Texas business activity expanded slightly for the ninth straight month in February, according to a Dallas Federal Reserve Texas Manufacturing Outlook Survey released today.
The monthly survey asks about 100 Texas manufacturers to rate their views on current and future business activity. Market watchers keep a close eye on this index, as Texas' manufacturing can serve as an important indicator of national economic health. A positive number indicates month-over-month growth, while a negative number means contraction.
After clocking in at 3.8 for January, February's report puts business activity at 0.3. While this keeps the Lonestar state in growth territory, the reading failed to live up to analyst expectations of 2.5.
Taking a closer look at the index's components, February's report is full of mixed messages. While factory activity increased for the tenth month in a row, and the production index added on 3.7 points to hit 10.8, the company outlook index dropped from 15.9 to 3.4, the lowest since last spring. New orders also lost a significant portion of its January jump, dipping 3.9 points to 9.5.
Source: Dallasfed.org; Production Index.
Strong employment continues to provide some hope for the future. While the outlook index and new orders component would lead some analysts to believe businesses are preparing for tougher times, they still seem to be hiring. The employment index increased for the third straight month to 9.9, while the hours worked index made a major 8.6 gain to 12, the highest in more than two and a half years.