News

In December, Texas factory activity increased, but industry indicators were mixed. The production index rose from -0.9 to 3.9 but was still far below the last positive reading of 14.6 in October. The new orders index increased from -11.9 to -0.9, indicating demand was relatively unchanged from November. Meanwhile, the capacity utilization and shipments indexes both rose slightly but remained in negative territory at -2.5 and -2.0, respectively.

Perceptions of manufacturing business conditions improved in December, with the general business activity index rising six points to 3.4, the first positive reading since April 2022. Meanwhile, the company outlook index continued to grow for the second consecutive month, improving to 8.0. The outlook uncertainty index, which has been volatile lately, fell for the second month in a row, from 5.9 to 1.2.

Labor market indicators suggested employment and workweeks steadied in December. The employment index fell 4.6 points to 0.3, while the hours worked index also decreased from 0.3 to -0.9. More than 16% of firms reported hiring, while nearly the same percentage noted layoffs. Moderate upward pressure on prices and wages seen in the past few months eased. The wages and benefits index fell slightly from 18.6 to 17.7. Meanwhile, the raw materials prices index dropped 18 points to 10.5, the lowest reading in 17 months. The finished goods prices index fell into the negative for the first time since 2023, decreasing more than 12 points to -3.4.

The outlook for future manufacturing activity remained optimistic, but the future production index fell from 44.0 to 32.7, with 44% of firms expecting increases in output in the next six months. Similarly, the future general business activity index remained positive but fell from 31.2 to 20.6.