Dallas Fed Manufacturing Outlook: Growth Accelerates In February

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for February. The latest general business activity index came in at 37.2, up from 33.4 in January. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Texas factory activity expanded at a faster pace in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose 11 points to 27.9, signaling a pickup in output growth.

Perceptions of broader business conditions improved further in February. The general business activity index pushed up to 37.2, its highest reading in 12 years. The company outlook index climbed four points to 31.5, on par with its December 2017 reading, which was also the highest in 12 years.

Expectations regarding future business conditions remained optimistic in February. The indexes of future general business activity and future company outlook slipped to 40.6 and 34.5, respectively, but both stayed well above their average readings. Most other indexes for future manufacturing activity also fell but remained highly positive.

Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator. The Dallas Fed on the TMOS importance:

Texas is important to the nation’s manufacturing output. The state produced $159 billion in manufactured goods in 2008, roughly 9.5 percent of the country’s manufacturing output. Texas ranks second behind California in factory production and first as an exporter of manufactured goods.

Texas turns out a large share of the country’s production of petroleum and coal products, reflecting the significance of the region’s refining industry. Texas also produces over 10 percent of the nation’s computer and electronics products and nonmetallic mineral products, such as brick, glass and cement.