Texas Manufacturing Activity Gains Momentum in January
In January, Texas factory activity increased, as most industry indicators moved upward. The production index rose from 5.3 to 12.2, improving nearly seven points in January. The new orders index similarly increased from 1.5 to 7.7, the highest reading since April 2022. Meanwhile, the capacity utilization and shipments indexes both rose from near zero readings in December to 5.0 and 8.7, respectively.
Perceptions of manufacturing business conditions improved in January, with the general business activity index surging nearly 10 points to 14.1, the highest reading since October 2021. Meanwhile, the company outlook index continued to grow and reached a multiyear high at 18.7. The outlook uncertainty index, which has been volatile in previous months, remained largely unchanged, at 1.3, indicating uncertainty stayed relatively the same.
Labor market indicators suggested employment and workweeks grew slightly in January. The employment index improved to 2.2, while the hours worked index inched up from -0.5 to 1.9. Almost 14% of firms reported net hiring, while nearly the same percentage (11.7%) noted net layoffs. Moderate upward pressure on prices and wages seen in the past few months continued. The raw materials prices index rose from 12.1 to 17.5, while the finished goods prices index jumped 8.8 points from negative territory to 6.2. Meanwhile, the wages and benefits index ticked up from 17.9 to 20.9.
The outlook for future manufacturing activity became even more optimistic in January, with the future production index increasing from 34.1 to 44.8, with nearly 52% of firms expecting increases in output in the next six months. Similarly, the future general business activity index surged nearly 15 points to 35.5.