s General Activity Index was -12.7.

What may matter the most here, at least after the jobs growth, was that expectations regarding future business conditions increased in November. The index of future general business activity rose by three points to 7.3, and the index of future company outlook rose by six points to 16.2. Indexes for future manufacturing activity showed mixed movements but remained strongly positive.

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Monday’s regional Fed manufacturing report said:

Some other indexes of current manufacturing activity also reflected growth in November, but the survey’s demand measures remained in negative territory. New orders, an indicator of incoming demand, stabilized somewhat this month. The index rose 6 points but stayed slightly negative at -1.6. The growth rate of orders index has been negative for 13 months and held fairly steady at -7.3 in November. Meanwhile, the capacity utilization index posted a third positive reading but slipped to 5.9, and the shipments index remained positive but moved down to 4.2.

Perceptions of broader business conditions were mixed in November. The general business activity index was negative again but less so, rising nearly 8 points to -4.9. The company outlook index pushed up to 0.8 — with the near-zero reading reflective of essentially unchanged outlooks from October — after three months in negative territory.

Labor market indicators reflected a notable rise in November. The employment index posted a double-digit increase to 11.6, its highest reading since August 2014. Twenty-four percent of firms noted net hiring, while 12 percent noted net layoffs. The hours worked index also rose sharply to a high not seen in more than a year, coming in at 9.9.

The survey’s price measures have been negative most of this year and pushed further negative in November. The raw materials prices index declined to -5.1, suggesting a slightly steeper decline in input costs than last month. The finished goods prices index posted its eleventh negative reading in a row and moved down to -12.1. Meanwhile, the wages and benefits index edged down but stayed strong at 16.

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