Texas factory activity, as measured by the production index, “continued to increase in August,” 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 17.0 in August from 16.8 in July.

The production index declined to 20.3 from 22.8.

Capacity utilization decreased to 12.2 from 18.1, the Fed reported. New orders dropped to 14.3 from 16.1, while growth rate of orders index slid to 11.7 from 12.2.

Unfilled orders fell to 0.2 from 1.0, while shipments increased to 18.1 from 11.6, and delivery times dropped to 0.5 from 4.3. The materials inventory index declined to 2.5 from 3.6, the finished goods inventory widened to negative 3.8 from negative 1.7. Prices paid for raw materials soared to 26.9 from 15.5, while prices received for finished goods climbed to 10.2 from 5.6. Wages and benefits rose to 26.9 from 20.6, while the employment index fell to 9.9 from 11.2, and the hours worked index increased to 14.5 from 9.8, and the capital expenditures index gained to 14.5 from 11.6.

As for future outlook (six months from now), the general business conditions index slipped to 29.2 from 31.6 last month, the production index dropped to 43.1 from 48.8, while capacity use slid to 38.6 from 39.9, the Fed reported. New orders increased to 48.6 from 43.6, while growth rate of orders index gained to 37.1 from 32.8.

Unfilled orders fell to 6.7 from 11.2, while shipments decreased to 41.8 from 47.0, and delivery times declined to 2.1 from 3.9. Materials inventories jumped to 12.0 from 4.6, and the finished goods inventory fell to negative 2.0 from positive 4.7.

Prices paid for raw materials grew to 26.0 from 20.8, while prices received for finished goods dropped to 17.0 from 21.2. Wages and benefits slid to 44.3 from 45.9, the employment index fell to 30.8 from 36.2, while the hours worked index rose to 11.8 from 10.2, and the capital expenditures index declined to 19.6 from 27.1.

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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