According to data released by the Federal Reserve Bank of Dallas, manufacturing activity in Texas slowed down in June, despite an increase in general business activity from May. The index for general business activity of the Texas Manufacturing Outlook Survey rose to minus 23.2, up from May’s record low of minus 29.1, yet still indicating contraction.
The production index, which serves as a major barometer for manufacturing performance in the state, decreased to minus 4.2, showing a contraction in output. Overall, the Dallas Fed’s measure of manufacturing output has remained negative since May 2022.
Although the index increased this month, it marks the 14th straight month of contraction. Factors contributing to this trend include weakened employment and production levels.
Manufacturing Industry Shows Resilience in June 2021
The manufacturing industry continued to show resilience in June 2021, with new orders holding steady in negative territory for over a year. However, there was a slight decline from minus 16.1 in the previous month to minus 16.6. Moreover, the growth rate for new orders fell significantly to minus 23.7 from May’s minus 20.7, which was the lowest value seen since mid-2020.
The employment index decreased by seven points to 2.2, reflecting weaker employment growth and work hours drop. About 17% of firms reported net hiring, while 15% noted laying off of employees.
On the other hand, inflationary pressures eased in June, as wages and benefits remained steady at 25.3, while raw-materials prices fell by 12 points to 1.4, indicating no significant changes in input costs from May.
Manufacturers’ expectations of the short-term outlook remained mixed in June. The future general business activity index remained negative but rose from minus 12.7 to minus 4.5. At the same time, the future production index increased by 12 points to 24.2.
The Dallas Fed’s manufacturing survey portrays that despite the challenging times, the manufacturing industry has shown resiliency and strength amidst these trying times.