Dallas Fed Manufacturing Outlook: Conditions Improve Despite Slight Drop

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for June. The latest general business activity index came in at 15.0, down slightly from 17.2 in May.

Here is an excerpt from the latest report:

Texas factory activity increased in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 11 points to 12.3, indicating output grew but at a slower pace than in May.

Perceptions of broader business conditions improved in June, although the indexes were less positive than in May. The general business activity index edged down to 15.0. The company outlook index posted a 10th consecutive positive reading but fell nine points to 10.8.

Expectations regarding future business conditions continued to improve. The index of future general business activity held steady at 31.9, while the index of future company outlook came in at 35.6, up five points from last month’s reading. Other indexes for future manufacturing activity showed mixed movements 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.