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Texas Fed Manufacturing Activity expanded at a fairly robust pace in May 2022
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Texas factory activity expanded at a fairly robust pace in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 10.8 to 18.8, signaling an acceleration in growth from April.
Other measures of manufacturing activity showed mixed movements. While the capacity utilization and shipments indexes moved up—to 19.8 and 13.1, respectively—the survey’s demand indicators retreated. The new orders index fell nine points to 3.2, and the growth rate of orders index plummeted 18 points and turned negative at -5.3. Both readings mark their lowest levels in about two years.
Perceptions of broader business conditions worsened in May. The general business activity index retreated eight points to -7.3, entering negative territory for the first time since July 2020 in the wake of the pandemic’s initial onset. The company outlook index pushed further negative from -5.5 to -10.0. The outlook uncertainty index remained elevated at 26.5.
Labor market measures indicated robust employment growth and longer workweeks. The employment index edged down four points to 20.9 but remained highly elevated. Thirty-one percent of firms noted net hiring, while 11 percent noted net layoffs. The hours worked index also remained elevated but edged down to 7.4.
Prices and wages continued to increase strongly in May. The raw materials prices index held steady at 61.8—more than twice its average of 27.8. The finished goods prices index was also largely unchanged at a highly elevated reading of 41.8. The wages and benefits index came in at 50.5, similar to April and markedly higher than its 20.2 average.
Expectations regarding future manufacturing were mixed but generally less optimistic than in April. The future production index remained positive but fell from 34.7 to 19.9, a reading now well below average. The future general business activity index fell eight points to -6.5, entering negative territory for the first time in two years. Other measures of future manufacturing activity showed mixed movements but remained solidly in positive territory.
Posted: May 31, 2022 Tuesday 10:30 AM