Federal Reserve Bank of Dallas
07/28/2025 | Press release | Distributed by Public on 07/28/2025 08:58
Texas Manufactoring Outlook Survey
July 28, 2025
Growth resumes in the Texas manufacturing sector
Special questions: Labor market conditions
Texas factory activity picked up notably in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, jumped 20 points to 21.3, its highest reading in more than three years.
Other measures of manufacturing activity were mixed. The new orders index remained negative but moved up to -3.6 from -7.3. Meanwhile the capacity utilization and shipments indexes pushed up into positive territory, coming in at 17.3 and 2.7, respectively.
Perceptions of broader business conditions stabilized, and outlooks improved. The general business activity index shot up 14 points to a near-zero reading, indicating no change in activity in July after five months of worsening. The company outlook index also jumped 14 points to 4.7, posting its first positive reading in six months. The outlook uncertainty index retreated four points to 11.2.
Labor market measures suggested an increase in employment and work hours. The employment index moved up three points to 8.4, with 17 percent of firms noting net hiring and 9 percent noting net layoffs. The hours worked index climbed 16 points to 7.7, its highest reading in nearly three years.
Elevated input price pressures continued in July, while selling price growth eased. The raw materials prices index held fairly steady at 41.7, well above its average reading of 27.4. The finished goods prices index retreated 15 points to 11.1. Meanwhile, the wages and benefits index was unchanged at 13.2.
Expectations for manufacturing activity six months from now improved. The future production index rose eight points to 30.3, while the future general business activity index rose five points to 19.0. Most other indexes of future manufacturing activity also increased, though some remain below their average readings.
Next release: Monday, August 25
Data were collected July 15-23, and 81 of the 117 Texas manufacturers surveyed submitted responses. The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state's factory activity. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.
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