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July 25, 2011
Texas factory activity expanded in July, according to business executives responding to the Texas Manufacturing OutlookSurvey. The production index, a key measure of state manufacturing conditions, rose from 5.6 to 10.8, suggesting outputgrowth picked up this month.Other measures of current manufacturing conditions also indicated growing activity, and the pace of new ordersincreased. The shipments index rose to a reading of 7.8 after coming in at zero last month. The capacity utilization indexwas positive but remained near zero, indicating little change over the prior month. The new orders index rose sharply from6.4 in June to 16 in July. Thirty-four percent of firms said order volumes increased this month, the highest share sinceNovember 2010.Indexes reflecting general business conditions improved in July. The general business activity index remained negative for the third month in a row but jumped from –17.5 to –2, suggesting only a slight worsening this month. The company outlookindex rose from 7.2 in June to 11 in July, indicating manufacturers were more optimistic about their firms’ prospects for the near future. Ninety percent of respondents said their outlooks were unchanged or improved from last month.Labor market indicators reflected more hiring and longer workweeks. The employment index came in at 12.1, up from 5.3in June. Twenty-two percent of manufacturers reported hiring new workers, the highest share this year. The hours workedindex rose from 1.5 to 7.9.Prices and wages increased again in July. The raw materials price index rose slightly after trending down in recent months,edging up from 31.1 to 34.3. The finished goods price index fell from 10 in June to 4.6 in July, suggesting selling pricesrose but at a slower pace than last month. More than 50 percent of respondents anticipate further increases in rawmaterials prices over the next six months, while 27 percent expect higher finished goods prices. The wages and benefitsindex moved up from 15.5 in June to 18.4 in July, although the great majority of respondents noted no change in laborcosts.Expectations regarding future business conditions were generally more optimistic in July. The indexes of future generalbusiness activity and future company outlook edged up this month after trending down in the first half of the year. Severalindexes of future manufacturing activity, including production, rose in July while others edged down but remained in solidpositive territory.The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’sfactory activity. Data were collected Jul.12–20, and 87 Texas manufacturers responded to the survey. Firms are askedwhether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over theprevious month.Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentageof respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting anincrease exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator hasincreased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, theindex will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when thenumber of firms reporting an increase is equal to the number of firms reporting a decrease.August 29, 2011
Federal Reserve Bank of Dallas Texas Business Outlook Surveys1
Business Indicators Relating to Facilities and Products in TexasCurrent
IndicatorJulIndexJunIndexChangeIndicatorDirection*Trend**(months)%ReportingIncrease%ReportingNo Change%ReportingDecrease
Production10.85.6+5.2Increasing2126.957.016.1Capacity Utilization0.6-0.8+1.4Increasing120.060.619.4New Orders16.06.4+9.6Increasing934.247.618.2Growth Rate of Orders2.52.3+0.2Increasing223.555.521.0Unfilled Orders8.2-6.2+14.4Increasing119.469.411.2Shipments7.80.4+7.4Increasing927.153.619.3Delivery Time3.51.2+2.3Increasing211.580.58.0Materials Inventories5.46.5-1.1Increasing223.458.618.0Finished Goods Inventories0.00.00.0Unchanged214.072.114.0Prices Paid for Raw Materials34.331.1+3.2Increasing2440.553.36.2Prices Received for Finished Goods4.610.0-5.4Increasing910.184.45.5Wages and Benefits18.415.5+2.9Increasing2019.579.31.1Employment12.15.3+6.8Increasing922.167.910.0Hours Worked7.91.5+6.4Increasing319.968.112.0Capital Expenditures-2.32.4-4.7Decreasing110.377.012.6
General Business ConditionsCurrent
IndicatorJulIndexJunIndexChangeIndicatorDirection*Trend**(months)%ReportingImproved%ReportingNo Change%ReportingWorsened
Company Outlook11.07.2+3.8Improving1020.869.49.8General Business Activity-2.0-17.5+15.5Worsening315.167.817.1
Business Indicators Relating to Facilities and Products in TexasSix Months Ahead
IndicatorJulIndexJunIndexChangeIndicatorDirection*Trend**(months)%ReportingIncrease%ReportingNo Change%ReportingDecrease
Production38.837.1+1.7Increasing2946.346.37.5Capacity Utilization30.527.4+3.1Increasing2940.649.310.1New Orders28.528.0+0.5Increasing2937.753.19.2Growth Rate of Orders22.622.1+0.5Increasing2931.958.89.3Unfilled Orders1.2-7.3+8.5Increasing114.073.312.8Shipments31.735.1-3.4Increasing2940.650.58.9Delivery Time-8.2-6.1-2.1Decreasing25.880.214.0Materials Inventories-2.33.6-5.9Decreasing114.069.816.3Finished Goods Inventories-3.52.4-5.9Decreasing111.872.915.3Prices Paid for Raw Materials47.645.1+2.5Increasing2852.343.04.7Prices Received for Finished Goods20.922.2-1.3Increasing1226.767.45.8Wages and Benefits29.133.5-4.4Increasing8632.564.13.4Employment2.314.5-12.2Increasing2320.960.518.6Hours Worked2.37.3-5.0Increasing2915.172.112.8Capital Expenditures10.621.7-11.1Increasing2023.563.512.9
General Business ConditionsSix Months Ahead
IndicatorJulIndexJunIndexChangeIndicatorDirection*Trend**(months)%ReportingImproved%ReportingNo Change%ReportingWorsened
Company Outlook15.915.6+0.3Improving2628.259.512.3General Business Activity3.72.9+0.8Improving1123.656.519.9
*Indicator direction refers to this month's index. If index is positive (negative), indicator is increasing (decreasing) or improving (worsening). If zero, indicator is unchanged.**Number of months moving in current direction.Data have been seasonally adjusted as necessary.
Federal Reserve Bank of Dallas Texas Business Outlook Surveys2
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