Input Stories

In March, Texas factory activity rose after declining in February. The production index increased more than 15 points to 6, returning to growth. The new orders index improved 3.4 points to -0.1, indicating new orders were roughly stable from the prior month. The capacity utilization index remained negative but rose more than 6 points to -2.3, while the shipments index was little changed at 6.1.

Perceptions of manufacturing business conditions continued to worsen in March, with the general business activity index falling 8 points to -16.3, its lowest point since last July. Furthermore, the company outlook index fell 5.5 points to -10.7. Meanwhile, the outlook uncertainty index rose 7 points to 36.2, the highest reading since fall 2022, after surging in February.

Labor market indicators suggested a decrease in employment and slightly shorter workweeks in March, with the employment index slipping further into negative territory to -4.6, while the hours worked index soared 11.3 points but remained negative at -2.9. Nearly 12% of firms reported net hiring, while a higher percentage (16.4%) noted net layoffs. Upward pressure on input prices intensified in March, while wages and selling price increases remained relatively stable. The prices paid for raw materials index rose from 35.0 to 37.7, a multiyear high, while the prices paid for finished goods index decreased marginally, from 7.8 to 6.3. Meanwhile, the wages and benefits index edged down from 16.7 to 16.0.

The outlook for future manufacturing activity is now mixed. The future production index inched down less than a point to 27.6, with 43.3% of firms expecting increases in output in the next six months. Meanwhile, the future general business activity index plummeted more than 14 points to -6.6, the first negative reading since May 2024. Other future activity indexes remained positive but slipped below their averages.