Texas factory activity, as measured by the production index, “expanded strongly in December,” according to the monthly Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas, released Tuesday.

The general business activity index rose to 29.7 in December from 19.4 in November.

The production index surged to 32.8 from 15.1.

Capacity utilization increased to 26.3 from 17.3, the Fed reported. New orders gained to 30.1 from 20.0, while growth rate of orders index rose to 21.4 from 18.1.

Unfilled orders slipped to 9.2 from 11.4, while shipments increased to 21.5 from 16.7, and delivery times grew to 8.0 from 4.8. The materials inventory index rose to 12.7 from 6.8, the finished goods inventory dropped to negative 2.0 from zero. Prices paid for raw materials crept to 32.5 from 32.2, while prices received for finished goods climbed to 17.9 from 15.1. Wages and benefits soared to 25.1 from 14.2, while the employment index surged to 20.4 from 6.3, and the hours worked index jumped to 23.3 from 11.5, and the capital expenditures index rose to 19.0 from 15.8.

As for future outlook (six months from now), the general business conditions index gained to 40.9 from 39.0 last month, the production index gained to 47.4 from 46.1, while capacity use declined to 39.9 from 45.4, the Fed reported. New orders gained to 50.8 from 48.9, while growth rate of orders index decreased to 40.1 from 40.9.

Unfilled orders rose to 16.2 from 14.2, while shipments increased to 46.9 from 43.2, and delivery times jumped to 6.9 from 3.8. Materials inventories fell to 11.8 from 13.2, and the finished goods inventory doubled to 12.4 from 6.2.

Prices paid for raw materials rose to 52.1 from 48.4, while prices received for finished goods climbed to 42.7 from 35.8. Wages and benefits decreased to 44.2 from 46.6, the employment index rose to 36.6 from 29.8, while the hours worked index dropped to 13.5 from 22.1, and the capital expenditures index rose to 43.2 from 34.1.

The Texas Manufacturing Outlook Survey is a monthly anecdotal survey of manufacturers in Texas. Over 100 manufacturers regularly participate in the Dallas Fed survey, which began collecting data in May 2004.

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Gary Siegel

Gary Siegel

Gary Siegel has been at The Bond Buyer since 1989, currently covering economic indicators and the Federal Reserve system.