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For immediate release: April 26, 2010

Texas Manufacturing Activity Continues to Strengthen

DALLAS—Texas factory activity increased for the sixth month in a row in April, 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.

The production index—a key indicator of state manufacturing conditions—climbed further into positive territory as more producers reported increased activity.

Other indicators of current factory activity also pointed to strong growth. The indexes for capacity utilization, new orders and shipments showed marked increases. The growth rate of orders index jumped to its highest level since June 2006.

The business activity index increased sharply, with the share of manufacturers reporting improvement rising from 23 percent in March to 34 percent in April. The company outlook index also rose steeply, reaching its highest level in four years.

Labor market conditions in the region’s manufacturing sector continued to improve in April. The employment index signaled further job growth, with the share of firms hiring workers rising to 22 percent.

Upward pressure on raw materials prices persisted, with 44 percent of manufacturers reporting rising input costs. The share of respondents noting higher finished goods prices increased.

Expectations of future price increases rose in April after abating in March. More than half of respondents anticipate further increases in raw materials prices over the next six months, while 26 percent expect higher finished goods prices.

Firms remain optimistic about their six-month outlook. The indexes for future production, capacity utilization and new orders stayed strongly positive in April. The future business activity index and six-month company outlook index rose after edging downward in recent months.

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