Texas Manufacturing Increased for 12th Straight Months

The production index, a key measure of state manufacturing conditions, reached its highest level in four years.

The state's production index, a key measure of state manufacturing conditions, rose from 17.1 to 24.7, reaching its highest level in four years, according to a report from the Federal Reserve Bank of Texas released on April 28.

Texas factory activity increased for the 12th month in a row in April, according to business executives responding to the Texas Manufacturing Outlook Survey.

Growth came in the form of a rising new orders index which also was at a four-year high.

The capacity utilization index rose to a multi-year high as well, climbing from 13.1 to 18.7, with a third of manufacturers noting an increase.

The shipments index fell 7 points to 12.4, indicating the volume of shipments grew but at a slower pace than in March.

Perceptions of broader business conditions were markedly more optimistic in April. The general business activity index rose for a second consecutive month, increasing from 4.9 to 11.7. The company outlook index jumped nearly 15 points to a four-year high of 23.4, reflecting a sharp rise in optimism among manufacturers.

Labor market indicators reflected stronger employment growth and longer workweeks. The April employment index rose to 19.7, its highest reading in more than two years. Twenty-eight percent of firms reported net hiring compared with 8% reporting net layoffs. The hours worked index spiked from 5.3 to 13.9, indicating a sizable increase in workweek length.

Upward pressure on input prices eased somewhat in April, while pressure ticked up for selling prices and wages. The raw materials price index declined sharply from 23.1 to 10.2, reaching an 8-month low.

Meanwhile, the finished goods price index edged up to a reading of 8. Looking ahead, 36% of respondents anticipate further increases in raw materials prices over the next six months, while 25% expect higher finished goods prices.

And the future looks promising as well with the  general business activity rising 7 points to 24.5, while the index of future company outlook was largely unchanged at 26.9.

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