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posted on 29 January 2018

January 2018 Texas Manufacturing Survey Sharply Declines

Of the five Federal Reserve districts which have released their January manufacturing surveys - all are in expansion. A complete summary follows.

Analyst Opinion of Dallas Fed Manufacturing Survey

This survey remains well into positive territory with new orders declining and unfilled orders declining - but both well into positive territory. This was a weaker report than last month.

Expectations from Bloomberg / Econoday was 18 to 22 (consensus 20), and the reported value was 32.8. From the Dallas Fed:

Texas factory activity expanded strongly in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, spiked 18 points to 32.8, reaching its highest level in more than 11 years.

Other measures of manufacturing activity also pointed to more rapid growth in December. The new orders index jumped 10 points to 30.1, another 11-year high, and the growth rate of orders index moved up to 21.4. The capacity utilization index increased nine points to 26.3, and the shipments index rose from 16.7 to 21.5 this month.

Perceptions of broader business conditions were markedly more positive in December. The general business activity index and the company outlook index posted double-digit increases, coming in at 29.7 and 31.5, respectively. Both represent highs last seen in 2006.

Labor market measures suggested more rapid employment growth and longer workweeks this month. The employment index came in at 20.4, up 14 points from November. More than 30 percent of firms noted net hiring, compared with 11 percent noting net layoffs. The hours worked index shot up to 23.3, a 12-year high.

Upward pressure on prices continued in December, and wage pressures escalated. The raw materials prices index held steady at 32.5 and the finished goods prices index edged up to 17.9. Meanwhile the wages and benefits index jumped up 11 points to 25.1. Looking ahead, price expectations increased notably for a second month in a row. The index of future finished goods prices rose to 42.7, up from 18.9 in October and 35.8 in November, and more than 20 points above its series average.

Expectations regarding future business conditions remained highly optimistic. The index of future general business activity inched up to 40.9, while the index of future company outlook held steady at 40.1. Other indexes for future manufacturing activity showed mixed movements but remained solidly in positive territory.

Source: Dallas Fed

Summary of all Federal Reserve Districts Manufacturing:

Richmond Fed (hyperlink to reports):

z richmond_man.PNG

Kansas Fed (hyperlink to reports):

z kansas_man.PNG

Dallas Fed (hyperlink to reports):

z dallas_man.PNG

Philly Fed (hyperlink to reports):

z philly fed1.PNG

New York Fed (hyperlink to reports):

z empire1.PNG

Federal Reserve Industrial Production - Actual Data (hyperlink to report):

Holding this and other survey's Econintersect follows accountable for their predictions, the following graph compares the hard data from Industrial Products manufacturing subindex (dark blue bar) and US Census manufacturing shipments (lighter blue bar) to the Dallas Fed survey (light blue bar).

Comparing Surveys to Hard Data:

z survey1.png

In the above graphic, hard data is the long bars, and surveys are the short bars. The arrows on the left side are the key to growth or contraction.

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