The Dallas Fed's latest monthly survey of regional manufacturing activity is out.
The headline index surged to 7.4 from last month's 2.2 reading, easily surpassing expectations of a smaller advance to 3.2.
The gains were led by the shipments sub-index, which jumped to 10.6 from 2.4 last month. The new orders sub-index rose to 8.7 from 2.8, finished goods inventories increased to 9.9 from 4.2, and wages and benefits increased to 18.5 from 12.9.
Unfilled orders continued to contract, falling to -5.6 from -3.5 last month.
Below is the full text from the release:
Texas factory activity increased in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 6.2 to 9.9, indicating a slightly faster pace of output growth. The share of manufacturers noting a decrease in production fell to its lowest level in two years.
Other survey measures also suggested a pickup in manufacturing activity, with the new orders and shipments indexes moving up strongly in March after dipping in February. The new orders index came in at 8.7, up from 2.8, and theshipments index rose 8 points to 10.6. The capacity utilization index held steady at 5.5, posting its fourth consecutive positive reading.
Perceptions of broader business conditions improved in March. The general business activity index rose from 2.2 to 7.4, reaching its highest level in a year. The company outlook index moved up from 6.3 to 9.6.
Labor market indicators remained mixed. The employment index has been in positive territory so far in 2013 and edged up to 2.6 in March. Sixteen percent of firms reported hiring new workers compared with 14 percent reporting layoffs. Thehours worked index remained slightly negative but ticked up to from –3 to –2.4.
Upward pressure on prices and wages increased slightly in March. The raw materials price index rose to 19.1, up from 15.8 in February. The finished goods price index increased from 4.6 to 7.2, suggesting selling prices rose at a stronger pace in March. The wages and benefits index increased from 12.9 to 18.5, although the great majority of manufacturers continued to note no change in compensation costs. Looking ahead, 44 percent of respondents anticipate further increases in raw materials prices over the next six months, while 27 percent expect higher finished goods prices.
Expectations regarding future business conditions increased in March. The indexes of future general business activity and future company outlook reached their highest levels in five months, coming in at 15.5 and 21.6, respectively. Indexes for future manufacturing activity also rose this month.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected March 12–20, and 92 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.
Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.
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