Texas Factory Activity Surges in February Despite the Cold Weather -- Dallas Fed

Manufacturing activity in Texas continued to grow in February even though the severe winter storm disrupted the economy, keeping many businesses shut.

The production index of the Texas Manufacturing Outlook Survey, a key measure of state manufacturing conditions, came in at 19.9 in February, up from 4.6 in January and indicative of a sharp acceleration in output growth.

In the survey, researchers at the Federal Reserve in Dallas ask Texas executives about a range of conditions in the industrial sector. They are asked whether certain parameters such as output, employment or orders increased, decreased or remained unchanged over the previous month.

February's reading signals that factory activity expanded for the ninth consecutive month at a much quicker pace than that of January.

In line with the production index, the index for general business activity rose to 17.2 in February from 7.0 the previous month. The reading beats forecasts from economists polled by The Wall Street Journal, who expected it to come in at 5.0.

Other measures of manufacturing activity also point to more rapid growth in February, the Dallas Fed said.

The new orders index rose seven points to 13.0, and the growth rate of orders index climbed six points to 11.6.

The capacity utilization index increased to 16.5, while the shipments index edged up three points to 16.1

Labor market measures indicated robust but slightly slower growth in employment and work hours. The employment index fell to 12.7 from 16.6 the prior month, with 21% of firms noted net hiring while 8% noted net layoffs. The hours worked index inched down to 11.3.

The raw materials prices paid index edged up to a 10-year high of 57.4 amid widespread reports of supply-chain disruptions driving up costs. The finished goods prices index climbed nine points to 23.0.

Expectations regarding future activity remained positive among the respondents in February, although some indexes weakened from their January readings.

The future company outlook index increased to 32.3 in February from 27.7 in January, while the future general business activity index rose to 33.9 from 29.6 the prior month. The future production index, however, moved down to 40.2 from 43.7 in January.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

  (END) Dow Jones Newswires
  02-22-21 1113ET
  Copyright (c) 2021 Dow Jones & Company, Inc.

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