February Dallas Fed Manufacturing

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey for February. The latest general business activity index came in at 17.2, up 10.2 from 7 in January. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Texas factory activity expanded at a markedly faster pace in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, surged 15 points to 19.9, indicating a sharp acceleration in output growth.

Other measures of manufacturing activity also point to more rapid growth this month. The new orders index rose seven points to 13.0, and the growth rate of orders index rose six points to 11.6. The capacity utilization index pushed up from 9.2 to 16.5, and the shipments index edged up three points to 16.1.

Perceptions of broader business conditions continued to improve in February. The general business activity index shot up 10 points to 17.2. The company outlook index held steady at 10.7, an above-average reading. Uncertainty regarding companies’ outlooks continued to rise, though the index retreated notably, from 19.3 to 8.5.

Expectations regarding future manufacturing activity remained positive in February, though some key indexes weakened slightly from their January readings. The future production index ticked down from 43.7 to 40.2, but the future general business activity index moved up four points to 33.9. Most other measures of future manufacturing activity edged down but remained solidly in 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.

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