Research >> Economics
Texas Manufacturing Activity Increased
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Texas factory activity increased in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 1.1 to 5.9, suggesting growth picked up this month after stalling in August.
Most other measures of current manufacturing conditions also indicated growth in September. The new orders index edged down from 4.8 to 3.6 this month, suggesting order volumes continued to increase, but at a slightly decelerated pace. The shipments index rose from 6.7 to 9.4, reaching its highest level since March. The capacity utilization index remained in negative territory in September but rose from –2.8 to –1.3.
Perceptions of general business conditions worsened in September. The general business activity index remained negative for the fifth month in a row and fell from –11.4 to –14.4; ten percent of manufacturers perceived an increase in activity this month, while one quarter noted a decrease. The company outlook index fell from 7.2 in August to a near-zero reading in September. Still, the great majority of respondents said their outlooks were unchanged or improved from last month.
Labor market indicators reflected higher labor demand growth. The employment index came in at 13.4, up notably from 5.4 in August. One quarter of manufacturers reported hiring new workers, while 12 percent reported layoffs. The hours worked index moved back into positive territory in September, suggesting average workweeks lengthened.
Input prices and wages rose at a pace similar to August, while selling prices increased slightly after holding steady last month. The raw materials price index was 23.5, virtually unchanged from its August reading. The finished goods price index moved up to 3.9 after coming in near zero last month. Forty-six percent of respondents anticipate further increases in raw materials prices over the next six months, while 29 percent expect higher finished goods prices. The wages and benefits index rose from 15.7 in August to 17.4 in September, although nearly three-fourths of respondents noted no change in labor costs.
Expectations regarding future business conditions were generally less optimistic in September. The index of future general business activity edged down to –1.5, the first negative reading since April 2009. The index of future company outlook fell as well, staying positive but registering its lowest reading in more than a year. Most indexes of future manufacturing activity inched down in September, although all remained in solid positive territory.
Posted: September 26, 2011 Monday 10:30 AM