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Texas Fed Manufacturing Activity Accelerated further in February
Growth in Texas factory activity accelerated further in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose six points to 16.4, suggesting stronger output growth than last month.
Other measures of manufacturing activity pointed to continued expansion in February, though demand growth decelerated. The new orders index fell nine points to 8.4, down from a 15-month high in January but still slightly above average. Similarly, the growth rate of orders index fell but remained above average, edging down from 6.1 to 3.6. The capacity utilization and shipments indexes held steady at 11.3 and 8.5, respectively.
Perceptions of broader business conditions were slightly more optimistic in February. The general business activity index edged up to 1.2 and the company outlook index ticked up to 3.6, though both readings remain slightly below average. The index measuring uncertainty regarding companies’ outlooks moved up eight points to 11.0 after receding in the prior two months.
Labor market measures suggested flat employment levels and slightly longer workweeks this month. The employment index stayed near zero for a second month in a row, coming in at -0.9. Fifteen percent of firms noted net hiring, while 16 percent noted net layoffs. The hours worked index moved up to 2.1.
Upward pressure on input prices and wages picked up in February, while selling prices remained flat. The raw materials prices index moved up three points to 12.8, a reading still well below average. The wages and benefits index rose from 16.3 to 22.6, reaching its highest level in six months. Meanwhile, the finished goods prices index hovered just above or below zero for the fourth month in a row, suggesting no meaningful change in selling prices.
Expectations regarding future business conditions were slightly more optimistic in February. The indexes of future general business activity and future company outlook moved up to 18.0 and 24.1, respectively. Most other indexes for future manufacturing activity declined slightly but remained solidly in positive territory.
Posted: February 24, 2020 Monday 10:30 AM