Texas Manufacturing Activity Increases in October After Nine-Month Slump, Says Dallas Fed Surv
DALLAS—Texas factory activity increased in October after nine months of flat or declining output, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.
The production index—a key measure of state manufacturing conditions—rose to 4.8, marking the first month of output growth this year.
Positive readings in the survey generally indicate expansion of factory activity, while readings below zero generally indicate contraction.
“This month’s survey data reflected the first real increase in manufacturing output all year, and also stabilization in employment levels after several months of net layoffs,” said Emily Kerr, Federal Reserve Bank of Dallas business economist. “However, demand indicators and company outlooks remain negative, so there are still some signs of weakness.”
Overall, Texas manufacturing is showing resilience in the face of headwinds like low oil prices and the strong U.S. dollar, according to Kerr.
The shipments and capacity utilization indexes pushed higher into positive territory, while the new orders and growth rate of orders indexes fell further into negative territory.
Perceptions of broader business conditions remained weak in October. The general business activity index, which has been negative all year, fell 3 points to –12.7. The company outlook index edged up but remained negative for a third consecutive month.
Labor market indicators reflected stabilization in October. The employment index moved up to zero, indicating no change in headcounts after five months of declines. The hours worked index suggested a much smaller decline in workweek length than last month.
Expectations regarding future business conditions remained positive in October. The index of future general business activity held fairly steady in positive territory, while the index of future company outlook edged up further into positive territory.
Indexes for future manufacturing activity moved up and remained strongly positive.
Texas produces more than 11 percent of total manufactured goods in the United States, ranking second behind California in factory production.
For this month’s Texas Business Outlook Surveys, respondents were asked supplemental questions on credit availability conditions in Texas.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity.
Federal Reserve Bank of Dallas