Dallas Fed Manufacturing: Perceptions of Growth Worsen in July

The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for July. The latest general business activity index came in at -22.6, down 4.9 from last month. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Growth in Texas factory activity continued at a modest pace in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, was largely unchanged at 3.8, a reading well below average but still indicative of growth.

Perceptions of broader business conditions worsened in July. The general business activity index declined five points to -22.6. The company outlook index posted a fifth consecutive negative reading but moved up from -20.2 to -10.8. The outlook uncertainty index came off its two-year high of 43.7, falling to 33.7.

Expectations regarding future manufacturing activity were mixed. The future production index climbed 10 points to 13.6. The future general business activity index rose eight points but remained negative at -17.7, suggesting that more manufacturers expect worsened activity six months from now than improved. Other measures of future manufacturing activity, like capacity utilization and new orders, pushed further positive in July.

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.