Texas Manufacturing Activity Expands Modestly

Growth in Texas factory activity resumed in December, according to business executives responding to the Texas Manufacturing Outlook Survey.

The production index, a key measure of state manufacturing conditions, rebounded to 3.6 after dipping into negative territory last month.

Most other measures of manufacturing activity also rebounded in December. The new orders index rose from -3.0 to 1.6.

The growth rate of orders index moved up but remained in negative territory for a third consecutive month, coming in at -5.0. The capacity utilization index shot up 13 points to 7.8, and the shipments index rose from -4.5 to 3.0.

Perceptions of broader business conditions were mixed in December. The general business activity index remained slightly negative at -3.2, while the company outlook index inched up three points to 1.3.

Both indexes have oscillated between positive (expansionary) and negative (contractionary) territory this year. The index measuring uncertainty regarding companies’ outlooks receded 12 points to 5.6, its lowest reading since March.

Labor market measures suggested rising employment levels and slightly longer workweeks this month. The employment index rose from 0.9 to 6.2, indicative of a pickup in hiring.

Eighteen percent of firms noted net hiring, while 12 percent noted net layoffs. The hours worked index rebounded to 2.6 after dipping into negative territory last month.

Input prices and wages rose in December, though upward pressure continued to ease, and selling prices were largely unchanged. The raw materials index declined three points to 14.5, while the wages and benefits index fell seven points to 14.6. The finished goods prices index edged down to 0.7.

Expectations regarding future business conditions remained optimistic in December.

The index of future general business activity was largely unchanged at 6.4, while the index of future company outlook edged down to 13.9. Most other indexes for future manufacturing pushed further into positive territory.

Source: Federal Reserve Bank of Dallas