Texas Factory Activity Slows, While Perceptions Strengthened

In October, Texas factory activity expanded at a slower pace after strengthening the prior month. The production index decreased from 29.5 to 15.8, but remained positive and above the series average of 9.7. The new orders and capacity utilization indices also both weakened, falling from 30.7 to 9.3 and from 23.9 to 13.7, respectively. At the same time, the shipments index moved down 16.4 points to 8.4, remaining above the series average of 7.9. The Eleventh District consists of Texas, northern Louisiana and southern New Mexico.

Perceptions of manufacturing conditions strengthened in October as the general business activity index rose 3.6 points to 13.4. Meanwhile, the company outlook index moved up 7.4 points to 16.1, remaining well above the series average of 4.2. The uncertainty index stepped down 3.4 points to 7.9, remaining below the series average of 16.5.

Labor market indicators suggested weaker growth in head counts but a longer workweek in October, with the employment index decreasing 3.5 points to 11.6 and the hours worked index rising 4.5 points to 10.1. Of those surveyed, 24.2% noted net hiring, while a smaller percentage (12.6%) noted net layoffs.

Price pressures strengthened while wage pressures weakened in October. The index for prices paid for raw materials increased 3.1 points to 55.3, while the prices received index stepped up 2.3 points to 29.9, as both indices remained above their series’ averages. The wages and benefits index declined 6.6 points to 20.8, falling below the series average of 21.1.

The outlook for future manufacturing activity was mixed in October, with the future production index edging down 0.9 points to 39.4 but remaining above the series average of 36.0. Furthermore, the future company outlook index ticked down 0.4 points to 31.1. On the other hand, the future general business activity index surged 17.3 points to 38.1, remaining well above the series average of 12.6.