Results from the Federal Reserve Bank of Dallas’ latest business executives survey showed factory activity in Texas remained flat in May.
The production index, which provides a critical measure of state manufacturing conditions, fell four points to near-zero, reflecting flat output. May’s results follow modest growth witnessed in the Lone Star State during the prior two months.
Zooming in, the new orders index remained negative during the month, indicating contraction. Still, the metric did move up to -8.7 from -20.0 in April. The capacity utilization index also stayed negative but improved slightly to -1.5.
However, the shipments index moved into positive territory, reaching 0.5 in May, after settling in negative territory in April.
Perceptions of broader business conditions deteriorated further in the latest period, though not as significantly as the month prior. The general business activity index rose an impressive 21 points, but remained negative at -15.3, while the company outlook index also improved to -11.3, up from -28.3.
Meanwhile, the outlook uncertainty index fell from 34 points to 12.7, “suggesting uncertainty continued to rise but not as notably as in April,” the Dallas Fed said in a May 27 release.
The employment index improved seven points to 3.5. According to the results, 12% of firms reported net hiring, more than the 8% that noted net layoffs.
“Expectations have increased for manufacturing activity six months from now,” said the Dallas Fed.
“The future production index moved up 16 points to 31.1. The future general business activity index also rose 16 points, barely pushing into positive territory to a reading of 1.3. Other indexes of future manufacturing activity rose but remained below average.”
In May, the Federal Reserve Bank of Dallas asked firms several special questions about artificial intelligence. When asked, “Is your firm currently using AI?” 59.1% of respondents said “yes,” up from 38.3% in April 2024.