Texas factory activity, as measured by the production index, “expanded at a faster pace in October,” according to the monthly Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas, released Monday.

The general business activity index grew to 27.6 in October from 21.3 in September.

The production index gained to 25.6 from 19.5.

Capacity utilization increased to 22.5 from 15.8, the Fed reported. New orders gained to 24.8 from 18.6, while growth rate of orders index rose to 12.3 from 9.7.

Unfilled orders climbed to 10.4 from 8.1, while shipments decreased to 20.9 from 27.4, and delivery times fell to 3.0 from 10.1. The materials inventory index gained to 10.6 from 3.9, the finished goods inventory reversed to positive 9.9 from negative 4.5. Prices paid for raw materials slipped to 32.3 from 34.5, while prices received for finished goods fell to 15.3 from 17.5. Wages and benefits declined to 22.5 from 26.4, while the employment index grew to 16.7 from 16.3, and the hours worked index slid to 13.7 from 18.4, and the capital expenditures index fell to 13.3 from 13.6.

As for future outlook (six months from now), the general business conditions index gained to 38.5 from 34.5 last month, the production index decreased to 46.0 from 46.5, while capacity use climbed to 47.2 from 44.9, the Fed reported. New orders slid to 45.3 from 48.7, while growth rate of orders index gained to 36.7 from 35.8.

Unfilled orders grew to 10.1 from 9.7, while shipments increased to 50.8 from 47.8, and delivery times dropped to 0.5 from 1.0. Materials inventories slumped to 3.7 from 10.8, and the finished goods inventory reversed to negative 0.9 from positive 10.5.

Prices paid for raw materials grew to 36.5 from 35.9, while prices received for finished goods slipped to 18.9 from 20.0. Wages and benefits fell to 36.9 from 39.8, the employment index dropped to 34.2 from 41.3, while the hours worked index declined to 13.8 from 17.2, and the capital expenditures index rose to 30.2 from 29.8.

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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