Texas Factory Activity Contracts in August
Factory activity in Texas continued to contract in August as production weakened and firms remained cautious about the future, according to the latest Texas Manufacturing Outlook Survey.
General Business Activity Index
The index for general business activity in August showed some improvement compared to the previous month but remained negative, standing at -17.2 (compared to -20.0 in July). The survey, conducted by the Dallas Fed, reveals that any level below zero indicates a contraction in the industry.
Decline in Production Index
The production index experienced a sharp decline to -11.2, indicating the steepest drop in output since May 2020.
Components of the Index
Among the components of the index, several worsened in August. Capacity utilization, shipments, and capital spending all experienced declines. Although new orders slightly increased compared to July, they remained negative.
Employment Indicators
Employment indicators suggest a cooling of the Texas labor market in August. The employment index fell below the long-term average at 4.3, and hours worked turned negative at -3.8. However, the wages and benefits index rose above the long-term average.
Uncertainty Ahead
Texas firms remain uncertain about future activity, with the outlook index rising at the slowest rate in over two years, according to the Dallas Fed.
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