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Production Hits 12-Year High in Texas Manufacturing Outlook Survey for May

A International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) worker gestures at the General Motors Assembly Plant in Arlington, Texas June 9, 2015. (Photo: Reuters)

The Texas Manufacturing Outlook Survey (TMOS) surged in May to 26.8, easily beating the 23.2 consensus forecast amid sharp regional factory activity growth. The company outlook index gained 4 points to 28.0, with both readings far above their respective averages.

The production index, a key measure of statewide manufacturing conditions, rose 10 points to a 12-year high of 35.2, signaling further acceleration in output growth.

The capacity utilization index soared from 18.7 to 32.2, and the shipments index shot up by 20 points to 39.5. The growth rate fueled by demand of the orders index rose 8 points to 26.5.

While the new orders index held steady at 27.7, all three aforementioned measures reached their highest readings since 2006.

Labor market data indicate stronger-than-expected growth in employment and longer work hours in May.

The employment index rose 6 points to 23.4, its highest reading in 6 years. Twenty-nine percent (29%) of firms reported net hiring juxtaposed to 5% that cited net layoffs. The hours worked index gained 9 points to 23.2, a significant gain for this subindex.

Upward pressures on prices and wages remained strong in May.

The raw materials prices index and wages and benefits index ticked down to 44.0 and 24.3, respectively—still well above their average readings. The finished goods prices index rose to 20.5, with a quarter of firms reporting increased prices this month.

Expectations regarding future business conditions remained optimistic in May.

The indexes of future general business activity and future company outlook were largely unchanged at 30.0 and 35.2, respectively, with both readings significantly above their respective averages.

Next release: Monday, June 25

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PPD Business Staff

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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