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posted on 24 April 2017

April 2017 Texas Manufacturing Survey Continues to Expand

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

Analyst Opinion of Dallas Fed Manufacturing Survey

Remember that last month, the hard data said manufacturing declined whilst the Fed surveys showed growth. This survey declined but remained in positive territory with both new orders and unfilled orders in positive territory, and new orders improved.

Expectations from Bloomberg / Econoday was 14.5 to 18.5 (consensus 15.0), and the reported value was 15.4. From the Dallas Fed:

Texas factory activity increased for the 10th consecutive month in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, moved down three points to 15.4, suggesting output growth continued but at a slightly slower pace this month.

Other measures of current manufacturing activity also indicated continued expansion in April. The survey's demand indicators saw upward movement, with the new orders and growth rate of orders indexes edging up to 11.5 and 5.1, respectively. The shipments index also moved up, rising three points to 9.5. The capacity utilization index fell slightly but stayed positive for a 10th month in a row, coming in at 11.5.

Perceptions of broader business conditions improved again. The general business activity index held steady at 16.8, and the company outlook index inched down but remained positive at 15.1.

Labor market measures indicated employment gains and longer workweeks in April. The employment index posted a fourth consecutive positive reading and remained unchanged at 8.5. Eighteen percent of firms noted net hiring, compared with 9 percent noting net layoffs. The hours worked index fell three points to 5.9.

Prices and wages continued to rise in April. Upward pressure on input costs continued to recede slightly, with the raw materials prices index falling four points to 20.8. Meanwhile, upward pressure on selling prices increased. The finished goods prices index rose 4.5 points to 12.0, slightly lower than levels seen earlier this year but still well above average. The wages and benefits index held fairly steady at 18.8, indicating compensation costs continued to rise at roughly the same pace seen over the past several months.

Expectations regarding future business conditions continued to improve, although several six-month-ahead indexes retreated from their March levels. The indexes of future general business activity and future company outlook came in at 27.1 and 26.2, respectively, down from last month's readings but still solidly in positive territory. Most other indexes for future manufacturing activity 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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