Texas Manufacturing Activity Accelerates as Production Jumps

In September, Texas factory activity expanded at a faster pace after strengthening the prior month. The production index increased from 16.1 to 29.5, remaining well above the series average of 9.7. The new orders and capacity utilization indices both strengthened, rising from 22.0 to 30.7 and from 12.8 to 23.9, respectively. At the same time, the shipments index moved up 10.7 points to 24.8, remaining well above the series average of 7.9.

Perceptions of manufacturing conditions weakened in September as the general business activity index declined 1.8 points to 9.8. Meanwhile, the company outlook index fell 10.5 points to 8.7, remaining above the series average of 4.2. The uncertainty index stepped up 2.6 points to 11.3, remaining below the series average of 16.6.

Labor market indicators suggested stronger growth in headcounts but a slightly shorter workweek in September, with the employment index increasing 7.1 points to 15.1 and the hours worked index edging down 0.3 points to 5.6. Of those surveyed, 26.5% noted net hiring, while a smaller percentage (11.4%) noted net layoffs.

Price and wage pressures both strengthened in September. The index for prices paid for raw materials rose 8.1 points to 52.2, while the prices received index stepped up 4.9 points to 27.6, as both indices remained above series averages. The wages and benefits index moved up 6.3 points to 27.4, above the series average of 21.1.

The outlook for future manufacturing activity weakened in September, with the future production index ticking down 0.6 points to 40.3 but remaining above the series average of 36.0. Furthermore, the future company outlook index decreased 3.8 points to 31.5, while the future general business activity index fell 16.4 points to 20.8, also remaining above the series average of 12.5.