Dallas Fed Manufacturing Outlook: "Manufacturing Continues Moderate Expansion"

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for July. The latest general business activity index came in at -6.3, up 5.8 from -12.1 in June. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Texas factory activity continued to expand in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, moved from 8.9 to 9.3, indicating output growth continued at roughly the same pace as in June.

Perceptions of broader business conditions were less negative in July. The general business activity index rose six points but remained in negative territory for a third month in a row, coming in at -6.3. The company outlook index rose five points to -0.9, with the near-zero reading indicating that the share of firms noting a worsened outlook roughly equaled the share noting an improved outlook. The index measuring uncertainty regarding companies’ outlooks retreated 12 points from its June peak, coming in at 9.7.

Expectations regarding future business conditions improved in July. The index of future general business activity returned to positive territory, rising nine points to 6.0. The index of future company outlook moved up six points to 9.1. Both readings, while positive, remain well below average. Other indexes for future manufacturing activity pushed further into positive territory.

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.

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The next chart is an overlay of the General Business Activity Index and the Future Outlook Index — the outlook six months ahead.

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For comparison, here is the latest ISM Manufacturing survey.

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Let's compare all five Regional Manufacturing indicators. Here is a three-month moving average overlay of each since 2001 (for those with data).

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Here is the same chart including the average of the five for the latest month with complete data.

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