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Texas Fed Manufacturing Activity Moderates, but Outlooks Remain Optimistic in January 2022
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Texas factory activity continued to increase but at a slower pace in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 16.6, an eight-month low but a reading still indicative of above-average output growth.
Other measures of manufacturing activity also indicated continued growth. The new orders and growth rate of orders indexes held steady at 20.0 and 12.6, respectively, suggesting a continuation of elevated demand growth. The capacity utilization index fell 13 points to 12.0, and the shipments index fell 12 points to 8.6. While still suggestive of growth, these lower readings indicate a deceleration from December.
Perceptions of broader business conditions improved slightly in January. The general business activity index remained positive but eased six points to 2.0. Similarly, the company outlook index moved down six points to 2.2. Uncertainty regarding outlooks escalated further, with the index pushing up 12 points to 30.8, its highest reading since April 2020 after the initial onset of the pandemic.
Labor market measures indicated robust employment growth and longer workweeks. The employment index inched down to 27.7 but remained highly elevated. Thirty-four percent of firms noted net hiring, while 6 percent noted net layoffs. The hours worked index was largely steady at 21.3.
Prices and wages continued to increase strongly in January, though price pressures eased slightly. The raw materials prices index remained highly elevated but dropped five points to 62.1. The finished goods prices index also fell five points, coming in at 37.1, but still far exceeded its historical average of 7.9. The wages and benefits index pushed up from 46.5 to 49.6, reaching a series high.
Expectations regarding future manufacturing activity remained highly positive. The future production index receded slightly to 38.0, and the future general business activity index was largely unchanged at 16.5. Other measures of future manufacturing activity such as capital expenditures and employment showed mixed movements but remained solidly in positive territory.
Posted: January 31, 2022 Monday 10:30 AM