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For immediate release: June 30, 2008

Manufacturing Activity in Texas Weakens, According to Dallas Fed Survey

DALLAS—Texas manufacturing activity weakened in June, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.

However, more than a third of manufacturers responding to the survey expect increases in production and volume of new orders six months from now.

Texas produces more than 8 percent of the total manufactured goods in the United States, ranking second behind California in factory production.

Indexes for production and volume of shipments dropped to zero, and some respondents noted that uncertainty in the national economy and rising energy costs were weighing on demand.

Indicators for capacity utilization, volume of new orders, material inventories and finished good inventories fell into negative territory, with more respondents reporting weaker readings than in May.

Expectations for manufacturing activity remained positive. The indexes for future production, capacity utilization and volume of shipments improved slightly, with a larger share of respondents than in May expecting increases in these measures six months from now.

Sentiment on general business activity remained pessimistic. Thirty-four percent of respondents said the economy had worsened since last month, pushing the index down from –10.3 in May to –24.1 in June. The company outlook also weakened, dropping from 4.6 in May to –16.7 in June.

Price pressures on raw materials intensified. Seventy-five percent of producers reported increases in raw materials prices in June, compared with 69 percent in May. The number of respondents noting increases in finished goods prices remained flat.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity.


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