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Texas Manufacturing Activity Held Steady
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Texas factory activity held steady in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at zero, suggesting output was unchanged from December. Other measures of current activity signaled continued growth in manufacturing, albeit at a slower pace.
The capacity utilization and shipments indexes fell but remained in positive territory. The new orders index improved, edging up from 11 to 13, with 30 percent of manufacturers reporting increased order volumes.
Indexes reflecting general business conditions fell but remained positive for the fourth month in a row. The general business activity index decreased from 16 to 11, and the company outlook index moved down from 17 to 13. Eighty-eight percent of respondents said business activity was unchanged or improved from the prior month.
Labor market indicators continued to reflect expansion, although increases in employment and hours worked abated. The employment index came in at a reading of 9, with 21 percent of firms reporting hiring compared with 12 percent reporting layoffs. The hours worked index fell from 14 to 4, while the wages and benefits index rose.
Prices climbed again in January. The raw materials price index jumped from 43 to 62, reaching its highest level since mid-2008. The share of manufacturers who saw an increase in input costs surged to 64 percent, compared with only 2 percent who saw a decrease. Finished goods prices rose for the third month in a row, although the great majority of respondents continued to note no change. Sixty percent of respondents anticipate further increases in raw materials prices over the next six months, while 40 percent expect higher finished goods prices.
Although several of the current activity indexes fell from December levels, all future activity indexes rose this month. The future indexes for production and shipments moved up to their highest levels in four years. The future new orders index reached its highest level since 2005, with 56 percent of manufacturers expecting an increase in order volumes over the next six months. The future general business activity index advanced to a six-year high of 39, and the future company outlook index rose to 41.
Posted: January 31, 2011 Monday 10:30 AM