Research >> Economics
Texas Manufacturing Activity Expands Again
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Texas factory activity expanded in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key indicator of state manufacturing conditions, climbed further into positive territory as more producers reported either increased or unchanged activity from December.
The production barometer has signaled increases in factory activity in the last three months, suggesting a recovery is under way for an industry that has endured a 14-month decline, from September 2008 through October 2009.
In January, signs of improving manufacturing activity also came from several of the survey’s other indicators. The new orders index posted a large improvement as the share of respondents noting increases in orders rose from 25.6 percent to 34.9 percent. Indexes for shipments and growth rate of orders strengthened, with the share of respondents reporting increases exceeding those reporting declines by nearly 2 to 1. Capacity utilization also increased.
The business activity and company outlook indexes continued to improve in January, reaching their highest levels since mid-2007.
The index for employment remained negative but was little changed from December as 73.1 percent of employers reported no staffing changes. The average workweek index turned positive for the first time since July 2008 as the share of firms reporting declines in work hours fell substantially. The index for wages and benefits rose, but overall wage pressures remained minimal, with 83.3 percent of respondents noting no change in compensation costs.
January’s survey found continued upward pressure on raw materials prices. Thirty-three percent of producers reported rising input costs. The downward price pressures on finished goods that had been present throughout 2009 subsided in January, with the index coming in close to zero. Expectations of future price increases also rose. The future raw materials price index increased again in January, with 57.3 percent of firms foreseeing further increases in prices six months from now and the rest expecting no change. The future finished goods price index was also positive and rose further, suggesting that a sizable share of firms expect higher selling prices in the next six months.
Posted: January 25, 2010 Monday 10:30 AM