Texas Manufacturing Surges in September with Rising Orders and Output
Texas manufacturing activity accelerates in September with strong output, orders, and hiring growth reported by the Dallas Fed.
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Texas manufacturing activity saw a sharp acceleration in September, with output, new orders, and hiring all rising well above historical norms, according to the Federal Reserve Bank of Dallas. The production index in the Dallas Fed’s Texas Manufacturing Outlook Survey jumped 13.4 points to 29.5, from 16.1 in August. This marks the ninth consecutive month of expanding output, with more than 41 percent of manufacturers reporting higher production.
Strong Demand and Order Backlogs
Demand also strengthened alongside output. The new orders index rose to 30.7 from 22.0, more than six times its series average of 4.8. The growth rate of orders climbed 11 points to 19.1, far above its historical average of negative 1.0. Orders are arriving faster than factories can fill them, with the unfilled orders index swinging 24 points to 22.7, well above its long-run average of negative 2.6.
Capacity Utilization and Hiring Growth
Capacity utilization rose 11.1 points to 23.9, and the shipments index rose 10.7 points to 24.8. Texas manufacturers also stepped up hiring, with the employment index rising 7.1 points to 15.1, marking a fifth consecutive month of job growth. Several manufacturers described swelling order books, with one machinery firm expecting a record year of revenue and net income in 2026.
Cost Pressures and Business Sentiment
Cost pressures intensified along with activity. The raw materials prices index rose 8.1 points to 52.2, well above its series average of 28.0, while the wages and benefits index increased to 27.4 from 21.1. Manufacturers cited diesel fuel costs and rising interest rates as challenges. Despite these pressures, measures of broader business sentiment remained positive, with the general business activity index edging down to 9.8 but still remaining positive for a third straight month.
Expectations for Future Growth
Manufacturers expect growth to continue, with the future production index holding near its August level at 40.3, above its series average of 36.0. The future new orders index was 39.5, and the future general business activity index fell to 20.8 from 37.2 but remained well above its historical average of 12.5. Expectations for hiring six months from now cooled, with the future employment index dropping to 18.1 from 34.5.
Source: Breitbart
