Dallas Fed: Texas manufacturing activity stabilizes in February

DALLAS—Texas factory activity stabilized in February after contracting in January, according to business executives responding to the Texas Manufacturing Outlook Survey.

“Texas’ manufacturing sector stabilized in February, with output holding steady after declining last month,” said Emily Kerr, senior business economist at the Dallas Fed. “Employment growth resumed, and new orders increased after falling for more than a year and a half. Some signs of weakness remain, particularly in the survey’s sentiment measures like general business activity and company outlook. Even still, all key measures of manufacturing activity six months ahead are now positive.”

Key takeaways from this month’s survey:

• The production index rebounded 16 points to 1.0.
• The new orders index shot up 18 points to 5.2, its first positive reading since May 2022.
• Labor market measures suggested growth in employment but shorter workweeks.
• Wage and input costs continued to increase this month, while selling prices remained flat.
• The general business activity and company outlook indexes remained negative but increased notably.

The Dallas Fed asked a series of special questions on demand expectations and the workforce in our February Texas Business Outlook Surveys and heard back from 359 business executives (services and manufacturing) Feb. 13–21.

“Texas firms are much more bullish on demand expectations than last quarter, with more than half expecting demand to increase over the next six months, up from 38 percent in November 2023,” Kerr said. “We know migration helps fuel economic growth in Texas, and in our latest survey we find that over the past year, 30 percent of firms have relied on hiring workers who moved to Texas from a different U.S. state, and 15 percent relied on hiring workers who moved to Texas from another country. Among firms that reported relying on such workers, reliance increased over the past year for about 40 percent of firms and decreased for only a few.”

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Media contact:
Jon Prior
Federal Reserve Bank of Dallas
Phone: 214-922-6857
Email: jon.prior@dal.frb.org