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

The general business activity index improved to negative 0.9 in September from negative 1.6 in August.

The production index gained to 10.0 from 6.4, while capacity use increased to 9.3 from 1.7, the Fed reported. Volume of new orders jumped to 5.3 from 0.2, while growth rate of orders index improved to negative 0.4 from negative 8.7.

Unfilled orders narrowed to negative 6.9 from negative 9.2 in the prior survey, while the volume of shipments reversed to positive 4.5 from negative 2.3, and delivery times gained to negative 8.2 from negative 9.9. The materials inventory index dropped to 0.2 from 8.9, the finished goods inventory reversed to negative 3.1 from positive 6.7. Prices paid for raw materials soared to 22.5 from 10.9, while prices received for finished goods improved to negative 1.3 from negative 1.6. Wages and benefits rose to 15.4 from 13.5, while the employment index slid to 5.9 from 14.2, and the hours worked index climbed to positive 2.8 from negative 0.9, and the capital expenditures index grew to 8.6 from 3.2.

As for future outlook (six months from now), the general business conditions index rose to positive 5.5 from negative 5.1 last month, the production index decreased to 26.4 from 28.6, while capacity use dipped to 24.5 from 27.5, the Fed reported. Volume of new orders fell to 25.3 from 27.1, while growth rate of orders index decreased to 4.2 from 15.3.

Unfilled orders improved to negative 6.5 from negative 7.9, while the volume of shipments slipped to 26.9 from 33.8, and delivery times improved to negative 5.4 from negative 11.3. Materials inventories increased to negative 1.1 from negative 2.3, and the finished goods inventory fell to negative 6.5 from negative 3.5.

Prices paid for raw materials jumped to 47.3 from 35.7, while prices received for finished goods climbed to 21.7 from 21.6. Wages and benefits slid to 34.4 from 35.8, the employment index rose to 15.1 from 13.8, while the hours worked index fell to 0.2 from 0.7, and the capital expenditures index rose to 20.6 from 17.3.

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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