Production weak in key US state but outlook strong

31 December 2007 18:43  [Source: ICIS news]

WASHINGTON (ICIS news)--The Texas manufacturing sector continued to soften in December, but production executives in that key industrial state indicated that they expect improvements in six months, the Dallas branch of the US central bank said on Monday.

 

The Dallas office of the US Federal Reserve Board said that its survey of Texas manufacturing executives showed that nearly all current indicators fell further into negative territory for the month just ending, continuing a decline that began in the second quarter of this year.

 

In its Texas Manufacturing Outlook Survey, the Dallas branch said that the company-outlook index fell from -1.7 in November to -8.9 this month, and the general-business index dropped from -17 last month to nearly -24 for December.

 

Both declines marked the lowest levels on record for those indexes.

 

The index for volume of new orders remained in negative territory but improved somewhat, the central bank office said, rising from -10.6 in November to -7.9 for December.

 

However, the bank noted that its survey results are not seasonally adjusted and that this month's downturn may reflect a pattern of December weakness that has been evident for two years.

 

“Despite the deteriorating current conditions, most indexes for activity six months from now strengthened,” the outlook report said.

 

The health of the Texas manufacturing sector is seen by some economists as a bellwether for the broader US production industry. 

 

Although only one of the 50 US states, Texas generates nearly 9% of US manufactured goods. The state ranks second to California in manufacturing output and leads the nation in manufacturing exports.

 

Texas produces 19% of US petroleum and coal products and nearly 15% of the country’s chemicals.

 

The broad US manufacturing industry is an important downstream consuming sector for petrochemicals and chemicals.

 

The full text of the Dallas Fed’s manufacturing outlook and accompanying index charts can be seen on the branch bank’s Web site.

By: Joe Kamalick
+1 713 525 2653

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