Texas factory activity, as measured by the production index, slowed slightly in July, according to the monthly business activity survey conducted by the Federal Reserve Bank of Dallas, released Monday.

The general business activity index reversed to negative 13.2 in July from positive 5.8 in June.

The production index dipped to 12.0 from 15.5, while capacity use decreased to 8.7 from 13.3, the Fed reported. Volume of new orders declined to 1.4 from 7.9, while growth rate of orders index reversed to negative 3.1 from positive 1.6.

Unfilled orders dropped to negative 1.6 from positive 7.8 in the prior survey, while the volume of shipments slipped to 7.4 from 9.6, and delivery times slipped to 1.1 from 5.5. The materials inventory index dropped to negative 3.0 from positive 1.1, the finished goods inventory slipped to negative 8.0 from negative 7.7. Prices paid for raw materials gained to 3.0 from 2.7, while prices received for finished goods improved to negative 5.5 from negative 5.8. Wages and benefits rose to 22.9 from 13.2, while the employment index slid to 11.8 from 13.7, and the hours worked index gained to 4.1 from 1.0, and the capital expenditures index sank to negative 0.8 from positive 8.1.

As for future outlook (six months from now), the general business conditions index slid to negative 7.3 from positive 1.3 last month, the production index decreased to 27.1 from 33.0, while capacity use slipped to 21.8 from 30.1, the Fed reported. Volume of new orders fell to 20.1 from 27.8, while growth rate of orders index decreased to 10.7 from 14.6.

Unfilled orders sank to negative 11.5 from negative 5.6, while the volume of shipments gained to 24.3 from 33.6, and delivery times improved to negative 6.9 from negative 9.1. Materials inventories reversed to negative 11.5 from positive 6.8, and the finished goods inventory declined to negative 8.3 from negative 1.1.

Prices paid for raw materials surged to 32.2 from 15.9, while prices received for finished goods jumped to positive 13.8 from negative 4.5. Wages and benefits grew to 35.0 from 27.3, the employment index slipped to 9.2 from 14.6, while the hours worked index rose to 2.8 from 1.0, and the capital expenditures index dropped to 10.5 from 13.6.

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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