Dallas Fed: Growth in Texas manufacturing picks up pace in January; outlooks improve further

DALLAS—Texas factory activity picked up notably in January, according to business executives responding to the Texas Manufacturing Outlook Survey. Businesses also weighed in on how financial conditions and regulatory policies are impacting their outlook.

“The Texas manufacturing sector saw a pickup in the pace of growth in January,” said Emily Kerr, senior business economist at the Dallas Fed. “Employment growth was modest, but most other indicators of state factory activity suggest healthy expansion. Outlooks and perceptions of general business activity improved notably.”

Key takeaways from this month’s Texas Manufacturing Outlook Survey:

• The production index rose seven points to 12.2.
• The new orders index rose six points to 7.7, its highest level since April 2022.
• Labor market measures suggested employment and workweek length grew slightly this month.
• Upward pressure on prices and wages increased this month.
• The general business activity and company outlook indexes moved up to multi-year highs.

Nearly half of Texas businesses trying to hire 

From Jan. 14–22, the Dallas Fed asked a series of special questions on labor market, federal government policies, and financial conditions in the Texas Business Outlook Surveys and heard back from 333 business executives.

Key takeaways:

• Just under half of firms reported they are currently trying to hire, and a lack of applicants remained the top hiring impediment.
• Applicant availability and firms’ ability to retain workers continued to improve.
• Half of firms cited business regulatory policy as a top three policy topic most important to their firm. Thirty percent cited international trade, and 29 percent cited corporate tax policy.
• About a quarter of firms said recent changes in financial conditions have negatively impacted their firm’s outlook on net, with long-term rates most commonly cited as the primary driver. Fifteen percent said changes in financial conditions have had a positive impact on their outlook, with short-term rates cited most often as the primary driver.

-30-

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