Texas Manufacturing Activity Picks Up Slightly in April but Uncertainty Remains, Says Dallas Fed Survey
For Immediate Release: April 29, 2019
DALLAS—Texas factory activity continued to expand in April, according to business executives responding to the Texas Manufacturing Outlook Survey.
The production index, a key measure of state manufacturing conditions, ticked up two points to 12.4. Positive readings in the survey generally indicate expansion of factory activity, while readings below zero generally indicate contraction. The company outlook index climbed two points to 6.3.
The survey’s demand indicators bounced back after dipping last month: The new orders index rose eight points to 9.8, and the growth rate of orders index rose from -2.0 to 5.2. The capacity utilization index pushed to a seven-month high of 15.6.
For this month’s surveys, executives in both manufacturing and the service sector responded to supplemental questions on revenue, income taxes and drivers of uncertainty.
“Growth in Texas manufacturing continues, at a pace slightly above what we saw in March and also slightly above average,” said Emily Kerr, Dallas Fed senior business economist. “A bright spot this month was the rebound in the survey’s demand indexes, coupled with a slight uptick in optimism in firms’ outlooks. Some uncertainty remains, though, and a special question posed this month on drivers of that uncertainty showed that trade negotiations and tariffs, the political climate, and labor constraints were at the forefront of firms’ minds.”
Here are some additional key takeaways from this month’s manufacturing report:
Perceptions of broader business conditions improved. The general business activity index remained positive for a third month in a row but fell five points to 2.0.
Employment growth weakened but workweeks lengthened. The employment index fell eight points to 4.6, its lowest reading since the end of 2016. Nineteen percent of firms noted net hiring, while the share reporting net layoffs rose to 15 percent from 10 percent last month. The hours worked index came in at 8.1, up slightly from March.
Input cost pressure eased a bit, while pressure on selling prices and wages held steady. The raw materials prices index dropped 11 points to 7.9, its lowest reading in three years. The finished goods prices index held steady at 6.0, and the wages and benefits index inched down to 28.2, a still-elevated level.
Texas produces around 10 percent of total manufactured goods in the United States, ranking second behind California in factory production.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity.
Federal Reserve Bank of Dallas
Phone: (214) 922-6748