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January 30, 2023
Texas Manufacturing Sector Growth Slows
New this month
In this month’s survey, we asked business executives in Texas additional questions. labor market situationResults for these questions from the Texas Manufacturing Outlook Survey, Texas Service Sector Outlook Survey, and Texas Retail Outlook Survey have been released together. Read the special question results.
This month’s data release also includes an annual seasonality correction. Once a year, the Federal Reserve Bank of Dallas revises historical data from the Texas Manufacturing Outlook Survey after calculating new seasonally adjusted factors. Annual seasonal corrections cause small changes in the seasonally adjusted series. Learn more about seasonal adjustments here.
Growth in factory activity in Texas slowed in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of the state’s manufacturing conditions, fell from 9.1 to 0.2, with a near-zero reading suggesting flat production.
Other readings generally point to a weakening in manufacturing activity this month. The new orders index was negative for the eighth straight month, rising from -11.0 to -4.0, suggesting a continued decline in demand. The order index growth rate has dropped to -12.3. The utilization index was positive, but fell from 7.9 to 6.0, and the shipment index was back negative at -6.3.
Pessimism has eased, but perceptions of the broader business environment continued to deteriorate in January. The general business activity index remained negative, but rose 12 points to -8.4. Similarly, the business outlook index rose 11 points to -2.5, despite his 11th consecutive negative reading. The outlook uncertainty index was little changed at 16.8.
Labor market indicators show job growth and a longer working week. The employment index rose four points to 17.6, well above the series average of 7.9. 31% of firms cited net hiring and 13% cited net layoffs. The working hours index remained fairly stable at 3.8.
Inflation pressures remained broadly stable and wage growth eased slightly in January. The raw material price index has remained mostly stable at 20.5, falling below the series average of 28.0 for the third straight month. The finished goods price index was little changed at 9.9, in line with the series average of 9.0. The wages and benefits index fell to 30.5 from 34.2.
Expectations for future manufacturing activity were mixed in January. The future production index is even more positive at 16.1, indicating that respondents expect production growth over the next six months. The future general business activity index remained negative at -9.1. Most other measures of future manufacturing activity were positive this month.
Next release: Monday, February 27th
Data was collected January 17-25 and 102 Texas manufacturers responded to the survey. The Dallas Federal Reserve conducts the monthly Texas Manufacturing Outlook Survey for a timely assessment of the state’s factory activity. Firms are asked whether output, employment, orders, prices, and other indicators have increased, decreased, or remained unchanged since the previous month.
Survey responses are used to calculate the index for each metric. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage of respondents reporting an increase. When the share of companies reporting an increase exceeds the share reporting a decrease, the index is greater than zero, suggesting that the metric has increased from the previous month. If the percentage of companies reporting a decrease exceeds the percentage reporting an increase, the index is below zero, suggesting that the metric has decreased from the previous month. If the number of companies reporting an increase equals the number of companies reporting a decrease, the index will be zero. Data have been seasonally adjusted where necessary.
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