The following is the text of the Texas manufacturing activity from the Federal Reserve Bank of Dallas.
Texas factory activity expanded in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 12.9 to 6.2, suggesting growth continued but at a slower pace.
Other measures of current manufacturing activity also indicated slower growth in February. The new orders index was positive for the second month in a row, although it fell from 12.2 to 2.8. The capacity utilization index declined from 14.0 to 5.4, suggesting utilization rates increased less than last month. The shipments index plunged almost 20 points but stayed in positive territory, indicating slightly higher shipments in February.
Perceptions of broader economic conditions improved a bit in February. The general business activity index was positive for the third month in a row, although it dipped from 5.5 to 2.2. The company outlook index was also positive for a third consecutive month, but it fell from 12.6 to 6.3.
Labor market indicators were mixed in February. Hiring slowed with the employment index moving down to 2.0, and about 17 percent of employers reporting hiring and 15 percent noting layoffs. The average workweek index dipped into negative territory with a reading of -3.0, suggesting hours worked declined.
Price and wage pressures diminished in February. The raw materials price index came in at 15.8, down from 27.8 in January. The finished goods price index dropped from 10.2 to 4.6. The wages and benefits index fell to 12.9, indicating wages rose at a slower pace. Still, the great majority of manufacturers continued to note no change in compensation costs. Looking ahead, 42 percent of respondents anticipate further increases in raw materials prices over the next six months, while 23 percent expect higher finished goods prices.
Expectations regarding future business conditions continued to reflect optimism. The index of future general business activity edged up from 9.2 to 10.8. The index of future company outlook remained unchanged at 20.1. Indexes for future manufacturing activity fell, but remained in solid positive territory this month.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected Feb. 12-20, and 95 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.
SOURCE: Federal Reserve Bank of Dallas