Research >> Economics
Texas Manufacturing Activity Picks Up
|
Texas factory activity expanded in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 5.6 to 10.8, suggesting output growth picked up this month.
Other measures of current manufacturing conditions also indicated growing activity, and the pace of new orders increased. The shipments index rose to a reading of 7.8 after coming in at zero last month. The capacity utilization index was positive but remained near zero, indicating little change over the prior month. The new orders index rose sharply from 6.4 in June to 16 in July. Thirty-four percent of firms said order volumes increased this month, the highest share since November 2010.
Indexes reflecting general business conditions improved in July. The general business activity index remained negative for the third month in a row but jumped from –17.5 to –2, suggesting only a slight worsening this month. The company outlook index rose from 7.2 in June to 11 in July, indicating manufacturers were more optimistic about their firms’ prospects for the near future. Ninety percent of respondents said their outlooks were unchanged or improved from last month.
Labor market indicators reflected more hiring and longer workweeks. The employment index came in at 12.1, up from 5.3 in June. Twenty-two percent of manufacturers reported hiring new workers, the highest share this year. The hours worked index rose from 1.5 to 7.9.
Prices and wages increased again in July. The raw materials price index rose slightly after trending down in recent months, edging up from 31.1 to 34.3. The finished goods price index fell from 10 in June to 4.6 in July, suggesting selling prices rose but at a slower pace than last month. More than 50 percent of respondents anticipate further increases in raw materials prices over the next six months, while 27 percent expect higher finished goods prices. The wages and benefits index moved up from 15.5 in June to 18.4 in July, although the great majority of respondents noted no change in labor costs.
Expectations regarding future business conditions were generally more optimistic in July. The indexes of future general business activity and future company outlook edged up this month after trending down in the first half of the year. Several indexes of future manufacturing activity, including production, rose in July while others edged down but remained in solid positive territory.
Posted: July 25, 2011 Monday 10:00 AM