Texas Factory Activity Slows, but Uncertainty Eases

In June, Texas factory activity expanded at a slower pace after weakening the prior month. The production index decreased from 9.4 to 4.1, remaining below the series average of 9.6. The new orders index stepped down 4.1 points to 2.3, while the capacity utilization index rose 2.1 points to 7.3, slightly below the series average of 7.5. Meanwhile, the shipments index ticked down 0.3 points to 7.1, slightly below the series average of 7.8. The Eleventh District consists of all of Texas, northern Louisiana and southern New Mexico.

Perceptions of manufacturing business conditions flattened in June as the general business activity index ticked up 0.4 points to 0.0. At the same time, the company outlook index rose 2.0 points to 2.3. Moreover, the uncertainty index fell 8.3 points to 10.9, falling below the series average of 16.9.

Labor market indicators suggested strong growth in head counts and a longer workweek in June, with the employment index climbing 13.7 points to 13.9, and the hours worked index moving up 4.1 points to 5.9. Of those surveyed, 20.8% reported net hiring, while a smaller percentage (6.9%) noted net layoffs.

Price pressures were mixed, while wage pressures strengthened in June. The prices paid for raw materials index ticked down 0.3 points to 42.4. Meanwhile, the prices received for finished goods index increased 9.7 points to 28.6, both higher than the series averages. The wages and benefits index stepped up 2.4 points to 26.0, also remaining above the series average of 21.1.

The outlook for future manufacturing activity weakened slightly in June, with the future production index declining 2.0 points to 34.8 and falling below the series average of 36.0. Furthermore, the future company outlook index jumped 12.0 points to 28.5, while the future general business activity index rose 11.6 points to 25.9, remaining above the series average of 12.4.