This morning the Dallas Fed released its Texas Manufacturing Outlook Survey for May. The latest general business activity index came in at 34.9, down 2.4 from 37.3 in April. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Texas factory activity expanded but at a slower pace in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 18 points to 15.7, a reading still well above average and indicative of healthy output growth. Other measures of manufacturing activity also pointed to slower but still-solid growth this month.

Expectations regarding future manufacturing activity remained highly positive in May. The future production index held steady at 47.6, and the future general business activity index slipped five points to 31.4. Other measures of future manufacturing activity showed mixed movements, but all remained solidly in positive territory.

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.