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Texas Fed Manufacturing Activity Expansion Picks Up Pace in August
Texas factory activity expanded at a faster clip in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, shot up nine points to 17.9, its highest reading in nearly a year.
Other measures of manufacturing activity also suggested faster expansion in August. The shipments index rose seven points to 17.6, and the capacity utilization index rose five points to 15.7, both reaching 11-month highs. The new orders index moved up from 5.5 to 9.3, while the growth rate of orders index was largely unchanged at 1.8.
Perceptions of broader business conditions improved in August. The general business activity index pushed into positive territory for the first time in four months, rising nine points to 2.7. Similarly, the company outlook index rose to 5.0 following three months in negative territory. However, the index measuring uncertainty regarding companies’ outlooks jumped nine points to 18.6, a reading well above average.
Labor market measures suggested slower growth in employment and work hours in August. The employment index remained positive but retreated 11 points to 5.5, a level closer to average. Eighteen percent of firms noted net hiring, while 12 percent noted net layoffs. The hours worked index edged down to 4.0.
Input costs and wages continued to rise in August, while selling prices declined slightly. The raw materials prices index remained positive but fell from 17.0 to 9.8. The wages and benefits index rose seven points to 27.3, an elevated level. Meanwhile, the finished goods prices index posted a second slightly negative reading in a row, suggesting a modest decline in selling prices this month.
Expectations regarding future business conditions remained positive in August. The index of future general business activity posted a second consecutive positive reading but moved down five points to 1.4. The index of future company outlook was little changed at 10.4. Both readings, while positive, remain well below average. Other indexes of future manufacturing activity moved down but stayed solidly in positive territory.
Posted: August 26, 2019 Monday 10:30 AM