The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for June. The general business activity index fell 0.4 points to 0.0, indicating slower growth of manufacturing activity and stable business conditions perceptions.
Texas manufacturing output growth decelerated in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell five points to 4.1, a reading suggestive of a below-average pace of output expansion.
Other measures of manufacturing activity remained positive but showed signs of slower growth in demand. The capacity utilization index ticked up two points to 7.3, and the shipments index was unchanged at 7.1. However, the new orders index fell further, to 2.3 from 6.4.
Perceptions of broader business conditions were fairly stable in June. The general business activity index was flat, with the zero reading indicating no change in activity from May. The company outlook index increased to 2.3 from 0.3, signaling a slight improvement in outlooks. The outlook uncertainty index fell eight points to 10.9.
Employment growth resumed in June, and work hours rose. The employment index moved up to 13.9 from 0.2. The hours worked index increased four points to 5.9.
Selling price and wage pressures increased, while input price pressures held steady. The finished goods prices index rose 10 points to 28.6. The raw materials prices index remained unchanged at 42.4. The wages and benefits index ticked up two points to 26.0.
Background on the Texas Manufacturing Outlook Survey (TMOS)
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 TMOS is a monthly survey of 100 Texas manufacturers that provides an assessment on the state's factory activity. The survey asks firms to whether output, employment, orders, prices, and other indicators have increased, decreased, or remained unchanged over the previous month. Results are aggregated into balance indexes where negative readings indicator contractions while positive ones indicate expansion.
The Dallas Fed on importance of Texas Manufacturing:
Texas is important to the nation’s manufacturing output. The state produced $296 billion in manufactured goods in 2023, roughly 11 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 13 percent of the nation’s chemical products and over 10 percent of nonmetallic mineral products, such as brick, glass and cement.
Here is a snapshot of the complete TMOS.
Texas Manufacturing Survey Future Outlook
The next chart is an overlay of the general business activity index and the future outlook index — the outlook six months ahead. Future general business activity expectations rose to 25.9 this month, the highest level since January 2025.
Expectations are for increased manufacturing activity six months from now. The future production index fell two points to 34.8, and the future general business activity index jumped 12 points to 25.9. Other indexes of future manufacturing activity remained in positive territory.
For comparison, here is the latest ISM Manufacturing survey.
Let's compare all five regional manufacturing indicators. Here is a three-month moving average overlay of each since 2004 (for those with data).
Here is the same chart including the average of the five.
ETFs associated with industrials and manufacturing include: First Trust Industrials/Producer Durables AlphaDEX Fund (FXR), Industrial Select Sector SPDR Fund (XLI), Vanguard Industrials ETF (VIS), and iShares U.S. Industrials ETF (IYJ).
Read more updates by Jen Nash
