The ongoing expansion of manufacturing activity in Texas cooled off slightly this month, but not enough to dampen manufacturers’ optimistic outlooks for business conditions, according to a survey released Monday by the Federal Reserve Bank of Dallas.
The state production index, a key measure of conditions in the sector, dipped to 7.3 in August from 11.4 in July, according to the Dallas Fed’s monthly Texas Manufacturing Outlook Survey.
The lower, positive figure suggests that manufacturing activity continues to accelerate, but at a slower pace.
The production index tends to track closely with the broader Texas economy, and as such provides one of the earliest indications of economic conditions across the state.
Other measures of manufacturing activity reflected the slower pace of overall production growth, the survey noted. The new orders index in August was half of the July measure, but remained in positive territory. The growth of shipments continued, but it slowed as well.
On the labor side, two measures of manufacturing employment moved in sharply different directions during August. The employment index nudged up to 11.2 from 9.3 in July, hitting its highest point in a year and suggesting that manufacturers hired at a faster pace during August.
However, the gauge of the hours worked plummeted to its lowest reading in almost four years — falling to -9.9 in July from 1.3 the prior month. The negative reading suggests that manufacturers had reduced the number of hours worked.
Still, measures that track manufacturers’ overall outlook on business conditions remained optimistic, both for current business and for conditions six months out, the report said. Anonymous comments compiled by the Dallas Fed noted some continuing concerns about federal regulations, but took a generally positive tone.
“Our industry and company have not had more than two sequential quarters of growth since 2009,” said one computer and electronics manufacturer. “We remain hopeful that the fourth quarter will break that trend, as early evidence shows that it might happen. There are still signs that things can weaken, so we are remaining cautious but hopeful.”