Dallas Fed Manufacturing Survey: Activity Expands Slower

Texas factory activity, as measured by the production index, "increased but at a slower pace in August," according to the monthly business activity survey conducted by the Federal Reserve Bank of Dallas, released Monday.

The general business activity index climbed to 5.0 in August from 4.4 in July.

The production index slid to 7.3 from 11.4.

Capacity use dropped to 4.6 from 12.2, the Fed reported. Volume of new orders decreased to 5.4 from 10.8, while growth rate of orders index slipped to 2.2 from 2.7.

Unfilled orders gained to positive 0.5 from negative 2.7 in the prior survey, while the volume of shipments decreased to 11.4 from 17.7, and delivery times widened to negative 9.8 from negative 1.2. The materials inventory index slumped to negative 11.6 from negative 2.4, the finished goods inventory decreased to negative 11.0 from negative 1.2. Prices paid for raw materials fell to 10.0 from 15.9, while prices received for finished goods improved to positive 4.0 from negative 1.0. Wages and benefits dipped to 14.5 from 16.4, while the employment index grew to 11.2 from 9.3, and the hours worked index slipped to negative 9.9 from positive 1.3, and the capital expenditures index rose to 10.4 from 3.5.

As for future outlook (six months from now), the general business conditions index grew to 14.2 from 9.6 last month, the production index decreased to 36.0 from 42.0, while capacity use fell to 32.4 from 41.4, the Fed reported. Volume of new orders rose to 35.8 from 30.8, while growth rate of orders index gained to 31.0 from 23.1.

Unfilled orders increased to positive 1.3 from negative 4.9, while the volume of shipments climbed to 41.2 from 36.2, and delivery times fell to negative 3.7 from positive 0.7. Materials inventories gained to 2.6 from zero, and the finished goods inventory reversed to negative 1.3 from positive 1.2.

Prices paid for raw materials slid to 24.1 from 32.5, while prices received for finished goods increased to 16.4 from 14.5. Wages and benefits jumped to 40.7 from 31.5, the employment index decreased to 11.5 from 25.3, while the hours worked index slumped to 5.9 from 9.3, and the capital expenditures index rose to 20.5 from 14.5.

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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