Research >> Economics
Texas Manufacturing Activity Weakens
|
Texas factory activity declined slightly in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key indicator of state manufacturing conditions, fell from 21 in May to –2 in June, abruptly ending a seven-month streak of positive readings.
All remaining indexes for factory activity also fell in June, and many turned negative. The new orders index fell from 16 to –8 as 78 percent of respondents reported that their June orders were either flat or down from May. The shipments index fell from 15 to –9, suggesting shipments contracted in June after three consecutive months of growth.
The general business activity index turned negative also, with 82 percent of respondents noting that June activity worsened or was unchanged from the prior month. The company outlook index fell from 20 to –3, as only 18 percent of manufacturers said their outlook had improved over the previous month, compared with nearly a third in May.
The employment index remained positive for the fourth consecutive month, though it edged down in June as the share of firms reporting layoffs increased. The hours worked and wages and benefits indexes followed a similar pattern, moving lower but staying positive. The weaker labor market indexes are consistent with a slower pace of employment growth.
Upward pressure on raw materials prices moderated in June but remained strong, as more than a third of respondents continued to see increasing costs. Meanwhile, downward pressure on finished goods prices intensified, driving the index into negative territory. Nevertheless, the great majority of firms—82 percent—reported no change in prices received for finished goods. Forty-three percent of respondents anticipate further increases in raw materials prices over the next six months, while about one-quarter expect higher finished goods prices.
Firms were less optimistic about their six-month outlook in June. The indexes for future production, new orders and shipments stayed positive but fell this month. The future general business activity index decreased but remained in positive territory, with the share of firms expecting improved activity exceeded those anticipating worsened conditions by nearly 2 to 1. The future company outlook index edged down but stayed very positive, with 86 percent of respondents expecting either increased or unchanged activity six months from now.
Posted: June 28, 2010 Monday 10:30 AM