Texas Manufacturing Outlook Survey
Texas Manufacturing Growth Rebounds, Though Demand Continues to Decline
For this month’s survey, Texas business executives were asked supplemental questions on wages, prices and outlook concerns. Results 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 questions results.
Growth in Texas factory activity resumed in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose nine points to 9.7, suggestive of a pickup in output growth.
Other measures of manufacturing activity showed mixed signals this month. The new orders index was negative for a seventh month in a row—suggesting a continued decrease in demand—though it moved up from -20.9 to -9.2. The growth rate of orders index rose nearly 11 points to -9.3. The capacity utilization index turned positive, rising from -3.4 to 8.5, and the shipments index pushed up nine points to 1.9 following two consecutive negative readings.
Perceptions of broader business conditions continued to worsen in December. The general business activity index pushed down further, from -14.4 to -18.8. The company outlook index posted its 10th straight negative reading but moved up two points to -12.8. The outlook uncertainty index retreated five points to 15.6, in line with its average reading of 16.6.
Labor market measures pointed to stronger employment growth and longer workweeks. The employment index climbed eight points to 14.0, a reading significantly above its series average of 7.9. Twenty-four percent of firms noted net hiring, while 10 percent noted net layoffs—on par with the average share of respondents noting layoffs this year. The hours worked index pushed up eight points to 7.2.
Price and wage indexes saw little movement in December. The raw materials prices index was largely stable at 23.7, remaining below its series average of 28.1 for the second month in a row. The finished goods prices index was little changed at 12.5, still slightly above its series average of 9.0. The wages and benefits index ticked down from 36.5 to 35.0.
Expectations regarding future manufacturing activity were mixed in December. The future production index remained positive at 10.2, signaling that respondents expect output growth to continue. The future general business activity index remained negative, though it pushed up nine points to -8.3. Most other measures of future manufacturing activity were positive this month.
Next release: Monday, January 30
Data were collected Dec. 13–21, and 90 Texas manufacturers responded to the survey. The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.
Results Summary
Historical data are available from June 2004 to the most current release month.
| Business Indicators Relating to Facilities and Products in Texas Current (versus previous month) | ||||||||
| Indicator | Dec Index | Nov Index | Change | Series Average | Trend* | % Reporting Increase | % Reporting No Change | % Reporting Decrease |
Production | 9.7 | 0.8 | +8.9 | 10.8 | 31(+) | 32.1 | 45.4 | 22.4 |
Capacity Utilization | 8.5 | –3.4 | +11.9 | 8.7 | 1(+) | 27.2 | 54.1 | 18.7 |
New Orders | –9.2 | –20.9 | +11.7 | 6.4 | 7(–) | 26.7 | 37.3 | 35.9 |
Growth Rate of Orders | –9.3 | –19.9 | +10.6 | 0.4 | 8(–) | 19.6 | 51.5 | 28.9 |
Unfilled Orders | –1.1 | –4.6 | +3.5 | –1.4 | 5(–) | 13.8 | 71.3 | 14.9 |
Shipments | 1.9 | –7.5 | +9.4 | 9.4 | 1(+) | 30.8 | 40.4 | 28.9 |
Delivery Time | –0.9 | –2.8 | +1.9 | 1.4 | 2(–) | 16.2 | 66.7 | 17.1 |
Finished Goods Inventories | –3.3 | 2.2 | –5.5 | –3.2 | 1(–) | 20.0 | 56.7 | 23.3 |
Prices Paid for Raw Materials | 23.7 | 22.6 | +1.1 | 28.1 | 32(+) | 41.0 | 41.8 | 17.3 |
Prices Received for Finished Goods | 12.5 | 13.9 | –1.4 | 9.0 | 29(+) | 21.5 | 69.5 | 9.0 |
Wages and Benefits | 35.0 | 36.5 | –1.5 | 20.8 | 32(+) | 36.1 | 62.8 | 1.1 |
Employment | 14.0 | 5.9 | +8.1 | 7.9 | 30(+) | 24.2 | 65.6 | 10.2 |
Hours Worked | 7.2 | –1.0 | +8.2 | 3.8 | 1(+) | 18.1 | 71.0 | 10.9 |
Capital Expenditures | –2.1 | 9.3 | –11.4 | 6.9 | 1(–) | 14.3 | 69.3 | 16.4 |
| General Business Conditions Current (versus previous month) | ||||||||
| Indicator | Dec Index | Nov Index | Change | Series Average | Trend** | % Reporting Improved | % Reporting No Change | % Reporting Worsened |
Company Outlook | –12.8 | –15.2 | +2.4 | 6.1 | 10(–) | 14.9 | 57.4 | 27.7 |
General Business Activity | –18.8 | –14.4 | –4.4 | 2.4 | 8(–) | 13.7 | 53.8 | 32.5 |
| Indicator | Dec Index | Nov Index | Change | Series Average | Trend* | % Reporting Increase | % Reporting No Change | % Reporting Decrease |
Outlook Uncertainty† | 15.6 | 20.4 | –4.8 | 16.6 | 20(+) | 27.8 | 60.0 | 12.2 |
| Business Indicators Relating to Facilities and Products in Texas Future (six months ahead) | ||||||||
| Indicator | Dec Index | Nov Index | Change | Series Average | Trend* | % Reporting Increase | % Reporting No Change | % Reporting Decrease |
Production | 10.2 | 8.9 | +1.3 | 37.8 | 32(+) | 25.8 | 58.6 | 15.6 |
Capacity Utilization | 9.2 | 14.9 | –5.7 | 34.7 | 32(+) | 26.5 | 56.2 | 17.3 |
New Orders | 2.0 | 4.5 | –2.5 | 35.1 | 2(+) | 23.8 | 54.4 | 21.8 |
Growth Rate of Orders | 2.9 | 1.1 | +1.8 | 26.1 | 6(+) | 23.5 | 55.9 | 20.6 |
Unfilled Orders | –12.7 | –10.9 | –1.8 | 3.3 | 7(–) | 6.6 | 74.1 | 19.3 |
Shipments | 10.7 | 5.3 | +5.4 | 36.1 | 32(+) | 31.0 | 48.7 | 20.3 |
Delivery Time | –2.9 | –11.8 | +8.9 | –1.3 | 2(–) | 13.6 | 69.9 | 16.5 |
Finished Goods Inventories | –1.2 | –10.3 | +9.1 | 0.4 | 3(–) | 16.9 | 65.1 | 18.1 |
Prices Paid for Raw Materials | 20.0 | 21.8 | –1.8 | 34.4 | 33(+) | 35.3 | 49.4 | 15.3 |
Prices Received for Finished Goods | 18.8 | 16.1 | +2.7 | 21.2 | 32(+) | 30.6 | 57.6 | 11.8 |
Wages and Benefits | 42.2 | 52.4 | –10.2 | 39.5 | 32(+) | 44.9 | 52.4 | 2.7 |
Employment | 19.7 | 22.9 | –3.2 | 23.3 | 31(+) | 25.4 | 68.9 | 5.7 |
Hours Worked | 1.5 | 10.3 | –8.8 | 9.3 | 4(+) | 14.7 | 72.1 | 13.2 |
Capital Expenditures | 5.3 | 7.7 | –2.4 | 19.9 | 31(+) | 22.8 | 59.7 | 17.5 |
| General Business Conditions Future (six months ahead) | ||||||||
| Indicator | Dec Index | Nov Index | Change | Series Average | Trend** | % Reporting Increase | % Reporting No Change | % Reporting Worsened |
Company Outlook | –2.3 | –9.2 | +6.9 | 19.5 | 8(–) | 15.5 | 66.7 | 17.8 |
General Business Activity | –8.3 | –17.5 | +9.2 | 13.6 | 8(–) | 15.1 | 61.5 | 23.4 |
*Shown is the number of consecutive months of expansion or contraction in the underlying indicator. Expansion is indicated by a positive index reading and denoted by a (+) in the table. Contraction is indicated by a negative index reading and denoted by a (–) in the table.
**Shown is the number of consecutive months of improvement or worsening in the underlying indicator. Improvement is indicated by a positive index reading and denoted by a (+) in the table. Worsening is indicated by a negative index reading and denoted by a (–) in the table.
†Added to survey in January 2018.
Data have been seasonally adjusted as necessary, with the exception of the outlook uncertainty index, which does not yet have a sufficiently long time series to test for seasonality.
Production Index
Comments from Survey Respondents
These comments are from respondents’ completed surveys and have been edited for publication.
- Business has picked up from a lull in October/November. We’re expecting a strong first quarter 2023.
- Late-year seasonality affects our business. We generally see a slowdown from Thanksgiving through the end of the year.
- The combination of increased costs of raw ingredients, illiquid consumers and the need to retain employees via increasing benefits has created a difficult environment. Couple that with the Biden political mentality of things, and it is unhealthy for business.
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We’re now dialing in the very increased forecast of a significant downturn. Recession is now being planned for and acted upon.
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We can feel things slowing down. Estimating activity is really down from previous months, and incoming orders have dropped off as well. It seems that our material vendors are getting items out faster, and all talk about how the activity level has slowed down from earlier in the year.
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Our products are sold to homebuilders. [When] interest rates go up, home construction goes down and will continue to go down in the next six months.
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Demand is decreasing.
- We are seeing more and bigger orders recently. Oil companies are spending money on projects that they have held back on this past year. We expect 2023 to be a very good year. Our backlog of orders is growing to a record.
- I think we are experiencing a year-end lull in business activity. We actually have no idea what to expect for 2023.
- Never doubt the ability of the Federal Reserve to crush the economy when they intervene to stop inflation.
- We’re plowing ahead as our market changes.
- We have seen a small decrease in new orders, but wages and other costs continue to increase. We are investing in more automation to reduce the labor cost.
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There is nothing positive in the economic outlook. The Federal Reserve should pause and let prior rate increases filter through before implementing further increases or they [will] overdo the contraction and make it harder to recover.
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The rapid pace of wage growth is putting significant pressure on the business to outsource manufacturing outside the U.S.
Historical Data
Historical data can be downloaded dating back to June 2004.
Indexes
Download indexes for all indicators. For the definitions of all variables, see Data Definitions.
| Unadjusted |
| Seasonally adjusted |
All Data
Download indexes and components of the indexes (percentage of respondents reporting increase, decrease, or no change). For the definitions of all variables, see Data Definitions.
| Unadjusted |
| Seasonally adjusted |
Questions regarding the Texas Manufacturing Outlook Survey can be addressed to Laila Assanie at laila.assanie@dal.frb.org.
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