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posted on 26 January 2015

January 2015 Texas Manufacturing Survey Rate of Growth Plunges

Of the four Federal Reserve districts which have released their January manufacturing surveys - all are forecasting growth. A complete summary follows.

The market was expecting -5.0 to 7.3 (consensus 4.0) versus the actual of 0.7. [note that values above zero represent expansion].

This month's survey data include annual seasonal factor revisions. In January of each year, the Federal Reserve Bank of Dallas revises the historical data for the Texas Manufacturing Outlook Survey after calculating new seasonal adjustment factors. Annual seasonal revisions result in slight changes in the seasonally adjusted series.

Texas factory activity was flat in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 0.7, indicating output was essentially unchanged from December.

Other survey measures also reflected sluggish activity during the month. The capacity utilization index fell to 5.1, its lowest reading in five months. The shipments index plunged from 20.8 to 6, due to a much higher share of respondents noting a decline in shipments in January than in December. The new orders index moved down from 2.7 to -7.7, registering its first negative reading since April 2013.

Perceptions of broader business conditions worsened this month, with both the general business activity index and thecompany outlook index dropping below zero for the first time in 20 months. The general business activity index dropped to-4.4, and the company outlook index fell 13 points, coming in at -3.8.

Labor market indicators reflected unchanged workweeks but continued employment increases. The employment index was 9.0 in January, slightly below last month's level but close to its average reading over the past two years. Twenty percent of firms reported net hiring compared with 11 percent reporting net layoffs. The hours worked index edged down from 0.7 to -0.1, indicating no change in hours worked in January.

Wage pressures eased, while input and selling prices declined in January. The raw materials price index came in at -1.7,its first negative reading in more than five years. The finished goods price index fell 11 points to -6.7, after posting positive readings during the past 17 months. Looking ahead, 29 percent of respondents anticipate increases in raw materials prices over the next six months, while 19 percent expect declines. The wages and benefits index receded from 25.2 to 19.1, suggesting some moderation in upward pressure on compensation costs.

Indexes reflecting future business conditions fell notably in January. The index of future general business activityplummeted from 13 to -6.4. The index of future company outlook plunged from 21.8 to 2.5, its lowest reading in more than two years. Indexes for future manufacturing activity also declined this month but remained 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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