Dallas Fed Oct. manufacturing survey shows activity expands at a slower pace

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Texas factory activity continued to expand in October although at a slower pace than the previous month, according to the monthly Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas.

The production index, a key measure of state manufacturing conditions, fell to 17.6 from 23.3 in September, the Dallas Fed said on Monday.

Other indexes of manufacturing activity were mixed. The new orders index rose to 18.9 in October from 14.7 while the growth rate of orders index slipped to 11.0 from 11.5, a six-month low. The capacity utilization index dropped to 15.4 from 21.6, while the shipments index fell to 16.6 from 20.8.
The general business activity index inched up to 29.4 from 28.1. The company outlook index rose to 25.0 from 18.2. And a new index measuring uncertainty regarding companies’ outlooks moved up to a new high of 19.9 from 19.9.

Labor market measures suggested rising employment levels and longer workweeks in October, the Dallas Fed said.

“The employment index rose six points to 23.9, a level well above average. Twenty-eight percent of firms noted net hiring, compared with 4% noting net layoffs. The hours worked index remained positive but moved down to 6.5.”

Price increases accelerated in October while wage pressures remained elevated, the Dallas Fed said.

“The raw materials prices index posted a 10-point increase to 54.4, reaching its highest level in seven years. The finished goods prices index also increased, rising four points to 17.5. Compensation costs continued to rise at a faster clip than normal, with the wages and benefits index relatively unchanged at 32.9.”

The outlook farther out were positive. The expected production index for six months ahead rose to 47.9 from 43.7.

Data were collected Oct. 16 through Oct. 24 with 118 Texas manufacturers responding to the survey.

The Dallas Fed serves the Eleventh Federal Reserve District, which consists of Texas, northern Louisiana and southern New Mexico.

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Economic indicators Texas