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posted on 27 February 2017

February 2017 Texas Manufacturing Survey Continues to Expand But Key Internals Declined

Of the four Federal Reserve districts which have released their February manufacturing surveys - all 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 survey remained in positive territory with both new orders and unfilled orders in positive territory, but both declined [which was the opposite direction as the overall index].

There was no consensus from Bloomberg / Econoday, and the reported value was 16.7. From the Dallas Fed:

Texas factory activity increased for the eighth consecutive month in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose five points to 16.7, suggesting output growth picked up pace this month.

Other measures of current manufacturing activity also indicated expansion. The new orders and growth rate of orders indexes fell but remained positive, coming in at 11.6 and 2.0, respectively. The shipments index also moved down but stayed positive, posting a reading of 12.2 in February. The capacity utilization index rose from 9.1 to 14.7 this month.

Perceptions of broader business conditions improved again in February. The general business activity index returned to positive territory in October 2016 and has pushed further positive every month since, reaching 24.5 this month. The company outlook index posted a sixth consecutive reading above zero this month, but slipped slightly to 17.6.

Labor market measures indicated employment gains and longer workweeks. The employment index posted a second positive reading in a row—something that hasn't happened since the end of 2015—and edged up from 6.1 to 9.6. Nineteen percent of firms noted net hiring, compared with 10 percent noting net layoffs. The hours worked index was largely steady at 7.7.

Upward price pressures remained strong in February, and wages continued to rise. The raw materials price index was unchanged at 31.5, and the finished goods prices index rose slightly to 19.5, reaching its highest level since 2011. The wages and benefits index held fairly steady at 19.5.

Expectations regarding future business conditions generally improved this month. The indexes of future general business activity and future company outlook came in at 37.0 and 35.6, respectively—down from their January readings but still solidly in positive territory. Most other indexes for future manufacturing activity also slipped but remained positive.

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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