Manufacturing activity in Texas rocketed in March as the state ended its pandemic restrictions, according to business executives responding to the Dallas Fed’s Texas Manufacturing Outlook Survey.
Governor Greg Abbott announced on March 3 an executive order that ended the statewide mask mandate and allowed businesses to reopen at 100 percent capacity on March 10. Business activity took off with explosive growth.
The Dallas Fed said manufacturing expanded at “a markedly faster pace.” The survey’s production index, a key measure of state manufacturing conditions, jumped 28 points to 48.0, the highest reading in its 17-year history.
The general activity index jumped from 17.2 in February to 28.9. The company outlook index rose 15 points to 25.8, its highest reading since mid-2018. The outlook uncertainty index ticked down to 5.5, a sign of improving conditions.
The results smashed expectations. Economists surveyed by Econoday had forecast a decline in the general activity index to 12.5 percent, in part because they expected drag from the February freeze to continue this month. Most of the prior month’s survey was taken before the cold snap.
The new orders index rose 18 points to 30.5, and the growth rate of orders index climbed 11 points to 22.7. The capacity utilization index soared from 16.5 to 46.1, another all-time high. The shipments index moved up 17 points to 33.1.
The Dallas Fed said these measures indicate “sharply faster growth.”
Labor market measures also indicated growth. The employment index rose 12.7 points t0 18.8, which the Dallas Fed said is “well above average.” Twenty-nine percent of firms noted net hiring, while 10 percent noted net layoffs. The hours worked index doubled from 11.3 to 23.4.
Price and wage pressures accelerated further in March. The raw materials prices index surged from 57.4 to 66.0 amid continued reports of supply-chain disruptions. The finished goods prices index rose nine points to 32.2, its highest reading since 2008. The wages and benefits index was up 12 points to 28.0.
Expectations regarding future manufacturing activity held steady and remained positive in March, the Dallas Fed said.
Sixty-one and one-tenth percent of businesses surveyed said they lost power in the cold snap, for 3.2 days on average. The storm completely shut down 59.9 percent of businesses and 83.3 percent of manufacturers.