Texas Manufacturing Growth
Dallas Fed Survey Shows Texas Manufacturing Output Accelerated in July with Rising Orders and Optimism
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Key Points
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New orders index increased to 6.4 in July from 2.3 in June, while the shipments index remained solid at 8.8 and the capacity utilization index was 5.9, indicating stronger demand alongside steady production.
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The company outlook index jumped 11 points to 13.4, with the general business activity index at 1.3, and forward-looking gauges remaining upbeat: future production at 34.6 and future general business activity at 26.5.
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Labor cost pressures persisted, with the wages and benefits index rising to 30.8, while finished goods prices fell 3 points to 25.6 and raw materials prices were essentially unchanged at 41.3.
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Dallas Fed data show the Texas manufacturing index rising to 1.3 in July, marking a move into positive territory for the first time since May and signaling a cautious expansion in the regional factory activity.
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The July survey drew responses from 64 of the 110 Texas manufacturers contacted, providing a sample that informs the regional read on manufacturing activity for the month.
Texas manufacturing picked up speed in July, with the production index climbing to 10.1 and new orders jumping to 6.4 from 2.3 in June, according to Fort Worth Inc. The broader general business activity index moved to 1.3 — back in positive territory for the first time since May — signaling a cautious but real expansion in the state's factory sector.
Company outlooks surged by 11 points to 13.4, and forward-looking gauges pointed to continued growth, with future production at 34.6 and future general business activity at 26.5, Morningstar reported.
New Orders and Shipments Drive July Momentum
Demand strengthened notably in July. New orders rose to 6.4 from just 2.3 in June, while the shipments index held solid at 8.8, according to Fort Worth Inc. Capacity utilization came in at 5.9, showing factories were running at a higher rate to keep up with rising demand.
The production index reading of 10.1 is a key measure of state manufacturing output. A positive number means more companies reported higher output than lower. That broad-based pickup across orders, shipments, and production suggests Texas factories are on firmer footing heading into late summer, Market Screener noted.
Business Confidence Jumps to Strongest Level in Months
Manufacturer optimism took a sharp turn upward. The company outlook index surged 11 points to 13.4 in July, Morningstar reported. That is one of the biggest single-month gains in recent surveys and points to growing confidence that conditions will keep improving.
Future-looking gauges backed that up. The future production index stood at 34.6, and future general business activity hit 26.5. Both readings suggest firms expect output and conditions to expand significantly over the next six months, according to Market Screener.
Wages Keep Rising Even as Goods Prices Cool
Labor costs remained a pressure point for Texas manufacturers. The wages and benefits index rose to 30.8 in July, meaning a large share of firms reported higher pay costs, according to Fort Worth Inc. That trend has persisted for months and shows no sign of easing.
On the price side, the picture was more mixed. Finished goods prices fell 3 points to 25.6, offering some relief for buyers. But raw materials prices stayed elevated at 41.3 — essentially unchanged from June — meaning input costs stayed high even as selling prices softened slightly, Morningstar reported.
Survey Scope and What the Numbers Actually Mean
The Dallas Fed contacted 110 Texas manufacturers for the July survey. Sixty-four responded. Their answers form the basis of all the index readings. Each index is built by subtracting the share of firms reporting a decrease from the share reporting an increase. A positive number means growth is more common than contraction.
The move back above zero in the general business activity index — to 1.3 — matters because it snaps a two-month run below zero, according to Fort Worth Inc. It is a small gain, but it aligns with other regional Fed surveys showing factory activity stabilizing across the country after a choppy spring.
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