Research >> Economics
Texas Manufacturing Activity Expands
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Texas factory activity increased in October, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained positive but edged down from 5.9 to 4.1, suggesting growth slowed slightly.
Other measures of current manufacturing conditions also indicated growth in October, and the pace of new orders increased. The shipments index fell from 9.4 to 2.7, suggesting shipment volumes continued to increase but at a slower pace. The capacity utilization index moved back into positive territory after being negative for two months. The new orders index suggested a pickup in demand, moving from 3.6 to 8.3. Nearly 30 percent of manufacturers noted increased order volumes in October, compared with about 20 percent noting a decrease.
Perceptions of general business conditions improved in October. The general business activity index jumped up from -14.4 to 2.3, its first positive reading in six months. The company outlook index also rose markedly, bouncing back to a reading of 7.2 after coming in near zero in September.
Labor market indicators reflected higher labor demand growth. The employment index came in at 15.1, up slightly from 13.4 in September. Twenty-one percent of manufacturers reported hiring new workers, while 6 percent reported layoffs. This share of layoffs represents the lowest figure since 2006. The hours worked index continued to suggest average workweeks lengthened.
Upward pressure on input prices and wages abated in October, and selling prices were unchanged from September levels. The raw materials price index fell to 19.1, its lowest reading since mid-2010. The finished goods price index came in near zero after a reading of 3.9 last month. Forty-four percent of respondents anticipate further increases in raw materials prices over the next six months, while 27 percent expect higher finished goods prices. The wages and benefits index fell from 17.4 in September to 8.9 in October, although the great majority of respondents continued to note no change in labor costs.
Expectations regarding future business conditions were notably more optimistic in October. The index of future general business activity advanced to 14.7 after dipping into negative territory in September. The index of future company outlook jumped up as well, rising from 11.8 to 25.3. Most indexes of future manufacturing activity also increased considerably in October, reaching their highest levels since spring.
Posted: October 31, 2011 Monday 10:30 AM