• General business activity at a four-month high and company outlook up but at a lesser extent.

• Production declines slightly, still suggesting above-average output growth.

• New orders growth holds steady, albeit at an above-average level.

• Current employment at a one-year low but still at an elevated level; future employment down slightly.

• Price received at a four-month high and price paid at a three-month high; both near record levels.

Manufacturing activity in Texas continued to improve in February, according to the Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas. The overall measure, the general business activity index, jumped to 14.0 in February, up from 2.0 in January and 7.8 in December. The February reading was the highest since October but below 18.2 last February. A higher 22.3% of respondents reported improved business activity in February, up from 20.8% in January. A lessened 8.3% of respondents reported a worsening of business conditions, down from 18.8%. The company outlook index rebounded to 6.4 this month from 2.2 in January. Data were collected from 96 Texas manufacturers between February 15 and 23.

The production index, a key measure of state manufacturing conditions, eased to 14.5 in February from 16.6 in January, still indicating above-average output growth. The new orders index improved to 23.1 from 20.0 and the growth rate of orders index was unchanged at 12.6; both readings were significantly above average. The shipments index recovered to 23.5, a three-month high, from 8.6. The capacity utilization index slipped to 11.5 from 12.0 and the unfilled orders index dropped to 7.7 from 13.8; both readings were at their lowest levels since January 2021. The delivery times index rose to 21.4 from 17.9, suggesting slower delivery speeds.

The employment index declined to 18.4 in February from 27.7 in January, registering the lowest level since last February but still at an elevated level. Twenty-seven percent of firms reported more hiring this month while 8.6% reported net layoffs. The hours worked index fell to 19.0, the lowest level since October, from 21.3. The wages & benefits index declined to 44.0 from 49.6, still well above its average reading of 19.8, as 44.0% of respondents paid higher wages.

The index for prices received for finished goods rose to 44.6 in February, the highest level since October, from 37.1 in January. The February reading reflected a higher 50.2% of respondents reporting price rises while an increased 5.6% reported price declines. The index of prices paid for raw materials advanced to 73.4 from 62.1, near November’s record high of 83.3.

The future general business activity index increased to 20.6 in February from 16.5 in January. Other measures of future manufacturing activity showed mixed movements, still remaining in positive territory. Expected wages & benefits, production, shipments and growth rate of orders rose in February, to 74.3, 42.1, 39.2 and 27.1, respectively. In contrast, expected employment and delivery times declined to 45.2 and 3.6, respectively.

Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report rising activity, an index will register 100. An index will register -100 when all firms report a decrease. An index will be zero when the number of firms reporting an increase equals the number reporting a decrease. Data for the Texas Manufacturing Outlook can be found in Haver's SURVEYS database.