Texas Manufacturing Activity Expands Again in August, Says Dallas Fed Survey
Wages and benefits index rises to pre-oil-bust levels
For Immediate Release: August 28, 2017
DALLAS—Texas factory activity continued to increase in August, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.
The production index—a key measure of state manufacturing conditions—edged down to 20.3, indicating output grew but at a slightly slower pace than in July.
Positive readings in the survey generally indicate expansion of factory activity, while readings below zero generally indicate contraction.
“The August report was another positive reflection on the Texas manufacturing sector,” said Emily Kerr, Dallas Fed senior business economist. “We continue to hear from some firms about the difficulty of finding the workers they need. This labor market tightness could be contributing to increased wages—the wages and benefits index rose to its highest level since before the oil bust. We also saw a notable increase in price pressures this month.”
Upward pressure on prices and wages increased in August. The raw materials prices index pushed up 11 points to 26.9, reaching its highest level in six months. The finished goods prices index climbed five points to 10.2. The wages and benefits index also rose, up six points to 26.9.
Other measures of current manufacturing activity also indicated continued growth. The new orders and growth rate of orders indexes ticked down but stayed solidly positive, coming in at 14.3 and 11.7, respectively. The capacity utilization index fell six points to 12.2, while the shipments index increased seven points to 18.1.
Perceptions of broader business conditions remained positive in August. The general business activity index was largely unchanged at a robust 17.0. The company outlook index posted its 12th consecutive positive reading but slipped 10 points to 16.3.
Labor market measures suggested continued employment gains and longer workweeks this month. The employment index came in at 9.9, slightly below the July reading. The hours worked index rose five points to 14.5.
Expectations regarding future business conditions continued to improve. The indexes of future general business activity and future company outlook remained elevated at 29.2 and 34.5. Other indexes of future manufacturing activity showed mixed movements but remained positive.
Texas produces more than 11 percent of total manufactured goods in the United States, ranking second behind California in factory production.
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
Phone: (214) 922-6748