Texas Manufacturing Activity Stalls in June, But Outlook Brightens — Evening Brief – 06.29.26

Texas manufacturing activity slowed in June as production and new orders moderated, although factory hiring strengthened and business leaders grew more optimistic about the outlook for the second half of the year, according to the Federal Reserve Bank of Dallas.

The Texas Manufacturing Outlook Survey’s general business activity index slipped to 0.0 in June from 0.4 in May, signaling essentially flat business conditions after modest expansion the previous month.

While headline activity softened, several underlying measures painted a mixed picture of the state’s manufacturing sector. Production eased to 4.1 from 9.4 in May, while the new orders index fell to 2.3 from 6.4, suggesting demand cooled during the month. Shipments remained relatively steady, edging down to 7.1 from 7.4.

Despite the slowdown in output, manufacturers continued to expand operations. The capacity utilization index rose to 7.3 from 5.2, hours worked increased to 5.9 from 1.8, and the employment index surged to 13.9 from just 0.2 in May, indicating firms continued adding workers even as order growth moderated.

The strongest improvement came in manufacturers’ expectations for the months ahead. The company outlook index for the next six months climbed to 28.5 from 16.5, reflecting growing confidence that business conditions will improve later this year.