Texas factories are flexing their muscles according to the latest monthly manufacturing survey from the Federal Reserve Bank of Dallas.
The production index for June rose from 5.5 to 15.5, its strongest showing in 15 months. The new orders index also showed a healthy gain, from -0.6 in May to 7.9 in June, "suggesting demand finally grew after staying flat since February," the bank noted.
The shipments index rose to 9.6 after two months of near-zero readings and the capacity utilization index spiked to 13.3, its highest level since early 2011.
Texas manufacturers' perceptions of the broader economy improved in June, rising to 5.8 from -5.1 in May. Managers' outlooks for their own firms also improved, from 4.7 last month to 5.5.
Labor indicators showed improvement. The employment index grew from 8.5 to 13.3. Twenty-one percent of firms reported hiring new workers, while 8% reported layoffs.
Wages rose at a slower pace, with the wages and benefits index dropping from 20 to 13.2.
Looking ahead six months, Texas manufacturers forecast softening business conditions. Their outlook for general business activity slipped from 4.3 to 1.3 and their outlook for their companies dropped to 8.4 from 11.4 in May.
The Dallas Fed's survey contrasted with the results of the Philadelphia bank's survey released June 21. The current activity index fell to -16.6 from -5.8 in May, its second consecutive negative reading. Manufacturers' reports for new orders, shipments, and average work hours were also negative, suggesting overall declines in business.
