Research >> Economics
Texas Manufacturing Expands After Prolonged Decline
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Texas factory activity showed its first signs of growth in more than a year, according to business executives responding to November’s Texas Manufacturing Outlook Survey. The production index, a key indicator of state manufacturing conditions, turned positive for the first time since July 2008. Other key indexes of current factory activity—including capacity utilization, shipments, new orders and growth rate of orders—also moved into positive territory.
The business activity and company outlook indexes also improved. After two years in negative territory, they came in close to zero in November as the number of companies reporting better business conditions and those noting further weakness were nearly equal.
The employment index remained negative, implying more manufacturers are laying off than are hiring. The average workweek index was also negative in November, but posted a big improvement over the prior month as the share of respondents noting increased work hours rose sharply from 6.7 percent to 16.3 percent. Wage pressures were still minimal, with the majority of producers reporting no change in wages and benefits.
Manufacturers continued to draw down inventories. The index for materials inventories fell to its lowest reading in eight months, and 30 percent of manufacturers reported declines in their finished goods inventories.
Price pressures were mixed. The finished goods price index remained negative, although the great majority of respondents reported no change in selling prices. The raw materials price index was positive and rose, indicating that producers continue to see rising input costs. Expectations for raw material price increases over the next six months were elevated as well.
Posted: November 30, 2009 Monday 10:30 AM