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Texas Manufacturing Activity Increases Again, But At A Slower Pace In October, Says Dallas Fed Survey

For Immediate Release: Oct. 31, 2016

DALLAS—Texas factory activity increased again in October, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.

The production index—a key measure of state manufacturing conditions—posted a fourth consecutive positive reading but moved down to 6.7, suggesting output grew but at a slower pace this month.

Positive readings in the survey generally indicate expansion of factory activity, while readings below zero generally indicate contraction.

Other measures of current manufacturing activity showed mixed movements. The new orders and growth rate of orders indexes posted second consecutive negative readings in October, holding fairly steady at –3.5 and –5.1, respectively. The capacity utilization and shipments indexes have been positive throughout the second half of the year so far but fell notably after spiking last month, coming in at 0.8 and 1.9, respectively.

Perceptions of broader business conditions remained mixed in October. The general business activity index has been negative for nearly two years, although it continued to push closer to positive territory, coming in at –1.5. The company outlook index posted a second positive reading in a row, but moved down 5 points to 1.8.

Labor market measures indicated flat employment levels and slightly shorter workweek length. The employment index came in at 0.2, suggesting little change in headcounts in October. The hours worked index edged down to –1.8.

Expectations regarding future business conditions improved again in October. The index of future general business activity posted a fifth positive reading in a row, although it fell from 9.3 to 4.8, indicating slightly less optimism. The index of future company outlook also fell but remained positive, coming in at 12.2. Other indexes for future manufacturing activity pushed higher into positive territory.

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.

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Media Contact: Justin Jones
Federal Reserve Bank of Dallas
Phone: (214) 922-5449
E-mail: justin.jones@dal.frb.org