Factory activity in the Lone Star State expanded in October, the second month of growth for the index following four months in contraction territory.
The Federal Reserve Bank of Dallas said its production index, based on a monthly survey of Texas business executives, registered 5.2 in October, down slightly from 7.9 in September.
The Dallas Fed said this signals a “modest” pace of output growth.
Despite the increase in output, Texas business executives remain gloomy about the economy. The index of general business activity fell to negative 19.2 from 18.1 in September.
The new orders index fell to negative 8.8 from negative 5.2 a month earlier. The shipments index edged down a bit further into negative territory.
The inflation measures showed easing. The prices received index actually turned negative, indicating falling selling prices, dropping to its lowest level in two years. The index of costs of materials remained in positive territory but dropped below its longterm average.
Expectations were mixed. The future production index remained positive and pushed up nine points to 20.0. The future general business activity index climbed 10 points but remained negative at -6.8.
“With the unrest in the Middle East, there is now additional global uncertainty and about how it will impact the U.S. and overall global economy. There is limited optimism; we will see a very slow recovery in the first quarter depending on the global impacts of additional conflict,” one executive in chemical manufacturing told the Fed.
