Texas Manufacturing Activity Remains Sluggish, According to Dallas Fed Survey

DALLAS, March 31 /PRNewswire/ -- Texas manufacturing activity remained
sluggish in March, according to the Federal Reserve Bank of Dallas' Texas
Manufacturing Outlook Survey.
The March survey can be found at:
http://dallasfed.org/data/outlook/2008/tmos0803.html .
Texas produces more than 8 percent of the total manufactured goods in the
United States, ranking second behind California in factory production.
Indicators for production, capacity utilization and volume of shipments
increased slightly in March but remained relatively soft, according to the
survey.
The index for volume of new orders increased from zero in February to 11.8
in March. In two of the last three years, however, this index has risen much
more strongly in March, suggesting this is a relatively weak reading.
Price pressures were still intensifying.
"Rising raw material costs are pushing up some finished goods prices,"
said Dallas Fed economist Fiona Sigalla. "Sixty-seven percent of respondents
reported increases in raw materials prices in March, but only 32 percent said
finished goods prices increased, indicating that producers are able to pass
only some of these higher costs to selling prices."
Sixty-two percent of factories foresee higher raw materials prices in the
next six months.
Respondents are still pessimistic about the level of general business
activity. One-third of the business leaders said conditions had worsened since
last month, pushing that index down from -21.4 to -22.7.
The company outlook continued to be better than for general business
activity, but that index fell from zero in February to -5.4 in March.
During the week of March 4-7, manufacturers were asked special questions
about the impact of credit conditions on their firms. A smaller share of
firms sought credit in March compared to December; however, of those seeking
credit, 24 percent reported difficulties in March, compared to 20 percent in
December.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to
obtain a timely assessment of the state's factory activity.
SOURCE Federal Reserve Bank of Dallas

James Hoard of Federal Reserve Bank of Dallas, +1-214-922-5307,
james.hoard@dal.frb.org