Dallas Fed Manufacturing Outlook: Robust Expansion in July Continues in August

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for August. The latest general business activity index came in at 30.9, down from 32.3 in July. Other components of the survey showed improved growth. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Texas factory activity maintained its strong momentum in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, held steady at 29.3.

Perceptions of broader business conditions remained highly positive this month, although uncertainty remained elevated. The general business activity index edged down to 30.9, while the company outlook index rose seven points to 27.3, with more than 30 percent of manufacturers saying their outlook had improved from July. The index measuring uncertainty regarding companies’ outlooks held fairly steady in August at 16.2, well above its readings in the first half of the year.

Expectations regarding future business conditions were slightly less optimistic in August. The indexes of future general business activity and future company outlook edged down to 34.7 and 34.3, respectively. Other indexes for future manufacturing activity showed mixed movements but remained in solidly 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.

 

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

 

For comparison, here is the latest ISM Manufacturing survey.

 

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.