Dallas Fed Texas Manufacturing Outlook Survey Finds Continued Growth in June

The Dallas Federal Reserve said Monday the Texas Manufacturing Outlook Survey continued to expand in June, albeit at a slightly slower pace than last month. The survey found the production index, a key measure of state manufacturing conditions, fell 11 points to 12.3, suggesting output was tampered back from an overheated pace than in May.

The new orders and growth rate of orders came in at 9.6 and 4.7, respectively. The capacity utilization index ticked down to 12.3, while the shipments index pulled back to 8.5 after skyrocketing last month.

The general business activity index edged down to a still-strong 15.0. The company outlook index posted a 10th consecutive positive reading but fell 9 points to 10.8.

The labor market showed continued employment gains and longer workweeks this month, a welcomed result. The employment index has now increased for a sixth consecutive month and increased to 9.6 this month. Nineteen-percent (19%) of firms reported net hiring juxtaposed to 10% reporting net layoffs. The hours worked index fell from its 6-year high last month to 8.9.

Prices and wages also rose in June, with the raw materials prices index ticking down 2 points to 15.6. The finished goods prices index fell from 5.9 to 3.6 and the wages and benefits index remained high at 21.1.

Still, expectations for future business conditions continued to improve. The index of future general business activity held steady at 31.9, while the index of future company outlook came in at 35.6, a gain of 5 points from last month.

Next release: Monday, July 31

Data were collected June 13–21, and 113 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.