DALLAS — Texas manufacturing activity remained soft in February; however, there were signs of optimism, according to the Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey.
Current indicators for production and capacity utilization remained positive but were slightly lower than last month. The volume of new orders index deteriorated slightly, but the volume of shipments index was virtually unchanged.
However, the capital expenditures index rebounded from negative to positive territory in February. The company outlook index improved slightly. Most indexes for activity six months from now were up, suggesting expectations of improvement.
Respondents remain pessimistic about general business conditions, pushing the index down from -20.7 to -21.4, according to the survey.
Price pressures on raw materials intensified. Nearly half of responding producers reported increases in raw materials prices.
More than half of responding business leaders expect raw materials prices to increase in the next six months. The finished goods price index continued to rise as well, but fewer firms are seeing finished goods prices rise than raw materials prices.
Texas produces more than 8 percent of the total manufactured goods in the United States, ranking second behind California in factory production.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state's factory activity.
The February survey can be found at: http://dallasfed.org/data/outlook/2008/tmos0802.html