Dallas Fed Texas Manufacturing Outlook Survey Gains Steam in August

Production Index Hits the Highest Level in Nearly a Year

The Dallas Federal Reserve Texas Manufacturing Outlook Survey picked up steam in August, with the key production index hitting the highest level in nearly a year.

The production index — a key measure of state manufacturing conditions — surged 9 points to 17.9, its highest reading in nearly a year.

The general business activity index — which gauges perceptions of broader business conditions — improved 9 points to 2.7 and headed into positive territory for the first time in 4 months.

The company outlook index rose to 5.0 after 3 months of negative readings. However, the index measuring uncertainty regarding companies’ outlooks rose 9 points to 18.6, a reading well above average.

The employment index remained positive but fell 11 points to 5.5, a level closer to average and suggesting slower growth in hours worked. Eighteen percent (18%) of firms reported net hiring, while 12% net layoffs.

The hours worked index ticked down to 4.0. Yet, the wages and benefits index rose 7 points to 27.3, a solid and higher than average level.

The Texas Manufacturing Outlook Survey is the second dataset on Monday to suggest a pickup in growth in the sector. While the factory industry boomed in 2018, it slowed somewhat in the beginning of 2019.

The U.S. Census Bureau reported new orders for manufactured durable goods rose $5.0 billion or 2.1% to $250.4 billion in July, beating forecasts. Durable goods orders are now up for two consecutive months after a 1.8% gain in June.