LATEST:The Dallas Fed’s September report on manufacturing activity is out.
The headline index jumped to 12.8 in September from August’s 5.0 reading. Economists expected a smaller advance to 5.5.
Below is the full text from the release:
Texas Manufacturing Activity Picks Up
Texas factory activity expanded in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 7.3 to 11.5, suggesting output increased at a slightly faster pace than in August.
Other measures of current manufacturing activity indicated continued growth in September. The capacity utilization index rose 6 points to a reading of 10.7. The new orders index was 5, largely unchanged from its August level. The shipments index edged down from 11.4 to 10.3.
Perceptions of broader business conditions improved further in September. The general business activity index jumped nearly 8 points to 12.8, its highest reading in a year and a half. The company outlook index posted a fourth consecutive positive reading and came in at 7.9, little changed from August.
Labour market indicators reflected continued employment growth but flat workweeks. The September employment index was 10, its third reading in a row in solidly positive territory. Seventeen per cent of firms reported hiring new workers compared with 7 per cent reporting layoffs. The hours worked index was near zero, indicating little change from August in average workweek length.
Upward pressure on prices picked up in September, while wage pressure abated. The raw materials price index increased from 10 to 17.6, posting its highest reading in six months. The finished goods price index also rose notably — from 4 to 10.6 — reaching a 19-month high. The wages and benefits index was positive but moved down to 9.7, its lowest level since early 2011. Looking ahead, 38 per cent of respondents anticipate further increases in raw materials prices over the next six months, while 27 per cent expect higher finished goods prices.
Expectations regarding future business conditions remained optimistic in September. The indexes of future general business activity and future company outlook showed mixed movements but remained in strongly positive territory. Indexes for future manufacturing activity also remained solidly positive, and the index for future employment spiked 10 points to 21.9.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected Sep. 17 — 25, and 90 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: October 28, 2013