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By Jennifer Nash
The Dallas Fed launched its Texas Manufacturing Outlook Survey (TMOS) for August. The most recent basic enterprise exercise index got here in at -9.7, up from -17.5 final month. This marks the very best stage for the index since January 2023, however is the twenty eighth consecutive month the index has been in contraction territory.
Background on the Texas Manufacturing Outlook Survey (TMOS)
Month-to-month knowledge for this indicator solely dates again to 2004, so it’s tough to see the complete potential of this indicator with out a number of enterprise cycles of information. Nonetheless, it’s an attention-grabbing and essential regional manufacturing indicator.
The TMOS is a month-to-month survey of 100 Texas producers that gives an evaluation on the state’s manufacturing facility exercise. The survey asks corporations as to if output, employment, orders, costs, and different indicators have elevated, decreased, or remained unchanged over the earlier month. Outcomes are aggregated into steadiness indexes, the place damaging readings indicator contractions whereas optimistic ones point out enlargement.
The Dallas Ate up the TMOS significance:
Texas is essential to the nation’s manufacturing output. The state produced $159 billion in manufactured items in 2008, roughly 9.5 p.c of the nation’s manufacturing output. Texas ranks second behind California in manufacturing facility manufacturing and first as an exporter of manufactured items.
Texas seems a big share of the nation’s manufacturing of petroleum and coal merchandise, reflecting the importance of the area’s refining trade. Texas additionally produces over 10 p.c of the nation’s laptop and electronics merchandise and nonmetallic mineral merchandise, equivalent to brick, glass and cement.
Here’s a snapshot of the entire TMOS.
Texas Manufacturing Survey Future Outlook
The subsequent chart is an overlay of the overall enterprise exercise index and the longer term outlook index — the outlook six months forward. Future basic enterprise exercise dropped to 11.6 in August.
For comparability, right here is the most recent ISM Manufacturing survey.
Let’s examine all 5 regional manufacturing indicators. Here’s a three-month transferring common overlay of every since 2004 (for these with knowledge).
Right here is identical chart together with the common of the 5 for the most recent month with full knowledge.
ETFs related to industrials and manufacturing embrace: First Belief Industrials/Producer Durables AlphaDEX Fund (FXR), Industrial Choose Sector SPDR Fund (XLI), Vanguard Industrials ETF (VIS), and iShares U.S. Industrials ETF (IYJ).
Unique Put up
Editor’s Word: The abstract bullets for this text have been chosen by In search of Alpha editors.