The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for December. The latest general business activity index came in at -18.8, down 4.4 from last month. All figures are seasonally adjusted.
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.
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.
Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator. The Dallas Fed on the TMOS importance:
Texas is important to the nation’s manufacturing output. The state produced $159 billion in manufactured goods in 2008, roughly 9.5 percent of the country’s manufacturing output. Texas ranks second behind California in factory production and first as an exporter of manufactured goods.
Texas turns out a large share of the country’s production of petroleum and coal products, reflecting the significance of the region’s refining industry. Texas also produces over 10 percent of the nation’s computer and electronics products and nonmetallic mineral products, such as brick, glass and cement.
Here is a snapshot of the complete TMOS.
The next chart is an overlay of the General Business Activity Index and the Future Outlook Index — the outlook six months ahead.
Let’s compare all five Regional Manufacturing indicators. Here is a three-month moving average overlay of each since 2001 (for those with data).
Here is the same chart including the average of the five for the latest month with complete data.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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