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For immediate release: December 26, 2006

Texas Manufacturing Activity Declines in December

DALLAS—Manufacturing activity in Texas contracted in December; however, manufacturers continue to be optimistic about future business activity, according to the Federal Reserve Bank of Dallas' Texas Manufacturing Outlook Survey.

The survey's production index was –5.2, compared with 8.5 in November. Readings above zero denote expansion, while negative levels indicate contraction.

Most indexes fell to negative, including capacity utilization, volume of new orders and shipments.

"The slowdown in activity is not unexpected," said Dallas Fed economist Fiona Sigalla. "Business leaders have been reporting reduced demand for construction-related materials and some high-tech products. Still, the large majority of business leaders expect increases in future activity, suggesting this decline is a pause rather than a downturn."

The survey found that almost two-thirds of responding firms expect increases in production in the volume of new orders six months from now.

The Dallas Fed conducts the survey monthly to obtain a timely assessment of the state's factory activity.

Last year, Texas produced almost 9 percent of the total manufactured goods in the United States. Texas ranks second behind California in factory production and first as an exporter of manufactured products.

The Dallas Fed's Texas Manufacturing Outlook Survey can be found at


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