Dallas Fed Manufacturing Outlook: Overall Activity Rose in May

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for May. The latest general business activity index came in at 26.8, up from 21.8 in April. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Texas factory activity rose markedly in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, increased 10 points to a 12-year high of 35.2, signaling further acceleration in output growth.

Perceptions of broader business conditions were even more positive in May than in April. The general business activity index rose five points to 26.8, and the company outlook index rose four points to 28.0. These readings are far above their respective averages.

Expectations regarding future business conditions remained largely optimistic in May. The indexes of future general business activity and future company outlook were largely unchanged at 30.0 and 35.2, respectively, with both readings significantly above average. Most 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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