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Texas Manufacturing Continues its 9-Month Rebound

For nine months in a row, Texas manufacturing has been on the rise.

Business executives responding to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey reported an increase in orders and shipments during January. Texas produces more than 11 percent of total manufactured goods in the United States, ranking second behind California in factory production.

Texas Manufacturing Production Index

The production index, a measure of state manufacturing conditions, grew to 7.1 from 6. This was a slightly stronger pace than December.

  • The production index, a measure of Texas manufacturing conditions, grew to 7.1 from 6. This was a slightly stronger pace than December.
  • New orders rose dramatically, to 14.4 in January from 1.3 in December. This marked a seven-month high and suggested a sharp increase in demand.
  • The shipments index, which was near zero in December, rebounded to 9.2 in January.

General business conditions on the rise

Businesses also indicated that broader market conditions seem to be improving as well.

  • For eight months in a row, the general business activity index stayed in positive territory.
  • The company outlook index also remained positive for the eighth consecutive month.
  • Expectations about future general business activity were slightly lower than December, but still robust at 22.3. The future company outlook reached its highest level in three years, rising 9 points to 33.5.

Will the labor markets rebound as well? The survey says, “yes”:

  • In January, the employment index rose for the second consecutive month, reaching 8.6.
  • Nearly one-fifth of companies said they were hiring, while about 10 percent indicated layoffs.
  • Longer workweeks were on tap, with the hours worked index rising to 3.4. It had dipped to -1.1 in December.

To calculate the indices, the Fed gained responses about output, employment, orders, prices, and other indicators from 99 Texas manufacturing companies. Each index was calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month.

Trends across Texas manufacturing industries

Some survey respondents gave specific feedback that provides the pulse of the marketplace:

  • Plastics and rubber product manufacturing – A company indicated that their greatest challenge is to find skilled toolmakers. The company wants to avoid sourcing tools from China, which is growing more expensive.
  • Chemical manufacturing – Again, exporting to the United States from China is becoming less attractive. With low energy prices and a cheap U.S. dollar, these companies expect tire manufacturing companies to move production to the United States.
  • Nonmetallic mineral product manufacturing – These companies expect the economy to improve overall in 2014, lifting the housing sector with it.
  • Fabricated metal manufacturing – Weather has dampened financial results during the winter months. While companies are optimistic in the long-term, they expect a poor first quarter. Raw materials are increasing in cost.
  • Food manufacturing – Inflation may force an increase in prices.
  • Machinery manufacturing – Again, inflation in wages and raw materials are causing difficulty.
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Jamie Duerksen

Product Manager Custom Labels and Barcode Printers at System ID
Jamie Duerksen loves challenges and enjoys the wealth of knowledge that comes from solving them. System ID customers benefit from her expertise—Jamie excels at helping organizations uncover barcode labeling and printing solutions for unique applications and environments. Outside of the office, Jamie embraces the everyday experience of being a wife and mother.

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