Texas factory output growth slows in October as production index falls to 15.8

Texas factory output grew more slowly in October, with the Dallas Fed's production index falling 14 points to 15.8, according to the Texas Manufacturing Outlook Survey. The reading is still above its series average of 9.7, which the bank said indicates a slower yet still solid pace of expansion.

What happened

The Federal Reserve Bank of Dallas released the survey on Monday. The new orders index dropped to 9.3 from 30.7 in September, the shipments index decreased 16 points to 8.4, and the capacity utilization index fell 10 points to 13.7.

Broader measures moved the other way. The general business activity index increased to 13.4 from 9.8, and the company outlook index rose seven points to 16.1.

Employment growth slowed, with the employment index at 11.6 versus 15.1, while the hours worked index increased five points to 10.1. The raw materials prices index edged up three points to 55.3, compared with a series average of 28.1, and the finished goods prices index rose to 29.9 from 27.6. The wages and benefits index fell seven points to 20.8.

The background

Each index is the percentage of respondents reporting an increase minus the percentage reporting a decrease, so a reading above zero means more firms reported growth than decline. The survey covers Texas manufacturers only. Data were collected October 13-21, and 64 of the 114 manufacturers surveyed responded.

The release included annual seasonal factor revisions, which the Dallas Fed said cause slight changes in the seasonally adjusted series.

What to watch

Manufacturers expect growth to continue: the future production index was little changed at 39.4, and the future general business activity index jumped 17 points to 38.1. The Dallas Fed's next release is scheduled for Monday, November 30.