Dallas Fed Manufacturing Outlook: "Texas Manufacturing Activity Expands Modestly"

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey for December. The latest general business activity index came in at -3.2, down 1.9 from -1.3 in November. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Growth in Texas factory activity resumed in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rebounded to 3.6 after dipping into negative territory last month.

Perceptions of broader business conditions were mixed in December. The general business activity index remained slightly negative at -3.2, while the company outlook index inched up three points to 1.3. Both indexes have oscillated between positive (expansionary) and negative (contractionary) territory this year. The index measuring uncertainty regarding companies’ outlooks receded 12 points to 5.6, its lowest reading since March.

Expectations regarding future business conditions remained optimistic in December. The index of future general business activity was largely unchanged at 6.4, while the index of future company outlook edged down to 13.9. Most other indexes for future manufacturing 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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