Research >> Economics
Texas Manufacturing Activity Picks up Pace Again
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Texas factory activity increased again 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 15.5 to 19.1, indicating output grew at a faster pace than in June.
Other measures of current manufacturing activity reflected significantly stronger growth in July. The new orders index doubled from 6.5 to 13. The capacity utilization index also posted a strong rise, moving to 18 from 9.2 in June. The shipments index rose 12 points to 22.8, reaching its highest level since January 2013. The July readings for these indexes were all more than twice their 10-year averages, suggesting notably robust manufacturing growth.
Perceptions of broader business conditions were more optimistic this month. The general business activity index edged up from 11.4 to 12.7, pushing to its highest level in 10 months. The company outlook index rose 3 points to 11.3.
Labor market indicators reflected continued employment growth and longer workweeks. The July employment index posted a second robust reading, although it edged down from 13.1 to 11.4. Twenty-five percent of firms reported net hiring compared with 14 percent reporting net layoffs. The hours worked index edged up from 4.7 to 6.3, indicating a slightly stronger rise in hours worked than last month.
Upward pressure on prices and wages continued at about the same pace in July as in June. The raw materials price index came in at 25.4, less than a two-point change from the 27.3 June reading. The finished goods price index held steady at 7.3, and the wages and benefits index remained at 18.8. All three July index readings were very close to their 10-year averages.
Expectations regarding future business conditions remained optimistic in July. The index of future general business activity inched up to 19.8, while the index of future company outlook fell to 24.4 after reaching a multiyear high of 33.8 in June. Indexes for future manufacturing activity showed mixed movements in July but remained in solidly positive territory.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected July 15–23, and 115 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.
Posted: July 28, 2014 Monday 10:30 AM