The Federal Reserve Bank of Dallas issued its August edition of the Texas Manufacturing Outlook survey and the most closely watched result, the general activity metric, rose more than expected to an index score of 17. That was 0.2 points better than the July index and handily beat expectations of 15.7.

The production index slipped from 22.3 to 20.3, indicating that output continue to grow but at a slower pace than in July.

Overall, compared with July, the Dallas Fed’s metrics indicate that business activity is increasing. Of 15 measurements, 14 indicate a positive direction, while just one (finished goods inventories) is a negative indicator.

The most striking measurements came in the month-over-month changes in wages and benefits and prices paid for raw materials. The index score for wages and benefits rose by 6.3 points to 26.9, and the score for prices paid rose 11.4 points, also to 26.9.

How one might interpret those two moves varies. On one hand, rising wages indicate that workers are being paid more, which can have a ripple effect throughout the entire economy. On the other hand, employers who have to pay more also may have to raise prices to consumers, jeopardizing sales and further growth. Either way, these are directionally inflationary moves.

When looking ahead six months, survey respondents gave wages and benefits an index score of 44.3, down 1.6 points from their July forecast, but still saw prices paid rising by 5.2 points to 26.9. Again, only the indicator score for finished goods inventories is showing a negative direction.

Overall, the company outlook index for six months in the future has an index score of 34.5, down slightly from July’s outlook but still pointed in a positive direction. The general activity score of 29.2 is down 2.4 points month over month and also moving in a positive direction.

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