Research >> Economics
Texas Fed Manufacturing Activity Expansion Accelerates Notably in May
Texas factory activity rose markedly in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, increased 10 points to a 12-year high of 35.2, signaling further acceleration in output growth.
Most other indexes of manufacturing activity also indicated a sharp acceleration in May. The capacity utilization index rose notably from 18.7 to 32.2, and the shipments index jumped 20 points to 39.5. Demand growth picked up as the growth rate of orders index increased eight points to 26.5. All three measures reached their highest readings since 2006. Meanwhile, the new orders index held steady at 27.7.
Perceptions of broader business conditions were even more positive in May than in April. The general business activity index rose five points to 26.8, and the company outlook index rose four points to 28.0. These readings are far above their respective averages.
Labor market measures suggested stronger growth in employment and notably longer work hours in May. The employment index pushed up six points to 23.4, its highest reading in six years. Twenty-nine percent of firms noted net hiring, compared with 5 percent that noted net layoffs. The hours worked index shot up nine points to 23.2.
Price and wage pressures remained highly elevated in May. The raw materials prices index and wages and benefits index edged down to 44.0 and 24.3, respectively—still well above their average readings. The finished goods prices index moved up to 20.5, with a quarter of firms noting that prices rose this month.
Expectations regarding future business conditions remained largely optimistic in May. The indexes of future general business activity and future company outlook were largely unchanged at 30.0 and 35.2, respectively, with both readings significantly above average. Most other indexes for future manufacturing activity pushed further into positive territory.
Posted: May 29, 2018 Tuesday 10:30 AM