Dallas Fed Manufacturing Survey: Activity Surges

Texas factory activity, as measured by the production index, "increased sharply in June," according to the monthly business activity survey conducted by the Federal Reserve Bank of Dallas, released Monday.

The general business activity index surged to positive 6.5 in June from negative 10.5 in May.

The production index gained to 17.1 from 11.2.

Capacity use jumped to 15.3 from 6.4, the Fed reported. Volume of new orders increased to 13.0 from 6.2, while growth rate of orders index reversed to positive 7.1 from negative 4.3.

Unfilled orders narrowed to negative 0.4 from negative 8.3 in the prior survey, while the volume of shipments increased to 15.4 from 3.1, and delivery times dipped to 3.2 from 3.3. The materials inventory index reversed to positive 0.3 from negative 7.3, the finished goods inventory decreased to negative 2.1 from zero. Prices paid for raw materials rose to 14.3 from 6.4, while prices received for finished goods improved to negative 2.1 from negative 8.3. Wages and benefits gained to 20.0 from 14.0, while the employment index grew to positive 0.2 from negative 6.3, and the hours worked index climbed to positive 4.8 from negative 2.3, and the capital expenditures index soared to 9.9 from 2.2.

As for future outlook (six months from now), the general business conditions index improved to positive 14.7 from negative 2.6 last month, the production index increased to 40.6 from 34.6, while capacity use rose to 37.2 from 27.9, the Fed reported. Volume of new orders grew to 33.2 from 26.9, while growth rate of orders index soared to 26.3 from 18.6.

Unfilled orders climbed to 6.6 from zero, while the volume of shipments gained to 36.9 from 30.1, and delivery times narrowed to negative 3.2 from negative 5.4. Materials inventories reversed to negative 2.2 from positive 2.2, and the finished goods inventory slid to zero from 2.2.

Prices paid for raw materials rose to 29.2 from 27.8, while prices received for finished goods surged to 20.9 from 11.1. Wages and benefits climbed to 36.7 from 31.9, the employment index increased to 23.1 from 14.5, while the hours worked index jumped to positive 8.0 from negative 3.5, and the capital expenditures index grew to 18.9 from 14.8.

The Texas Manufacturing Outlook Survey is a monthly anecdotal survey of manufacturers in Texas. Roughly 80 manufacturers regularly participate in the Dallas Fed survey, which began collecting data in May 2004.

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