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posted on 29 June 2015

June 2015 Texas Manufacturing Survey Manufacturing Activity Continues to Contract for Fourth Month

Of the five Federal Reserve districts which have released their June manufacturing surveys - two forecast weak growth and three are in contraction. A complete summary follows.

The market expected -16.0 to -11.0 (consensus -13.5) versus the actual -6.5. From the Dallas Fed:

Texas factory activity declined again in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose to -6.5 but remained in negative territory, suggesting a fourth consecutive month of contracting output.

A similar pattern was seen among other measures of current manufacturing activity in June. The capacity utilization index increased to -6.1 and the shipments index increased to -8.8. These negative index levels indicate continued contraction, but the upward movement this month suggests the pace of decline slowed. The new orders index moved up to -10.3, while the growth rate of orders index edged down to -16.5.

Perceptions of broader business conditions worsened further, although not as sharply in June as in prior months. The general business activity index jumped nearly 14 points to -7, its highest reading since January. The company outlook index moved to -7.4, up from -10.5 last month.

Labor market indicators reflected slight employment declines and shorter workweeks. The June employment index was negative for a second month in a row but pushed up 7 points to -1.2. Fourteen percent of firms reported net hiring, compared with 15 percent reporting net layoffs. The hours worked index inched up from -11.6 to -10.7.

There was upward pressure on input prices and wages in June, and downward pressure on selling prices eased. The raw materials prices index jumped 9 points to 7.4 after five months of negative readings. The finished goods prices index remained negative for a sixth month but moved up to -1.9, suggesting an abatement of downward pressure. Meanwhile, the wages and benefits index remained positive and little changed at 16.4.

Expectations regarding future business conditions improved in June. The index of future general business activity edged up to 8.1 and the index of future company outlook came in at 13.4. Indexes of future manufacturing activity moved down slightly but remained in solid 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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