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Texas Fed Manufacturing Activity Continues to Expand but Pace Slows in June
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Texas factory activity continued to expand in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 6.3 to 8.9, indicating output growth accelerated slightly from May.
Other measures of manufacturing activity exhibited mixed movements in June. The new orders index edged up to 3.7, a reading still below average. The growth rate of orders index fell eight points to -6.7, reaching its lowest reading in nearly three years. The capacity utilization index inched up to 9.6, while the shipments index retreated six points to 1.7, a two-year low. The capital expenditures index posted a double-digit decline, falling 11 points to 6.9, also a two-year low.
Perceptions of broader business conditions shifted down again in June. The general business activity index pushed further into negative territory as more firms noted worsened activity this month than last. The index declined from -5.3 to -12.1, hitting a three-year low. Similarly, the company outlook index fell from -1.7 to -5.5, also a three-year low. The index measuring uncertainty regarding companies’ outlooks pushed up to 21.6, its highest reading since the question was added to the survey in January 2018.
Labor market measures suggested solid, but somewhat slower, growth in employment and work hours in June. The employment index slipped from 11.6 to 8.8 but remained slightly above average. Nineteen percent of firms noted net hiring, while 10 percent noted net layoffs. The hours worked index remained above average as well but inched down to 4.7.
Upward pressure on input costs increased in June, while pressure on selling prices remained muted and wage pressure moderated. The raw materials prices index rose nine points to 16.4. The finished goods prices index was largely unchanged at 1.2, with the near-zero reading suggesting virtually no growth in selling prices this month. The wages and benefits index dropped five points to 22.7, closer to the long-run average for this measure.
Expectations regarding future business conditions were mixed. The index of future general business activity dropped 12 points to -2.7, with more firms expecting worsened activity six months from now than improved. The index of future company outlook fell eight points but remained positive at 3.6. Other indexes of future manufacturing activity declined this month but stayed in positive territory.
Posted: June 24, 2019 Monday 10:30 AM