Texas manufacturing holds steady, outlook improves ...

The Federal Reserve Bank of Dallas released its Texas Manufacturing Outlook Survey for December on Monday. Here's the gist of their statement:

Texas factory activity was flat in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key indicator of state manufacturing conditions, came in close to zero in December, suggesting output held steady after growing in November for the first time since July 2008.

All indexes for future activity strengthened substantially in December, suggesting a more upbeat six-month outlook. The majority of respondents expect increases in production, new orders and shipments in the next six months. The future business activity index climbed to its highest level in nearly three years, and 41 percent of responding executives reported an improved six-month company outlook.

Other broad indicators of current factory activity — including capacity utilization, shipments, new orders and growth rate of orders — remained positive and pointed to continued growth.

The business activity and company outlook indexes were positive for the second consecutive month in December, with manufacturers seeing better business conditions outnumbering those experiencing continued weakness.

The employment index remained negative but posted a big improvement as the share of respondents reporting layoffs fell from 27.3 percent in November to 17.9 percent in December.

Current capital investment continued to decline, but the future capital expenditures index climbed into positive territory. Twenty-three percent of manufacturers — the highest share since September 2008 — said they expected increases in capital expenditures six months from now.

Downward pressures on finished goods prices remained, but the number of companies reporting declines in selling prices outpaced those seeing increases by the slimmest margin since October 2008. The raw materials price index was positive and rose, indicating producers were still seeing rising input costs. The future raw materials price index rose to its highest level since July 2008 — when energy prices were at their peak.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected Dec.15–22, and 93 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.

-- Joe Rutland