Research >> Economics
Texas Manufacturing Activity Declines
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Texas factory activity decreased in November, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, dipped from 4.1 to –5.1, registering its first negative reading in two years.
Other measures of current manufacturing conditions also indicated contraction in November. The new orders index suggested deterioration of demand, falling to –5.1 after a year in positive territory. Eighteen percent of manufacturers noted increased order volumes in November, compared with 23 percent noting a decrease. The shipments index edged down from 2.7 to –1.1, suggesting the volume of shipments fell slightly. The capacity utilization index tumbled to –10.2 after several months of weak readings centered around zero.
Perceptions of broader economic conditions improved slightly in November. The general business activity index posted its second positive reading in a row, and it edged up from 2.3 to 3.2. The company outlook index remained positive but moved down from 7.2 to 4.7. More than 90 percent of manufacturers said their outlooks were unchanged or improved from last month.
Labor market indicators reflected continued labor demand growth, albeit at a slower pace. The employment index came in at 9, down from 15.1 in October. Twenty-one percent of manufacturers reported hiring new workers, while 12 percent reported layoffs. The hours worked index continued to suggest average workweeks lengthened.
Selling prices were flat in November, while upward pressure on input prices and wages continued at about the same pace as in October. The finished goods price index remained near zero, and the great majority of respondents noted no change in selling prices. The raw materials price index held steady at 19, still below levels seen earlier in the year. Thirty-six percent of respondents anticipate further increases in raw materials prices over the next six months, while 26 percent expect higher finished goods prices. The wages and benefits index came in at 11 after a slightly lower reading of 8.9 in October.
Expectations regarding future business conditions were slightly less optimistic in November. The index of future general business activity moved down, as did most indexes of future manufacturing activity, although all remained in solid positive territory. The index of future company outlook inched down to 23 from a reading of 25.3 in October.
Posted: November 28, 2011 Monday 10:30 AM