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For immediate release: November 27, 2007

Texas Manufacturing Activity Declines in November, Dallas Fed Survey Finds

DALLAS—Factory activity in Texas weakened in November, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.

Texas produces more than 8 percent of the total manufactured goods in the United States, ranking second behind California in factory production.

Nearly all current production and general business condition indicators fell into negative territory from the October survey, continuing a slowing trend that began in early spring.

“Producers attribute weaker activity to softer demand for homebuilding and some consumer products,” according to Dallas Fed economist Fiona Sigalla.

Indexes for production, capacity utilization and volume of shipments became slightly negative. The index for volume of new orders swung from 8.2 in October to –10.6 in November, with nearly a third of respondents reporting a decline compared with last month.

Most indexes for activity six months from now are positive but lower, suggesting producers expect growth to remain soft.

Texas manufacturers remain cautious about general business conditions. The company outlook index has hovered around zero since July, and the index for the current level of general business activity declined, dipping from –6.6 in October to –17.0 in November.

The index for the level of general business activity expected six months from now was also negative.

Upward wage and price pressures persist, although producers continue to report more pressure on raw materials than finished goods.

“Strain from high input costs—particularly for energy and some food products—is a concern for manufacturers,” Sigalla said. “Respondents say they are having difficulty passing these costs on to selling prices.”

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity.


Media contact:
James Hoard
Phone: (214) 922-5307