Texas factory activity, as measured by the production index, “continued to increase in September,” although at a slower rate than 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 21.3 in September from 17.0 in August.

The production index declined to 19.5 from 20.3.

Capacity utilization increased to 15.8 from 12.2, the Fed reported. New orders gained to 18.6 from 14.3, while growth rate of orders index slid to 9.7 from 11.7.

Unfilled orders soared to 8.1 from 0.2, while shipments increased to 27.4 from 18.1, and delivery times surged to 10.5 from 0.5. The materials inventory index gained to 3.9 from 2.5, the finished goods inventory widened to negative 4.5 from negative 3.8. Prices paid for raw materials climbed to 34.5 from 26.9, while prices received for finished goods rose to 17.5 from 10.2. Wages and benefits slid to 26.4 from 26.9, while the employment index grew to 16.3 from 9.9, and the hours worked index increased to 18.4 from 14.5, and the capital expenditures index fell to 13.6 from 14.5.

As for future outlook (six months from now), the general business conditions index gained to 34.5 from 29.2 last month, the production index increased to 46.5 from 43.1, while capacity use climbed to 44.9 from 38.6, the Fed reported. New orders increased to 48.7 from 48.6, while growth rate of orders index declined to 35.8 from 37.1.

Unfilled orders grew to 9.7 from 6.7, while shipments increased to 47.8 from 41.8, and delivery times dropped to 1.0 from 2.1. Materials inventories slumped to 10.8 from 12.0, and the finished goods inventory reversed to positive 10.5 from negative 2.0.

Prices paid for raw materials grew to 35.9 from 26.0, while prices received for finished goods climbed to 20.0 from 17.0. Wages and benefits slid to 39.8 from 44.3, the employment index increased to 41.3 from 30.8, while the hours worked index rose to 17.2 from 11.8, and the capital expenditures index jumped to 29.8 from 19.6.

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.