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Texas Manufacturing Activity Strengthens Further
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Texas factory activity increased in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose sharply to 24, its highest level in nearly a year.
Most other indicators of current activity also moved further into positive territory, signaling stronger growth in manufacturing. The capacity utilization and shipments indexes jumped up, with about 30 percent of manufacturers reporting increases over the prior month. The new orders index was largely unchanged in March, suggesting new orders rose at about the same pace as in February.
Respondents also noted continued improvement in the broader economy as indexes reflecting general business conditions had positive readings for the sixth month in a row. The general business activity index remained positive but fell from its February level. The company outlook index advanced from 13 to 16, with more than a quarter of respondents saying their outlooks were improved from the prior month.
Labor market indicators continued to reflect expansion. The employment index came in at a reading of 12, similar to February. Twenty percent of manufacturers reported hiring new workers compared with eight percent reporting layoffs. The hours worked index jumped to 13, with the share of firms reporting decreases in employee workweeks falling to its lowest level since 2006. The wages and benefits index rose from 9 to 12, although the great majority of respondents noted no change in labor costs.
Prices continued to climb in March although the pace of increase was either flat or down. Increases in input prices abated slightly; the raw materials price index edged down from 63 to 57 after posting increases for seven months in a row. The finished goods price index was positive for the fifth consecutive month, but held steady at a reading of 17. Roughly 60 percent of respondents anticipate further increases in raw materials prices over the next six months, while 36 percent expect higher finished goods prices.
Movement in the future indexes of manufacturing conditions were mixed in March, but all indexes remained in solid positive territory. Future indexes for production, capacity utilization and new orders moved up from their February readings. The future general business activity index fell from 28 to 17. The future company outlook index came in at 27, down slightly from a reading of 29 last month.
Posted: March 28, 2011 Monday 10:30 AM