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For immediate release: January 25, 2010

Dallas Fed: Texas Manufacturing Activity Continues to Expand

DALLASTexas factory activity continued to expand in January, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.

The production index, a key indicator of the state’s manufacturing conditions, climbed further into positive territory as more producers reported either increased or unchanged activity from December.

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

The production barometer has signaled increases in factory activity in the past three months, suggesting a recovery is underway in the state’s manufacturing industry.

The new orders index posted a large improvement as the share of respondents noting increases in orders rose from 25.6 percent to 34.9 percent. Indexes for shipments, growth rate of orders and capacity utilization also strengthened.

The business activity and company outlook indexes continued to improve in January, reaching their highest levels since mid–2007.

January’s survey found continued upward pressure on raw materials prices. The downward price pressures on finished goods that had been present throughout 2009 subsided in January, with the index coming in close to zero.

Expectations of future price increases also rose. The future raw materials price index increased again in January, with 57.3 percent of firms foreseeing further increases in prices six months from now and the rest expecting no change.

Firms continue to be optimistic about their six–month outlook. The indexes for future production, capacity utilization, new orders and shipments strengthened further in January. The future company outlook and business activity indexes remained positive.

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