Texas manufacturing activity bounced back in December, according to the Federal Reserve Bank of Dallas.
On Tuesday, the Dallas Fed published results from its monthly Texas Manufacturing Outlook Survey that showed the production index gained nearly nine points, to 9.7, suggesting an increase in output growth. The report is based on data collected between Dec. 13–21 and responses from 90 manufacturing business executives.
Other December indicators showed mixed results.
The new orders index improved slightly from -20.9 to -9.2, but still marking its seventh consecutive negative month. This reading indicates a continued decrease in demand. The growth rate of orders index came in at -9.3, up 11 points from November.
Two other measures turned positive during the same period.
The capacity utilization index, which measures output, rose from -3.4 to 8.5. And after two months of negative readings, the shipments index gained nine points to 1.9.
The general business activity index slid to -18.8 from -14.4 last month. The company outlook index at -12.8 gained two points, but it maintained its tenth straight month of negative readings. And the outlook uncertainty index pulled back five points to 15.6.
Texas’s labor market measures showed stronger employment growth. The employment index gained eight points, to 14, a reading that is well above the series average of 7.9. Nearly one in four businesses reported net hiring activity, while 10 percent reported net layoffs. The hours worked index was up eight points, to 7.2.
“Business has picked up from a lull in October/November,” commented an unnamed food manufacturing company that participated in the survey. “We’re expecting a strong first quarter in 2023.”
Last month, the state added a record 33,600 nonfarm jobs, according to a press release earlier this month. Texas also reported an annual job growth rate of 5.1 percent year over year.
“Businesses continue to grow jobs in Texas thanks to the strength of the Texas economy, the diversity of industries investing here, and the best workforce in America,” Republican Gov. Greg Abbott said in the release.
There was little movement in price and wage indexes.
For the second month, the raw materials prices index was mostly stable at 23.7, and the finished goods prices index was down slightly from last month to December at 12.5.
There was a slight downturn in the wages and benefits index, from 36.5 to 35.
Future expectations in manufacturing activity were also mixed.
The future production index remained positive at 10.2. Meanwhile, the future general business activity index pushed up nine points but remained negative at -8.3.
“I think we are experiencing a year-end lull in business activity,” a machinery manufacturing company wrote on the survey. “We actually have no idea what to expect for 2023.”