Texas factory activity continued to expand in February, albeit at a slower pace than a month earlier, according to the monthly Texas Manufacturing Outlook Survey released Monday by the Federal Reserve Bank of Dallas.
The Dallas Fed’s production index, a key measure of manufacturing conditions in Texas, slipped four points to 10.1, indicating a slight deceleration in output growth.
The new orders index fell five points to 6.9, its lowest reading in more than two years, also indicating a slower pace of expansion. Capacity utilization index fell eight points to 7.1, a two-year low. The shipments index was largely unchanged at 10.7.
Somewhat contradicting the manufacturing picture painted by the Dallas Fed, the general business activity index is much brighter. This rose 12 points to 13.1 after posting weak readings in the prior two months. Economists had expected it to rise to just 4.8.
The overall positive message of the Dallas survey contrasts with last week’s survey from the Philadelphia Fed, which fell all the way down to minus 4.1 last week. That is the first time the Philly Fed survey hit negative territory, indicating contraction, since 2016. It is possible the Philly survey was depressed by the government shutdown.