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For immediate release: February 22, 2010

Dallas Fed: Texas Manufacturing Activity Expands Slowly in February

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

The production index—a key indicator of state manufacturing conditions—edged downward from its January reading but remained positive, suggesting slower growth in output.

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

Several indicators of current factory activity turned negative in February, reversing recent months’ improvements. The new orders index fell as the share of respondents reporting decreases more than tripled from January. With new orders falling, indexes for shipments and growth rate of orders also retreated, turning slightly negative.

The business activity and company outlook indexes slid below zero due to an increase in the share of manufacturers reporting deteriorating conditions.

Upward pressure on raw materials prices continued in February, with 41 percent of producers reporting rising input costs. The finished goods price index remained close to zero, suggesting minimal pressures on selling prices.

Expectations of upward price pressures over the next six months moderated in February as both the future raw materials price and the future finished goods price indexes edged downward.

Forty-seven percent of executives expect increases in production, capacity utilization and growth rate of orders six months from now, while one third report an improved six–month company outlook.

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