December 30, 2024
Texas manufacturing activity expands in December
What’s new this month
This month’s survey asked Texas business executives additional questions about their concerns about wages, prices and the outlook, as well as the possibility of higher tariffs in 2025. Results for these questions from the Texas Manufacturing Outlook Survey, Texas Services Sector Outlook Survey, and Texas Retail Outlook Survey were released. together. Read the results of the special questions.
Factory activity in Texas increased in December, according to business executives who responded to the Texas Manufacturing Outlook Survey. The production index, a key indicator of the status of the state’s manufacturing industry, rose to 3.9 from last month’s reading, which was near zero.
Other indicators of manufacturing activity were mixed. The new orders index rose 11 points to -0.9, suggesting demand has remained unchanged since November. Capacity utilization rate and shipment index both increased slightly, but remained in negative territory, at -2.5 and -2.0, respectively.
Perceptions of broader business conditions improved in December. The general business activity index rose six points to 3.4, the first positive turn since April 2022. The Business Outlook Index was positive for the second month in a row, rising slightly to 8.0. The outlook uncertainty index decreased by 5 points to 1.2.
Labor market measures suggested that employment and the weekly labor force remained stable this month. The employment index fell 5 points to zero. 16% of companies indicated net hiring, the same percentage as indicated net layoffs. The working hours index has remained stable at a value of almost zero, indicating that there has been no change in weekly working hours since November.
This month, upward pressure on raw material prices eased. Sales prices fell and wages rose slowly. The raw material price index fell 18 points to 10.5, the lowest level in 17 months. The finished goods price index also fell, dropping 12 points to -3.4, the first negative figure since late 2023. The wage and benefits index was 17.7, the same as in November.
We expect to see an increase in manufacturing activity six months from now. The future production index remained positive, but fell from 44.0 to 32.7, with 44% of companies expecting production to increase in six months. The future comprehensive business activity index fell from 31.2 to 20.6. Other indicators of future manufacturing activity retreated this month but remained positive.
Next release date: January 27th (Monday)
The data was collected from Dec. 17 to Dec. 25, and 87 of the 122 Texas manufacturers surveyed submitted responses. The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Businesses are asked whether production, employment, orders, prices, and other metrics have increased, decreased, or remained the same compared to the previous month.
Survey responses are used to calculate the index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage of respondents reporting an increase. If the share of companies reporting an increase is greater than the share of companies reporting a decrease, the index is greater than zero, indicating that the index has increased compared to the previous month. If the share of companies reporting a decrease is greater than the share of companies reporting an increase, the index is below zero, suggesting that the indicator has decreased compared to the previous month. If the number of companies reporting an increase is equal to the number of companies reporting a decrease, the index is zero. Data are seasonally adjusted where appropriate.
