Research >> Economics
Texas Manufacturing Activity Expansion Continues
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Texas factory activity expanded for the fifth straight month in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key indicator of state manufacturing conditions, rose to its highest level in two years.
Additional signs of strength came from other indicators of current factory activity. Capacity utilization rebounded, with the index rising to 15 in March after falling to 0 in February. The new orders index also jumped up sharply into positive territory after dipping below zero last month. The indexes for shipments and growth rate of orders also turned positive in March.
The business activity and company outlook indexes rebounded into positive territory after they slid below zero in February.
After several months of growth in production, there are finally signs that manufacturers have begun to replenish their materials inventories. The index turned positive in March after 18 months of negative readings. Finished goods inventories held steady as the index came in at zero, with 78 percent of producers noting no change in inventories over last month.
Labor demand among manufacturers improved in March. Eighteen percent of firms reported increases in employment, pushing the index into positive territory for the first time since July 2008. Hours worked and wages and benefits also increased.
Strong upward pressure on raw materials prices continued in March, and the share of respondents reporting higher input costs remained near 40 percent. Finished goods prices fell for the second month in a row. Expectations of price increases for raw materials and finished goods over the next six months abated.
All indexes for future activity were positive but moved lower in March, suggesting producers have lowered their expectations for the pace of growth in factory activity in coming months. The future business activity index and six-month company outlook index edged downward to 16 and 18, respectively. The indexes for future production, capacity utilization, new orders and shipments remained positive but fell in March.
Posted: March 29, 2010 Monday 10:30 AM