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For immediate release: July 30, 2007

Texas Manufacturing Activity Slows In July, Survey Finds

DALLAS—Texas factory activity weakened in July, according to the Federal Reserve Bank of Dallas' Texas Manufacturing Outlook Survey, however, the six-month outlook remains optimistic.

Indexes for production, capacity utilization, volume of new orders, growth rate of orders, volume of shipments and average employee workweek turned negative in July.

The general business activity index dropped from 10.8 in June to –3.6 in July. Firms reporting worsening conditions increased from 12.6 percent in June to 16.2 percent in July, and a smaller share of respondents said general business activity had improved.

Expectations for future manufacturing activity remain positive, according to the survey. Indexes for future capacity utilization, growth rate of orders and volume of shipments improved slightly, with a larger share of respondents expecting an increase in these measures six months from now.

Additionally, more than 50 percent of reporting firms anticipate a pickup in production and volume of orders.

"The index indicates some slowing in activity," said Dallas Fed economist Laila Assanie. "Comments from manufacturers suggest this is driven in part by slowing demand from homebuilders."

Survey results also suggest continued price and wage pressures. The raw materials price index was mostly unchanged from June levels. The index for prices received moved slightly higher. The index for wages also drifted up in July.

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

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.


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James Hoard
Phone: (214) 922-5307