The ongoing rebound in Texas factory activity extended into its eighth month in February, having now set deep enough roots to consistently boost hiring activity and expectations, according to a report Monday from the Federal Reserve Bank of Dallas.
The state production index, a key measure of manufacturing health in Texas, increased to a reading of 16.7 in February from 11.9 the prior month, according to the monthly Texas Manufacturing Outlook Survey.
The greater, positive figure indicated that activity increased at a faster rate this month than in January.
The production index tracks closely with the overall Texas economy, so it provides one of the most current glimpses of broader economic conditions across the state.
The sustained production increases, a fourth consecutive month of rising orders and a general sense of optimism about a business conditions — partly due to the business-friendly atmosphere in the White House and Congress — helped prompt more hiring in February, the report noted.
The survey’s employment index suggested payroll expansion for the second consecutive month, the first time that has happened since the end of 2015, the Dallas Fed noted.
Factory managers also indicated a greater likelihood of increased hiring in the next six to 12 months, according to a supplementary set of questions in the survey. The share of responding manufacturers who said they expect to increase employment in that time rose to 57.1 percent in February from 41.6 percent the same time last year.
However, two-thirds of the factory managers said they continue to have problems finding qualified workers, roughly the same ratio as 12 months ago. About six of 10 manufacturers said they’d intensified their recruiting efforts, according to the Dallas Fed report, while similar number said they’d increased wages or benefits in an effort to land qualified workers.
“The ability to find qualified labor for manufacturing jobs has become nearly impossible,” a fabricated metal products manufacturer said in anonymous comments compiled by the Dallas Fed. “Even with increases in starting wages (30 percent in the last two years) applicants are less qualified and less able to work a consistent 40-hour week.”
Almost three-quarters said applicants lack the hard, technical skills needed for manufacturing jobs today. Fewer than half said applicants lacked “soft” skills.
“We have taken on many new hires that we plan on training, but 80 percent are released after attendance problems or found out the past history on employment form was exaggerated as to skill level,” said a paper manufacturer.
In kicking off its annual State of Manufacturing tour last week in Round Rock, the National Association of Manufacturers noted the rising technical requirements for factory occupations. The organization hopes to reframe the popular perception of manufacturing jobs, and its leaders stressed the need for stronger career and technical education programs nationwide.