Texas factory activity increased for the sixth month in a row in April, according to business executives responding to the Texas Manufacturing Outlook Survey. Results of the survey were released April 26 by the Federal Reserve Bank of Dallas. The production index, a key indicator of state manufacturing conditions, climbed further into positive territory as more producers reported increased activity.

The April production index came in at 18, up from its March level of 9, with 40 percent of respondents noting increased output.

Other indicators of current factory activity also pointed to strong growth. The indexes for capacity utilization, new orders and shipments showed marked increases. The growth rate of orders index jumped to its highest level since June 2006.

The index for capital expenditures, which had been negative for nearly two years, stabilized in April with a slightly positive reading. Still, four of five companies hadn’t made any changes in their capital expenditures over the prior month.

The business activity index increased sharply, with the share of manufacturers reporting improvement rising from 23 percent in March to 34 percent in April. The company outlook index also rose steeply, reaching its highest level in four years.

Labor market conditions in the region’s manufacturing sector continued to improve in April. The employment index signaled further job growth, with the share of firms hiring workers rising to 22 percent. Hours worked climbed again, and the wages and benefits index rose as the share of respondents noting increases doubled from 10 percent to 20 percent.

Upward pressure on raw materials prices persisted, with 44 percent of manufacturers reporting rising input costs. The share of respondents noting higher finished goods prices increased, and the index entered positive territory, although three-fourths of producers reported no change. Expectations of future price increases rose in April after abating in March. More than half of respondents anticipate further increases in raw materials prices over the next six months, while 26 percent expect higher finished goods prices.

Firms remain optimistic about their six-month outlook. The indexes for future production, capacity utilization and new orders stayed strongly positive in April. The future business activity index and six-month company outlook index rose after edging downward in recent months.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected April 13-21, and 93 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.

Survey responses are used to calculate an index for each question. Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report that activity has increased, an index will register 100. An index will register -100 when all firms report a decrease. An index will be zero when the number of firms reporting an increase or decrease is equal. Where appropriate, the indexes are seasonally adjusted.

For additional perspective on the survey, see "The Texas Manufacturing Outlook Survey: A Tool for Understanding the Economy" and "Made in Texas: The Natural Selection of Manufacturing." 

  • Click on links in the table for greater details, including historical data.

Company Business Indicators Relating to Facilities and Products in Texas
Current
Indicator
Apr Index
Mar Index
Change
Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
18.2
8.7
+9.5
Increasing
6
39.6
38.9
21.4
20.6
14.9
+5.7
Increasing
2
38.7
43.2
18.1
15.8
10.9
+4.9
Increasing
2
35.7
44.4
19.9
19.6
8.6
+11.0
Increasing
2
36.1
47.5
16.5
8.9
7.4
+1.5
Increasing
2
18.4
72.1
9.5
14.6
1.6
+13.0
Increasing
2
36.3
42.0
21.7
4.3
-7.8
+12.1
Increasing
1
14.0
76.3
9.7
2.2
7.8
-5.6
Increasing
2
19.4
63.4
17.2
-6.5
0.0
-6.5
Decreasing
1
12.9
67.7
19.4
42.1
39.3
+2.8
Increasing
9
43.7
54.7
1.6
2.9
-3.3
+6.2
Increasing
1
14.3
74.3
11.4
16.3
4.5
+11.8
Increasing
5
19.6
77.2
3.3
9.8
2.8
+7.0
Increasing
2
21.5
66.8
11.7
22.8
13.5
+9.3
Increasing
2
34.8
53.3
12.0
1.1
-7.8
+8.9
Increasing
1
9.9
81.3
8.8
General Business Conditions
Current
Indicator
Apr Index
Mar Index
Change
Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
26.4
7.1
+19.3
Improving
2
36.9
52.6
10.5
21.1
7.2
+13.9
Improving
2
33.9
53.3
12.8
Company Business Indicators Relating to Facilities and Products in Texas
Six Months Ahead
Indicator
Apr Index
Mar Index
Change
Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
35.1
34.0
+1.1
Increasing
14
47.0
41.0
11.9
33.0
32.1
+0.9
Increasing
14
45.7
41.6
12.7
30.5
29.5
+1.0
Increasing
16
43.5
43.5
13.0
26.2
28.5
-2.3
Increasing
14
38.9
48.4
12.7
7.7
5.8
+1.9
Increasing
10
12.0
83.7
4.3
28.7
38.1
-9.4
Increasing
14
42.1
44.5
13.4
-2.2
0.0
-2.2
Decreasing
1
4.3
89.1
6.5
13.0
-4.6
+17.6
Increasing
1
23.9
65.2
10.9
6.5
3.4
+3.1
Increasing
2
15.2
76.1
8.7
47.2
40.3
+6.9
Increasing
13
51.6
44.0
4.4
16.5
11.4
+5.1
Increasing
6
26.4
63.7
9.9
29.6
31.8
-2.2
Increasing
71
30.4
68.8
0.8
17.6
12.5
+5.1
Increasing
8
26.4
64.8
8.8
18.4
25.3
-6.9
Increasing
14
30.4
57.6
12.0
9.9
6.9
+3.0
Increasing
5
19.8
70.3
9.9
General Business Conditions
Six Months Ahead
Indicator
Apr Index
Mar Index
Change
Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
19.6
16.4
+3.2
Improving
11
35.4
48.9
15.8
23.1
18.4
+4.7
Improving
9
37.4
48.4
14.3


*Indicator direction refers to this month's index. If index is positive (negative), indicator is increasing (decreasing) or improving (worsening). If zero, indicator is unchanged.
**Number of months moving in current direction.
Data have been seasonally adjusted as necessary. See information on seasonal adjustment.

Current and future production

Comments from Survey Respondents
These comments were selected from respondents' completed surveys and have been edited for publication.
 

Food Manufacturing
Dairy costs have increased significantly, especially when compared with last year.

Beverage and Tobacco Product Manufacturing
First quarter sales were weak, despite price reductions. Profits trended downward in the first three months of the year, though April is looking better.

Chemical Manufacturing
The rig count has moved up substantially, increasing the demand for our products from customers in the oilfield industry. We think there is going to be a slight leveling off in the rig count, which in turn will bring our business down.

Nonmetallic Mineral Product Manufacturing
We are seeing a modest increase in business levels due to seasonal influences. We continue to believe that the economic recovery will be slow.

Fabricated Metal Product Manufacturing
After adjusting for seasonal variation, we are generally seeing demand return in markets that have been significantly down over the past 28 months. Positive signs indicate that planning activity is starting to take place for larger projects, such as new commercial construction.

We remain concerned whether this is a lasting increase or a flurry of pent-up activity that will be short-lived.

Machinery Manufacturing
Our sectors (downstream energy, petrochemicals, power, pipeline, steel) remain very sluggish.

Computer and Electronic Product Manufacturing
We are beginning to see large cost increases for materials due to higher transportation, regulatory compliance and insurance costs. The additional cost pressures will make recovery more difficult since they will preclude additional investment in reducing our costs and improving our competitive position.

Furniture and Related Product Manufacturing
Weak credit has hurt several of our customers and put them in serious financial difficulty. We do not see anything in the next six months that will help this issue.