NEW YORK - Texas factory activity, as measured by the production index, continued to expand, at a slower pace in May than in April, according to the monthly business activity survey conducted by the Federal Reserve Bank of Dallas, released Tuesday.

The general business activity index decreased to negative 5.1 in May from negative 3.4 in April.

The production index dipped to 5.5 from 5.6, while capacity use increased to 5.0 from 1.4, the Fed reported. Volume of new orders improved to negative 0.6 from negative 1.0, while growth rate of orders index declined to negative 3.7 from negative 2.6.

Unfilled orders rose to negative 4.0 from negative 8.3 in the prior survey, while the volume of shipments increased to negative 0.2 from negative 0.8, and delivery times surged to positive 4.7 from negative 1.1. The materials inventory index dipped to 7.2 from 7.3, the finished goods inventory improved to negative 2.4 from negative 5.6. Prices paid for raw materials dropped to 20.2 from 21.2, while prices received for finished goods rose to negative 0.5 from negative 5.4. Wages and benefits slid to 8.5 from 15.2, while the employment index fell to 8.5 from 11.8, and the hours worked index gained to negative 2.2 from negative 4.6, and the capital expenditures index increased to 6.9 from 6.1.

As for future outlook (six months from now), the general business conditions index sank to 4.3 from 15.7 last month, the production index decreased to 31.6 from 38.5, while capacity use slipped to 29.1 from 34.9, the Fed reported. Volume of new orders fell to 22.8 from 31.4, while growth rate of orders index decreased to 13.7 from 21.1.

Unfilled orders rose to 4.8 from 4.6, while the volume of shipments declined to 27.2 from 34.7, and delivery times dropped to negative 3.6 from negative 2.3. Materials inventories reversed to negative 5.9 from positive 5.8, and the finished goods inventory declined to negative 7.2 from negative 2.3.

Prices paid for raw materials decreased to 35.7 from 40.2, while prices received for finished goods climbed to 16.6 from 16.1. Wages and benefits slid to 34.4 from 36.4, the employment index slipped to 15.4 from 19.8, while the hours worked index fell to 2.6 from 9.8, and the capital expenditures index dropped to 18.1 from 21.0.

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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