Texas manufacturing activity “picked up steam in February,” says Dallas Fed economist
For Immediate Release: February 26, 2018
DALLAS—Texas factory activity expanded at a faster pace in February, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose 11 points to 27.9.
“The ongoing expansion in Texas manufacturing picked up steam in February,” said Emily Kerr, Dallas Fed senior business economist. “Output growth accelerated, and the survey’s broader measure of general business activity pushed up to a reading last seen in 2005, a banner year for the Texas economy.”
For this month’s Texas Business Outlook Surveys, respondents were also asked special questions on employment expectations and the labor market. Responses to those questions indicated that roughly 70 percent of respondents are having trouble finding qualified workers when hiring, particularly for mid-skill positions.
“Wages rose at a faster clip this month, spurred by firms raising pay to attract and retain employees in this very tight labor market,” Kerr said. “The surveys’ price indexes both reached their highest readings since 2011, a year when headline inflation exceeded 3 percent.”
Here are more key takeaways from this month’s report:
Other measures of manufacturing activity pointed to slightly stronger growth. The new orders and growth rate of orders indexes held steady at 25.3 and 15.3, respectively. The capacity utilization index rose five points to 19.6, and the shipments index rose to 32.1, its highest reading since 2006.
Perceptions of broader business conditions improved further. The general business activity index rose to 37.2, its highest reading in over 12 years. The company outlook index climbed four points to 31.5, also a 12-year high.
Price pressures remained elevated, and wages rose at a faster clip. The raw materials prices index climbed six points to 39.8, while the finished goods prices index edged up to 22.5. The wages and benefits index posted a nine-point increase to 32.2, with nearly a third of firms noting an increase in compensation from January levels.
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.
-30-
Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org