Texas manufacturing expansion continues; uncertainty rises in July, says Dallas Fed survey
For Immediate Release: July 30, 2018
DALLAS—Texas factory output accelerated in July, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey. The production index—a key measure of state manufacturing conditions—rose six points to 29.4. Hiring also picked up, with the employment index rising five points to 28.9.
Positive readings in the survey generally indicate expansion of factory activity, while readings below zero generally indicate contraction.
Manufacturers were slightly less sure about the future, however. The outlook uncertainty index rose to 17.0, well above its June reading and the highest level since the survey began tracking this measure in January.
“This was yet another strong report for the Texas manufacturing sector,” said Emily Kerr, Dallas Fed senior business economist. “A particular bright spot was the acceleration seen in net hiring—the employment index rose to its highest level since 2005. But we are seeing a bit more uncertainty from firms regarding their outlook, with several comments from respondents pointing to trade policy as a driver of that uncertainty.”
Here are some additional key takeaways from this month’s manufacturing report:
Other indexes of manufacturing activity also pointed to solid expansion. The new orders and growth rate of orders indexes moved down but remained well above average at 23.3 and 17.0, respectively. The shipments index climbed five points to 30.8, and the capacity utilization index edged up to 25.0.
Manufacturers were slightly less positive about broader business conditions. The general business activity index fell four points to 32.3. The company outlook index dropped 13 points to 20.4, which is the second-lowest reading this year but still elevated relative to the average.
Price and wage pressures remain elevated. Compensation costs continued to rise at a faster clip than normal, with the wages and benefits index holding fairly steady at 32.4. While still well above average, the raw materials prices index moved down five points to 48.6, and the finished goods prices index ticked down to 22.9.
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