Texas Manufactoring Outlook Survey

Texas factory output growth slows to a moderate pace, outlooks stable

Texas manufacturing output growth decelerated in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 10 points to 9.4, a reading suggestive of an average pace of output expansion.

Other measures of manufacturing activity also remained positive but showed signs of slower growth this month. The capacity utilization index plunged 15 points to 5.2, the new orders index dipped four points to 6.4, and the shipments index fell eight points to 7.4.

Perceptions of broader business conditions were stable in May. The general business activity index edged up three points to 0.4, with the near-zero reading indicating no change in activity from April. Similarly, the company outlook index came in at 0.3, down from 3.0, with the near-zero May reading signaling no change in outlooks. The outlook uncertainty index was little changed at 19.2, remaining above the series average of 16.9.

Employment continued to be flat, and workweeks held steady in May. The employment index was unchanged at 0.2, indicating no change in payrolls from April. The hours worked index moved down to 1.8 from 4.0.

Input price pressures increased, selling price pressures eased, and wage pressures held steady this month. The raw materials prices index rose six points to 42.7, its highest level in eight months, while the finished goods prices index fell nine points to 18.9. The wages and benefits index was relatively unchanged at 23.6.

Expectations are for increased manufacturing activity six months from now. The future production index was little changed at 36.8, and the future general business activity index came in at 14.3, unchanged from last month. Other indexes of future manufacturing activity remained in positive territory.

Next release: Monday, June 29