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posted on 26 September 2016

September 2016 Texas Manufacturing Survey Improves Further Into Expansion.

Of the four Federal Reserve districts which have released their September manufacturing surveys - one is in contraction and three are in expansion. A complete summary follows.

Analyst Opinion of Dallas Fed Manufacturing Survey

One must assume with surveys that change in values is relative to the previous month. This is fine if understood that a sector (say industrial production) can be in a recession but surveys can show positive values.

Both unfilled orders and new orders are in contraction. But shipments (which is the basis of the Fed's Industrial Production Index) is up massively. I would consider this a mixed report which could be spum any way you desired.

There no expectations from Bloomberg, and the reported value was 4.5. From the Dallas Fed:

Texas factory activity increased markedly in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose 12 points to 16.7, suggesting output picked up at a notably faster pace this month.

Some other measures of current manufacturing activity also reflected faster expansion, while the survey's demand indicators dipped back into negative territory. The capacity utilization and shipments indexes posted double-digit gain to reach 13.5 and 20.1, respectively. These reading represent the highest readings for these indexes in roughly two years. The new orders fell from 5.3 to -2.9 in September, and the growth rate of orders index fell to -5.8 after pushing into positive territory last month.

Perceptions of broader business conditions were mixed. The general business activity index remained negative for a 21st consecutive month, although it edged up to -3.7. The company outlook index reflected optimism as it pushed into positive territory for the first time since November 2015, coming in at 6.7.

Labor market measures indicated slight employment gains and longer workweek length. The employment index came in at 2.3, its first positive reading in nine months. Nineteen percent of firms noted net hiring while 16 percent noted net layoffs. The hours worked index also moved up to positive territory, coming in at 3.7 in September.

Price pressures were mixed, and wages continued to rise. Upward pressure on input costs continued this month, with theraw materials prices index holding fairly steady at 13.3. Selling prices were little changed in September, as indicated by a near-zero reading of the finished goods prices index. Meanwhile, wages and benefits continued to rise, with the index climbing to 21.0.

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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