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For immediate release: August 31, 2009

Declines in Texas Factory Activity Moderate; Six-Month Outlook Positive

DALLAS—Texas factory activity continued to contract at a slower pace in August, according to the Federal Reserve Bank of Dallas' Texas Manufacturing Outlook Survey.

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

While the production index dipped slightly, indexes for capacity utilization, new orders and growth rate of orders moved upward but remained negative.

The August survey echoes the broad signal from the previous five months that Texas factory output and employment is still receding but at a slower pace.

Although still negative, the business activity index improved significantly as the share of companies reporting better market conditions rose and the share reporting weaker conditions declined from July to August. The company outlook index also strengthened.

Price pressures were mixed. The index for finished goods prices remained negative, and producers receiving lower prices for their products outnumbered those receiving higher prices.

In contrast, the raw materials price index turned positive for the first time in 11 months, and producers paying higher prices for raw materials outnumbered those paying lower prices.

Most indicators of future activity remained positive and rose in August, suggesting manufacturers expect better conditions over the next six months. The future general business activity index climbed to its highest reading since May 2007.

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