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Texas Manufacturing Activity Expands but at a Slower Pace
Texas factory activity increased again in August, albeit at a slower pace than in recent months, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 19.1 to 6.8, indicating output growth slowed from July.
Other measures of current manufacturing activity also reflected notably slower growth in August. The new orders index fell 11 points to 2.2 after surging in July. The capacity utilization index also posted a sharp decline, moving down from 18 to 3.6. The shipments index experienced the largest fall, from 22.8 to 6.4, reaching its lowest reading in eight months.
Perceptions of broader business conditions were less optimistic this month. The general business activity index remained positive but fell to a five-month low of 7.1. The company outlook fell from 11.3 to 1.5, due to a smaller share of firms noting an improved outlook in August than in July.
Labor market indicators reflected continued employment growth and longer workweeks. The August employment index posted a third robust reading, holding steady at 11.1. Twenty-one percent of firms reported net hiring compared with 10 percent reporting net layoffs. The hours worked index slipped from 6.3 to 2.9, indicating a smaller rise in hours worked than last month.
Upward pressure on input prices continued at about the same pace in August as in July, while pressure increased for selling prices and wages. The raw materials price index held fairly steady at 26.4. The finished goods price index edged up from 7.3 to 9.1, reaching its highest level in six months. The wages and benefits index rose 5 points to 23.7, also posting a six-month high.
Expectations regarding future business conditions remained optimistic in August. The index of future general business activity inched down 1 point to 18.7, while the index of future company outlook rose 6 points to 30.1. Indexes for future manufacturing activity showed mixed movements in August but remained in solidly positive territory.
Posted: August 25, 2014 Monday 10:30 AM