Texas manufacturing activity unexpectedly slowed in October, with the
general business activity index falling 6.6 points to minus 5.1, well
below the consensus forecast of 1.2. The production index managed to
remain in expansion territory, falling 9.4 points to 4.5, but orders
dove into contraction for the first time in three years, with new orders
falling 11.3 points to minus 4.2, unfilled orders down 7.4 points to
minus 9.4, and the growth rate of orders down 10.3 points to minus 5.9.
Shipments fell 8.7 points to 6.0, while capacity utilization
retreated 9.4 points to 3.6, a three-year low. Delivery times fell 6.5
points to minus 4.2.
Employment, which rose sharply in the
previous month, retreated with a 7.8 point decline to 11.0, while hours
worked fell 1 point to 4.7.
On the inflation front, growth of
input costs and output prices increased, with the index for prices paid
for raw materials rising 2.5 points to 22.8, a 10-month high, while
prices received for finished goods rose 3.8 points to 4.8. The wages and
benefits index rose 4.8 points to 22.2.
One bright note for the current conditions part of the survey was a rise of 2.5 points in capital expenditures to 13.6.
But
despite the general decline seen in current conditions, expectations
regarding future business conditions were more optimistic in October.
The index of future general business activity returned to positive
territory, rising 9.2 points to 2.4. The index of future company outlook
rose 12.9 points to 15.3, its highest level in six months.
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