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Data Definitions
Texas
Leading Index
The Texas Leading Index is a single
summary statistic that sheds light on the future of
the state's economy. It is designed to signal the likelihood
of the Texas economy’s transition from expansion
to recession or vise versa. The index is a composite
of eight leading indicators—those that tend to
change direction before the overall economy does. These
indicators include:
- Texas Value of the Dollar
- U.S. Leading Index
- Real oil prices
- Well permits
- Initial claims for unemployment insurance
- Texas Stock Index
- Help-wanted advertising
- Average weekly hours worked in manufacturing
For example, at the beginning
of a recession, firms usually cut back on average weekly
hours worked before they start cutting the number of
employees. As another example, rises in initial claims
for unemployment insurance imply that there are more
people with job separations who do not expect to quickly
find new jobs, signaling economic weakness. Variables
that tend to move in the opposite direction of the economy,
like initial claims for unemployment insurance, are
first inverted so that their movements coincide with
that of the broader economy. The index's lead time is
three to six months
- Texas Leading Index
Data Series
- Data Source:
- Federal Reserve Bank of Dallas
Texas Value of
the Dollar
The Texas Value of the Dollar
(TXVD), the Texas equivalent of the Trade-Weighted Value
of the Dollar (TWVD), is an index of the weighted value
of the inflation-adjusted dollar relative to the inflation-adjusted
currencies of other countries. Each country is assigned
a fixed weight based on the size of its export trade
history. There are 48 countries in the TXVD, accounting
for more than 95 percent of the Texas exports. Mexico
is the largest country in this index, with 35.9 percent
of the weight, followed by Canada (9.8 percent) and
Japan (4.1 percent). Therefore, movements in the value
of the Mexican peso will affect the TXVD more than movements
in any of the other currencies.
The TXVD is one of the eight components
of the Texas Leading Index. It is inversely related
to the leading index. In other words, an increase in
the TXVD affects the Texas Leading Index negatively,
while a decrease in the TXVD gives it a positive boost.
The TXVD is included in the index because it is an indicator
of the price of Texas exports. When the value of the
TXVD increases, these exports become more expensive
for Texas' trading partners, resulting in a reduction
in the volume of Texas exports.
- Texas Value of the Dollar
Data Series
- Data Source:
- Federal Reserve Bank of Dallas
- Additional Link:
U.S. Leading Index
The U.S. Leading Index is a composite
of 10 key leading economic indicators. These economic
variables include the factory workweek, new orders for
consumer goods, new orders for nondefense capital goods,
stock prices, initial jobless claims, vendor performance,
building permits, money supply, consumer expectations
and the spread between the 10-year note and the federal
funds rate.
The U.S. leading index is a component
of the Texas Leading Index because changes in aggregate
national activity tend to precede changes of similar
direction in the Texas economy.
- Data Source:
- Additional Link:
Real Oil Prices
Real oil prices measure the inflation-adjusted
value of a barrel of crude oil in the marketplace and
are a leading indicator for the Texas energy industry.
As such, real oil prices are one of the eight leading
indicators included in the Texas Leading Index. An increase
in oil prices tends to benefit the Texas economy, while
it has a negative effect on most other states’
economies.
The oil price series followed
by the Dallas Fed is the West Texas Intermediate crude
spot price, available daily in the Wall Street Journal.
Prices are averaged by month and deflated using the
Consumer Price Index.
Well Permits
Well permits measure the number
of permits issued for oil and natural gas drilling outfits.
This variable is considered a leading indicator for
the energy industry. In general, a large increase or
decrease in the number of well permits issued is an
indication of change in oil and gas industry activity.
Well permits are reported by the Texas Railroad Commission
and are available monthly.
Because of its forward-looking
nature, well permits are one of the components of the
Texas Leading Index. Although the energy industry plays
a smaller role in Texas’ overall economy than
it did in previous decades, it still figures prominently
into overall statewide economic activity.
Initial Claims
for Unemployment Insurance
This variable is simply a count
of the total number of initial claims for unemployment
as measured by the U.S. Department of Labor. This particular
variable is useful because it gives a timely assessment
of the overall economy. Initial claims lead the economy
in that they can indicate changes in labor market conditions.
Rising numbers of initial claims may signal that layoffs
are occurring. Initial claims is one of the eight leading
variables used in the Texas Leading Index.
The Texas Stock
Index, or “Texas 100”
The Texas 100 is a stock index
of Texas firms compiled by the Texas Comptroller of
Public Accounts. The index tracks monthly stock prices
of the 100 largest publicly traded companies in the
state, based on annual employment. It shows the current
value of one dollar invested in each of the 100 companies
in December 1997. The index is updated annually as firms
move in and out of the top 100. It is available monthly
from October 1996 to the present.
The Texas 100 is a measure of
the financial health of Texas’ largest companies
and, as such, is one of the eight leading indicators
included in the Texas Leading Index.
Help-Wanted Index
The Help-Wanted Index is a measurement
of help-wanted advertising volume. The index is compiled
by the Texas State Comptroller and is indexed to 1989
as the base year (1989 = 100). It indicates how many
jobs employers are trying to fill, a measure of the
supply of regional jobs. Because it measures companies’
intentions to hire new workers, it is considered a leading
indicator of changes in the economy and is a component
of the Texas Leading Index. An upward trending help-wanted
index suggests that businesses are planning to expand
their payroll, which could indicate a strengthening
of the economy. On the other hand, a downward trend
in the index suggests that businesses are not anticipating
expansion of their operations and are possibly expecting
declining activity.
Average Weekly
Hours
This series is the average of
weekly hours worked by production workers in manufacturing
industries. The Bureau of Labor Statistics' survey of
business establishments—Current Employment Statistics—gathers
data for this series. Average weekly hours worked is
considered a leading indicator because it gauges employers’
need to hire additional workers or lay off current employees.
If demand for production increases, employers will ask
their workers to work more hours and put off hiring
additional workers until they’re confident that
the increased demand is unwavering. If demand for production
holds up, businesses will be forced to hire additional
workers, signaling a strengthening economy. On the flip
side, if demand for production slows, employers will
ask workers to log fewer hours before laying them off.
A downward trend in average weekly hours can signal
future layoffs and presumably a weakening economy.
Texas Business-Cycle
Index (formerly Texas Coincident Index)
The Texas Business-Cycle Index
is a single economic statistic that helps gauge the
current state of the Texas economy. Changes in the index
tend to coincide with changes in overall economic activity.
In other words, during periods of economic expansion,
the coincident index increases; when the economy contracts,
the index falls. The Texas Business-Cycle Index is constructed
using payroll employment, gross state product and the
unemployment rate.
- Texas Business-Cycle Index
Data Series
- Data Source:
- Federal Reserve Bank of Dallas
- Additional Link:
Texas Employment
Payroll
Employment
The Bureau of Labor Statistics’
payroll employment is a measure of the current number
of nonagricultural-related jobs. Total job count is
based on the BLS's Current Employment Statistics, a
monthly survey of business establishments. The employment
situation is one of the most widely followed economic
statistics because of its timeliness, accuracy and importance
in estimating overall economic activity.
Labor Force
Related to the payroll or
establishment survey is the household employment survey,
which estimates the labor force and the unemployment
and employment rates. The labor force consists of all
individuals 16 years or older who are employed or who
are unemployed and searching for work.
Unemployment
Rate
The unemployment rate is
found by dividing the number of unemployed individuals
seeking work by the labor force.
Employment results from the two
surveys are not the same and can diverge from time to
time. For an explanation of the differences, see the
Bureau
of Labor Statistics  .
Rig Count
The rig count is a weekly census
of the number of active drilling rigs exploring for
oil and natural gas in North America. The rig count,
published by Baker Hughes, is available weekly from
1949 to the present.
The Baker Hughes rig count is
an important indicator for the energy industry and Texas.
Rig counts generally rise following increased oil and
gas company development and exploration spending, which
is influenced by the current and expected price of oil
and natural gas (among other factors). Thus, the rig
count reflects the strength and stability of energy
prices.
Construction Contract
Values
Construction contract values are
construction "starts" measured in terms of
contract award dollars. Data series are available for
nonresidential and residential buildings and nonbuilding
projects. The nonresidential category includes projects
such as office buildings, retail stores, warehouses,
hotels, schools, museums, hospitals, churches and government
buildings. The residential series includes single-family
homes, duplexes and apartment buildings. The nonbuilding
sector includes projects such as streets and highways,
bridges, dams, waste disposal, communications systems
and airport facilities.
Contract value data are obtained
from McGraw-Hill Construction Dodge, which gathers information
on individual construction projects in the United States.
At the Dallas Fed, contract-value data are deflated
using the Consumer Price Index. Moreover, because construction
data are typically quite volatile even after seasonal
adjustment, the data are smoothed using a five-month
moving average.
- Data Source:
- Dodge Construction Potentials, McGraw-Hill Construction,
Dodge Analytics, 24 Hartwell Ave, Lexington, MA
02421, or www.construction.com
. For more information on available
reports from McGraw-Hill Construction Dodge, contact
Don Cotchen, Dodge Federal Government Account
Manager, Washington DC (202) 383-3709.
Note: Dallas Fed contract with Dodge does not
allow republication of data.
- Additional Link:
Building Permits
This variable measures the number
of permits issued for housing units (single-family home
or apartment) authorized for construction. Because permits
precede construction, they are considered a leading
indicator for the residential construction industry
and the overall economy. Most of the construction begins
the same month the permit is issued. The remainder usually
begin construction during the next three months.
Building permit data for the United
States, states, metropolitan areas and counties are
released monthly by the U.S. Census Bureau. These data
are available for both single-family and multifamily
construction. However, month-to-month changes in seasonally
adjusted permit data are quite volatile, and the Census
Bureau suggests it may take four months to establish
an underlying trend in permit authorizations. For this
reason, many economists analyze the data using a moving
average.
Texas Exports
This variable measures the value
of exports originating from Texas. Because Texas producers
sell globally, a rise or fall in international demand
can have a significant impact on the Texas economy.
For example, a weakening global economy translates into
falling Texas exports, which has a dampening effect
on Texas economic activity. Mexico is Texas’ principal
export market; thus, the strength of Mexico’s
economy is an important determinant of overall Texas
exports. Texas exports a variety of products to its
trading partners, with the majority of products coming
from the energy, transportation, and computer and electronics
industries.
Texas export data are available
quarterly by contract from the World Institute for Strategic
Economic Research (WISERTrade). WISERTrade produces
state export data under an agreement with the Census
Bureau. WISERTrade improves the census’ unadjusted
foreign trade data by filling in missing industry and
state information using a calculation.The quarterly
export data are available from WISERT from 1997 to the
present.
Monthly export data are available
from the Census Bureau. These data are calculated on
an origin-of-movement-to-port basis.
Maquiladora Employment
This variable measures the number
of manufacturing jobs in maquiladora plants in Mexico.
Mexican maquiladora data are compiled and disseminated
by Instituto Nacional de Estadística Geografía
e Informática (INEGI) through its monthly survey
Encuesta de la Industria Maquiladora de Exportación
(IME). IME data are published monthly, usually with
a three-month lag. It covers 17 states plus the Federal
District and 31 municipalities. The employment section
of the maquiladora survey includes hours worked and
compensation data on laborers, technicians and administrative
workers by gender.
Maquiladora manufacturing or assembly
may be carried out under various operating frameworks.
Generally, there are three ways to manufacture in Mexico
under the maquiladora program: as a subcontractor, a
shelter or a wholly owned subsidiary. In its simplest
form, a maquiladora plant imports inputs from a foreign
country, processes these inputs and ships them back
to the country of origin. The advantage of maquiladoras
is their ability to import capital and raw materials
duty-free (from within NAFTA). When exporting back to
the United States, as most maquiladoras do, tariffs
are applied only to the value-added portion of the final
product or service.
Maquiladoras have had a large
economic impact on both Mexico and the United States,
particularly in the border region. The rapid growth
of the maquiladora industry in Mexico has made it that
country’s leading source of foreign exchange.
Along the border, cities have grown rapidly with respect
to both population and employment as a result of the
growth of maquiladora industry.
Because of the shared border between
Texas and Mexico, changes in maquiladora employment
are important when evaluating the Texas economy. Maquiladoras
have helped make Mexico Texas's foremost trading partner
(destination for over 40 percent of Texas exports),
and has generated growth and development along the Texas–Mexico
border. Rising maquiladora employment creates greater
demand for goods and services provided on the U.S. side.
The influence of maquiladoras on the Texas economy has
made maquiladora employment an important indicator of
the region's economic conditions.
- Data Source:
- Additional Links:
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