The headline index from the Dallas Fed’s monthly survey of regional manufacturing activity rose to 4.9 from February’s 0.3 reading. Economists expected the index to rise to 3.0.
The table at right breaks down changes in various components of the report (click to enlarge).
Below is the full text of the release.
Texas Manufacturing Strengthens Further
Texas factory activity increased for the eleventh month in a row in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 10.8 to 17.1, indicating output grew at a stronger pace than in February.
Other measures of current manufacturing activity also reflected more robust growth. The new orders index rose to a nine-month high of 14.7, with nearly a third of manufacturers noting an increase in demand and less than a fifth noting a decrease. The shipments index rose from 13.3 to 19.5, posting its strongest reading in nearly four years. The capacity utilization index rose as well, climbing four points to 13.1.
Perceptions of broader business conditions were more optimistic in March. The general business activity index moved up to a six-month high of 4.9 after slipping to zero last month. The company outlook index also rebounded, rising six points to 9.1 after falling sharply in February.
Labour market indicators reflected stronger employment growth and longer workweeks. The March employment index rose markedly to a 21-month high of 15. Nearly a quarter of firms reported net hiring compared with 9 per cent reporting net layoffs. The hours worked index fell from 12 to 5.3 but remained positive for the third month in a row.
Upward pressure on prices and wages continued in March. The raw materials price index edged up to 23.1, staying well above the level seen for most of 2013. The finished goods price index edged back to single digits, coming in at 7.3. Looking ahead, 38 per cent of respondents anticipate further increases in raw materials prices over the next six months, while 33 per cent expect higher finished goods prices. The wages and benefits index remained elevated but fell from 25.8 to 20.8, suggesting compensation costs increased but at a slightly weaker pace than in February.
Expectations regarding future business conditions remained optimistic in March. The index of future general business activity edged up to 17.6, and the index of future company outlook rose 7 points to 27.4. Indexes for future manufacturing activity showed mixed movements but remained in solidly positive territory.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected March 18 — 26, and 100 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.
Next release: April 28, 2014
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