Dallas Fed sees prices moderate, as production slipped in July

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Texas factory activity growth, as measured by the production index, suggested a “robust expansion,” according to the monthly Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas, released Monday.

“The production index, a key measure of state manufacturing conditions, rose six points to 29.4, signaling an acceleration in output growth,” according to the report.

The general business activity index declined to 32.3 in July from 36.5 in June.

The production index gained to 29.4 from 23.3.

Capacity utilization rose to 25.0 from 21.7, the Fed reported. New orders dropped to 23.3 from 29.6, while growth rate of orders index slipped to 17.0 from 22.2.

Unfilled orders rose to 14.9 from 13.0, while shipments climbed to 30.8 from 25.5, and delivery times fell to 12.7 from 15.9. The finished goods inventory reversed to negative 1.9 from positive 5.8. Prices paid for raw materials slid to 48.6 from 53.6, its highest reading since 2011, while prices received for finished goods dropped to 22.9 from 10-year high of 26.2. Wages and benefits increased to 32.4 from 31.4, while the employment index climbed to 28.9 from 23.9, and the hours worked index gained to 22.2 from 20.2, and the capital expenditures index rose to 26.6 from 23.8.

As for future outlook (six months from now), the general business conditions index gained to 36.2 from 35.9 last month, the production index gained to 50.6 from 47.90, while capacity use decreased to 46.4 from 46.5, the Fed reported. New orders grew to 50.6 from 47.0, while growth rate of orders index slid to 35.1 from 37.7.

Unfilled orders slumped to 12.4 from 24.5, while shipments remained increased to 49.7 from 43.9, and delivery times fell to 4.3 from 6.8. The finished goods inventory slid to 3.8 from 7.2.

Prices paid for raw materials declined to 46.1 from 49.0, while prices received for finished goods fell to 26.6 from 28.1. Wages and benefits held at 53.2, the employment index rose to 39.9 from 39.8, while the hours worked index soared to 18.1 from 9.7, and the capital expenditures index dropped to 31.9 from 33.9.

Since January respondents have been asked, “How has uncertainty regarding your company’s outlook changed in the current month vs. prior month?” This month, one in four firms saw a rise in uncertainty, while only 8% reported a decline, “bringing the outlook uncertainty index to 17.0, well above its June reading and the highest level to date.”

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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Economic indicators Manufacturing industry Federal Reserve Bank of Dallas