Texas Manufacturing Outlook Survey Surpasses Two-Year High
Dallas, Tx. (PPD) — The Texas Manufacturing Outlook Survey again beat expectations in October, showing factory activity surpassing the highest levels in two years.
The production index, a key measure of state manufacturing conditions, increased another 3.2 points to 25.5, its highest reading since August 2018. The general business activity index surpassed historical average, rising from 13.6 to 19.8, a two-year high.
Nearly every component in the Texas Manufacturing Outlook Survey indicates stronger growth and renewed optimism for the months ahead, barring no change to public policy.
The new orders index rose 5 points to 19.9 and the growth rate of orders index ticked up to 14.3. The capacity utilization index increased from 17.5 to 23.0, while the shipments index was relatively stable at 21.9.
The company outlook index moved up three points to 17.8, also a two-year high. Uncertainty regarding companies’ outlooks continued to rise, with the index moving up four points to 11.0.
The employment index fell from 14.5 to 8.7, but remained positive and indicates less-robust hiring. Twenty percent (20%) of manufacturing firms reported net hiring, while only 11% noted net layoffs. The hours worked index also fell but remained positive from 6.9 to 3.7.
Prices and wages were solid and continued to rise in October. The raw materials prices index ticked up another 3 points to 29.4, a reading well above the series average. The finished goods prices and wages and benefits indexes rose to 6.8 and 16.5, respectively.
Future activity expectations remained positive in October. The future production index held steady at 47.2, while the future general business activity index was unchanged at 28.4. the remaining measures of future manufacturing activity were mixed, but all remained solidly in positive territory.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data for the August survey were collected October 13–21, and included responses from 110 Texas manufacturing firms.