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Texas Fed Manufacturing Activity Expansion Carries On in May 2021
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Texas factory activity expanded but at a slower pace in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 18 points to 15.7, a reading still well above average and indicative of healthy output growth. Other measures of manufacturing activity also pointed to slower but still-solid growth this month.
The new orders index came in at 20.8, down from 38.5 in April but more than triple the series average of 6.3. Similarly, the growth rate of orders index came in at 19.5, down from 32.3 but still elevated. The capacity utilization index remained high, though it slipped from 34.6 to 23.2, and the shipments index fell from 32.6 to 18.3.
Perceptions of broader business conditions improved markedly in May, though uncertainty picked up. The general business activity index came in at 34.9, just a couple points down from its April reading and markedly higher than its series average of 2.6. The company outlook index fell seven points to 22.0, a reading well above the series average. The outlook uncertainty index moved up from zero to 14.7, indicating that uncertainty is back on the rise.
Labor market measures indicate robust but slower growth in employment and steady growth in work hours. The employment index came in at 22.7, down from 31.3 but still highly elevated. Twenty-nine percent of firms noted net hiring, while 6 percent noted net layoffs. The hours worked index held fairly steady at 22.7.
Input prices and wage pressures accelerated further in May. The raw materials prices index rose another nine points to 79.9, reaching an all-time high. The finished goods prices index remained near its all-time high reached last month, coming in at 38.4. The wages and benefits index pushed to a new high of 39.0.
Expectations regarding future manufacturing activity remained highly positive in May. The future production index held steady at 47.6, and the future general business activity index slipped five points to 31.4. Other measures of future manufacturing activity showed mixed movements, but all remained solidly in positive territory.
Posted: June 1, 2021 Tuesday 10:30 AM