Texas factory activity continued to expand in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, moved down from 24 to 8, suggesting slower growth in output.
Other measures of current manufacturing activity remained positive but retreated from their March levels. The capacity utilization and shipments indexes declined to readings of 10 and 8, respectively. The new orders index was positive for the sixth consecutive month, although it decreased from 14 to 4 in April. Downward movement in the indexes for current activity was largely due to a rise in the share of manufacturers reporting decreases in these indicators.
Respondents noted continued improvement in the broader economy as indexes reflecting general business conditions had positive readings for the seventh month in a row. The general business activity index was largely unchanged in April, coming in at a reading of 11. The company outlook index declined from 16 to 10, with a quarter of respondents saying their outlooks were improved from the prior month compared with 15 percent saying their outlooks had worsened.
Labor market indicators showed mixed movements in April. The employment index edged up from 12 to 13, its highest reading this year. Nineteen percent of manufacturers reported hiring new workers compared with 6 percent reporting layoffs. Hours worked were essentially flat in April after increasing for five consecutive months.
This is the second regional Fed manufacturing index to slow sharply (the first was Philly's). While this is only one month of data, this is the second index to slow in a short period of time.