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For immediate release: May 29, 2007

Texas Manufacturing Continues to Expand, Survey Finds

DALLAS—Texas factory activity continued to expand in May at about the same pace reported in April, according to the Federal Reserve Bank of Dallas' Texas Manufacturing Outlook Survey.

Indexes for production, volume of new orders, volume of shipments and company outlook in May were little changed from the April survey.

However, the index for general business activity improved for the second consecutive month.  Index values were also higher for growth rates of orders, unfilled orders and number of employees. 

In contrast, the index for capacity utilization drifted lower, falling from 25.2 in April to 19.2, with 30 percent of firms reporting an increase and 10 percent a decrease.

Survey results continue to suggest upward price pressures. The raw materials price index edged up from 39.1 to 40.8 in May, with 44 percent of the manufacturers reporting an increase and 3 percent a decrease.  The finished goods price index rose from 15.6 to 20.

"The survey indicates Texas factories are doing quite well," said Dallas Fed economist Fiona Sigalla.  "The indicator for new orders is positive, suggesting that expansion in manufacturing will continue.  While there are price increases for raw materials, not all manufacturers are passing on those higher prices to consumers."

Forty-seven percent of responding firms expect higher raw materials prices in the future, while 34 percent said they believe finished goods prices will increase six months from now.

Sentiment on future business activity remained optimistic.

The Dallas Fed conducts the survey monthly to obtain a timely assessment of the state's factory activity.  One hundred twenty-five leading manufacturers responded to the May survey.

Texas produces more than 8 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.

For additional perspective on the Texas Manufacturing Outlook Survey, visit


Media contact:
James Hoard
Phone: (214) 922-5307