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Texas Manufacturing Expansion Slows but Remains Solid, says Dallas Fed Survey

For Immediate Release: November 27, 2017

DALLAS—Texas factory activity continued to expand in November, but growth moderated some from the hot pace seen last month, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.

Here are some key takeaways from this month’s report:

Several measures of manufacturing activity pointed to slightly slower growth. The production index, a key measure of state manufacturing conditions, fell 10 points from its October reading but remained elevated at 15.1. The new orders index moved down five points to 20.0, and the capacity utilization and shipments indexes fell to 17.3 and 16.7, respectively. However, the growth rate of orders index rose six points to 18.1—its highest reading since 2010—signaling a stronger pickup in demand.

Perceptions of broader business conditions remained positive. The general business activity index came in at 19.4 and the company outlook index remained positive but dipped to 18.5.

Texas manufacturers remained highly optimistic about future business conditions. The index of future general business activity held steady at 39.0, while the index of future company outlook edged up to 40.8. Other indexes for future manufacturing activity showed mixed movements but remained solidly in positive territory.

Labor market measures suggested slower employment growth. The employment index fell 10 points from October to 6.3, reflecting a more normal index level after several months of elevated readings. The hours worked index edged down but remained positive at 11.5.

Upward pressure on prices and wages continued in November. The raw materials prices and finished goods prices indexes held steady at 32.2 and 15.1, respectively. The wages and benefits index moved down eight points to 14.2.

For this month’s Texas Business Outlook Surveys, respondents were asked special questions on employment expectations and the labor market.

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.

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Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org