Research >> Economics
Texas Manufacturing Activity Rises at Slower Pace
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Texas factory activity expanded in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained positive but fell from 12.7 to 5.6, suggesting output growth slowed this month.
Other measures of current manufacturing conditions indicated flat activity, while new orders picked up. The capacity utilization index slipped into negative territory but was near a reading of zero, suggesting little change over the prior month. Similarly, the shipments index fell to zero with about 60 percent of manufacturers noting no change in shipment volumes. The new orders index rose from 1.1 in May to 6.4 in June, its eighth consecutive month in positive territory. Nearly one-quarter of firms said order volumes increased from May levels. The growth rate of orders index turned positive after dipping into negative territory last month.
Perceptions of general business conditions were mixed in June. The general business activity index pushed further negative, falling from –7.4 to –17.5. Twenty-eight percent of respondents said activity weakened this month, the highest share in nine months. However, the company outlook index rose from 3.2 to 7.2, suggesting manufacturers were more optimistic about their firms’ prospects for the near future. More than 85 percent of respondents said their outlooks were unchanged or improved from last month.
Labor market indicators reflected slower growth in labor demand. The employment index came in at 5.3, with 14 percent of manufacturers reporting hiring new workers compared with 9 percent reporting layoffs. The hours worked index fell to 1.5 in June, down from a reading of 13.2 in May.
Price and wage pressures moderated this month. The raw materials price index retreated from 42.3 to 31.1, suggesting input costs rose but at a slower pace than in May. The finished goods price index was largely unchanged at a reading of 10. More than 50 percent of respondents anticipate further increases in raw materials prices over the next six months, while 28 percent expect higher finished goods prices. The wages and benefits index moved down from 18.5 to 15.5, although the great majority of respondents noted no change in labor costs.
Expectations regarding future business conditions were less optimistic in June. The index of future general business activity was 2.9, its lowest reading since August 2010, and the index of future company outlook remained positive but fell to a 9-month low. Indexes of future manufacturing activity also fell in June, but remained in solid positive territory.
Posted: June 27, 2011 Monday 10:30 AM