Texas Factory Output Accelerates as Cost Pressures Rise — Evening Brief – 09.28.26

Texas manufacturers reported a pickup in output and new orders in September, suggesting factory activity gained momentum even as businesses faced mounting costs. The Dallas Federal Reserve’s production index rose 13 points to 29.5, while its measure of prices paid for raw materials climbed to 52.2.

Several other activity measures strengthened. The capacity utilization index rose 11 points to 23.9, and the shipments index gained 11 points to 24.8. New orders increased to 30.7 from 22.0, pointing to continued demand beyond the month’s increase in production.

Hiring also picked up. The employment index advanced to 15.1 from 8.0, although the hours-worked index was little changed at 5.6.

The stronger output figures came with a less uniform assessment of business conditions. The general business activity index slipped to 9.8 from 11.6. The company outlook index fell to 8.7 from 19.2, while the outlook uncertainty index rose to 11.3.

Cost pressures present another complication. The raw-material prices index rose eight points to 52.2, well above its series average of 28.0. The finished-goods prices index increased five points to 27.6, and the wages and benefits index climbed six points to 27.4.

Manufacturers still expect expansion over the next six months. The future production index was nearly steady at 40.3, though the future general business activity index declined to 20.8 from 37.2.