Manufacturing activity in the Lone Star State continues to strengthen, and the outlook for future business appears favorable.
The Federal Reserve Bank of Dallas said in its monthly Texas Manufacturing Outlook Survey that its production index rose to 18.1 in February, from 13.8 in January. About 30 percent of the respondents indicated that production and capacity utilization had increased, and almost 40 percent reported an upsurge in the volume of new orders, the Dallas Fed said.
General business sentiment climbed to 26 from its January level of 4.7, supported by an upsurge in the number of manufacturers citing an improvement in overall business activity.
The index for raw material prices remained mostly unchanged in February, but the index for finished goods prices increased sharply. Twenty-one percent of responding manufacturers indicated rising prices for finished goods, and more than 30 percent reported expectations of further increases.
Respondents continue to express optimism in their outlook for future business activity, as the index for business activity six months from now rose to 39.4, the highest it has been since March 2005. In addition, most forward-looking indicators rose from January to February, and about half of the participants said they expected an increase in production, volume of new orders, capacity utilization, shipments, employment and capital expenditures in six months.
The indexes for production, volume of shipments, growth rate of orders and delivery time remained positive and rose slightly, the Dallas Fed said. The index for unfilled orders turned positive from zero, and readings on capacity utilization, volume of new orders, prices of finished goods, number of employees and capital expenditures increased sharply.