Research >> Economics
Texas Manufacturing Activity Surged in June
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Texas factory activity surged in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 5.5 to 15.5, posting its strongest reading in 15 months.
Other measures of current manufacturing conditions also indicated strengthening activity in June. The new orders index rose to 7.9, following three readings around zero, suggesting demand finally grew after staying flat since February. Similarly, the shipments index rebounded to 9.6 after two months of near-zero readings. The capacity utilization index rose from 5 to 13.3, reaching its highest level since early 2011.
Perceptions of broader economic conditions improved in June. The general business activity index had been negative in April and May but increased to 5.8 this month. Twenty-four percent of firms noted improvement in the level of business activity in June, up from 15 percent last month. The company outlook index edged up from 4.7 to 5.5.
Labor market indicators reflected stronger labor demand growth and steady workweeks. Employment grew at a faster pace in June, with the index rising from 8.5 to 13.7. Twenty-one percent of firms reported hiring new workers, while 8 percent reported layoffs. The hours worked index was 1, suggesting little change in workweek length.
Input price pressures dissipated abruptly in June, while selling prices declined and wages rose at a slower pace. The raw materials price index plummeted from 20.2 to 2.7, registering its lowest reading since mid-2009. Selling prices fell for the fourth consecutive month in June; the finished goods price index was -5.8. The share of respondents who anticipate further increases in raw materials prices over the next six months fell 12 points to 28 percent in June. The share of respondents expecting higher finished goods prices moved down 9 points to 14 percent, while the share expecting falling finished goods prices tripled. Meanwhile, the wages and benefits index moved down from 20 to 13.2, largely due to a reduction in the share of firms noting increased compensation costs.
Expectations regarding future business conditions slipped in June. The index of future general business activity edged down from 4.3 to 1.3. The index of future company outlook also fell three points from its May level, coming in at 8.4. Indexes for future manufacturing activity moved up slightly in June, pushing further into positive territory.
Posted: June 25, 2012 Monday 10:00 AM