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Texas Manufacturing Activity Edges Down
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Texas factory activity weakened slightly in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, posted a second negative reading but moved up from –5.1 to –1.3. This suggests a slowing of the pace of decline.
Other measures of current manufacturing conditions indicated flat activity in December. The new orders index suggested stagnant demand, registering a near-zero reading after dipping into negative territory last month. The shipments index was little changed from its November reading and continued to suggest flat shipment volumes. The capacity utilization index was also near zero although it rebounded from last month, rising from –10.2 to 0.7.
Perceptions of broader economic conditions were mixed in December. The general business activity index dipped into negative territory after two consecutive positive readings. The index came in at –3, with 12 percent of manufacturers noting improvement in the level of business activity while 15 percent noted a worsening. The company outlook index remained positive and edged up from 4.7 to 6.6. Nearly 90 percent of manufacturers said their outlooks were unchanged or improved from last month.
Labor market indicators reflected continued labor demand growth. The employment index came in at 11.8, up from 9 in November. Twenty-one percent of firms reported hiring new workers, while 9 percent reported layoffs. The hours worked index continued to suggest average workweeks lengthened.
Input prices and wages continued to increase in December, while selling prices declined. The raw materials price index rose from 19 to 26.6 but remained below levels seen earlier in the year. The finished goods price index edged down to –2.6, continuing its recent trend of readings centered around zero. Forty-three percent of respondents anticipate further increases in raw materials prices over the next six months, while 31 percent expect higher finished goods prices. The December wages and benefits index came in at 16.7 after a reading of 11 in November.
Expectations regarding future business conditions were largely unchanged in December, and all indexes remained in solid positive territory. The index of future general business activity was 10.3, about the same as in November. The index of future company outlook came in at 22.8, also little changed from last month.
Posted: December 27, 2011 Tuesday 10:30 AM