Texas factory activity declined again in May, though at a slower pace than in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained negative but improved from -55.6 to -28.0, suggesting the contraction in output has eased somewhat since last month.
Other measures of manufacturing activity pointed to a less-severe decline in May. The new orders index advanced 38 points to -30.6, its highest reading in three months, with more than 20 percent of manufacturers noting an increase in orders. Similarly, the growth rate of orders index pushed up more than 30 points to -30.8. The capacity utilization and shipments indexes also remained negative at -26.0 and -25.7, respectively, but were up from March and April.
Perceptions of broader business conditions remained negative but were somewhat less pessimistic in May. The general business activity index moved up from -74.0 to -49.2. Similarly, the company outlook index moved up nearly 30 points to -34.6, though only 12 percent of manufacturers noted improved outlooks. The index measuring uncertainty regarding companies’ outlooks retreated notably to 28.3, though the positive reading still indicates increased uncertainty.
Labor market measures indicated further employment declines and shorter workweeks this month. The employment index remained negative but rose from -22.0 to -11.5. Eight percent of firms noted net hiring, while 19 percent noted net layoffs. The hours worked index rose 18 points to -22.8, with the still-negative reading signaling reduced workweek length.
The last of the regional Fed surveys for May will be released later this week (Richmond and Kansas City Fed)