Economy

Manufacturers in Texas and Richmond Optimistic on Future Business Conditions

October 26, 2015

The Texas manufacturing Outlook Survey released by the Federal Reserve Bank of Dallas showed manufacturing increasing in October after nine months of flat or declining output. The production index rose to 4.8 for the first growth in output for the region in 2015.

New orders continued a third month of negative reading, falling 3 points to -7.6. Capacity utilization, however, increased from 4.9 to 8.6. The index for shipments rose from 0.9 to 6.4. Inputs costs continued to decline in October along with finished product prices.

Current general business activity stayed in negative numbers, as it has all year, falling 3 point to -12.7. The company outlook index, although negative, edged up to -4.1.

Looking ahead six months, Texas manufacturers were more optimistic. The future general business activity index was steady at 4.1 and the company outlook improved to 9.8

The Federal Reserve Bank of Richmond reported manufacturing activity as soft with shipments losing 1 point to register -4 and the new order index gaining 12 points to register 0. The composite index for the Richmond area was flat at a reading of -1.

Lead times decreased from a reading of 7 to -2. Capacity utilization was at an index reading of -14. Backlogs of new orders were still negative but rose 17 points to reach -7. Inventories of finished goods and raw materials both gained four points in October. Raw material prices rose at the same pace as September while prices of finished goods declined to a -0.10 annualized rate from a 0.47 percent pace in September.

Like Texans, manufacturers in the Richmond region are expecting better conditions in the next six months. Steady growth in shipments and in the volume of new orders is expected. Survey participants anticipate higher input and finished goods prices in the coming months.