Texas Manufacturers Optimistic Despite Challenging Conditions

Texas factory activity contracted in July, with the production index indicating a modest decline in output. Other measures of manufacturing activity also showed contraction, including new orders, capacity utilization, and shipments. However, there were signs of improvement in the labor market, with faster growth in employment and longer workweeks. Price pressures increased but remained subdued, while wage growth moderated. Expectations for future manufacturing activity improved, with the future production index remaining positive and the future general business activity index entering positive territory for the first time in over a year.