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Texas Manufacturing Activity Stalls and Outlook Worsens in January
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Texas factory activity was flat in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 0.7, indicating output was essentially unchanged from December.
Other survey measures also reflected sluggish activity during the month. The capacity utilization index fell to 5.1, its lowest reading in five months. The shipments index plunged from 20.8 to 6, due to a much higher share of respondents noting a decline in shipments in January than in December. The new orders index moved down from 2.7 to -7.7, registering its first negative reading since April 2013.
Perceptions of broader business conditions worsened this month, with both the general business activity index and the company outlook index dropping below zero for the first time in 20 months. The general business activity index dropped to -4.4, and the company outlook index fell 13 points, coming in at -3.8.
Labor market indicators reflected unchanged workweeks but continued employment increases. The employment index was 9.0 in January, slightly below last month’s level but close to its average reading over the past two years. Twenty percent of firms reported net hiring compared with 11 percent reporting net layoffs. The hours worked index edged down from 0.7 to -0.1, indicating no change in hours worked in January.
Wage pressures eased, while input and selling prices declined in January. The raw materials price index came in at -1.7, its first negative reading in more than five years. The finished goods price index fell 11 points to -6.7, after posting positive readings during the past 17 months. Looking ahead, 29 percent of respondents anticipate increases in raw materials prices over the next six months, while 19 percent expect declines. The wages and benefits index receded from 25.2 to 19.1, suggesting some moderation in upward pressure on compensation costs.
Indexes reflecting future business conditions fell notably in January. The index of future general business activity plummeted from 13 to -6.4. The index of future company outlook plunged from 21.8 to 2.5, its lowest reading in more than two years. Indexes for future manufacturing activity also declined this month but remained in positive territory.
Posted: January 26, 2015 Monday 10:30 AM