24/7 Wall St.

With oil prices still under $50 per barrel, many manufacturers in Texas and targeting the Texas market have felt a pinch for more than a year now. According to the Federal Reserve Bank of Dallas, factory activity in Texas increased markedly in September. The regional Fed office released its Texas Manufacturing Outlook Survey on Monday.

Investors and economists alike should understand that this is a survey of local businesses. The production index rose by a sharp 12 points to 16.7. According to the Fed, this means that output picked up at a notably faster pace this month.

Some other measures of current manufacturing activity also reflected faster expansion. Still, demand indicators have dipped back into negative territory.

These readings represent the highest for these indexes in roughly two years. Perceptions of broader business conditions were mixed. Labor market measures indicated slight employment gains and longer workweek length. Price pressures were mixed, and wages continued to rise. Expectations regarding future business conditions improved again in September. The data and index readings were shown as follows on these topics:

• The capacity utilization index posted a strong gain to 13.5.
• The shipments index posted a strong gain to 20.1.
• The new orders fell from 5.3 to −2.9 in September.
• The growth rate of orders index fell to −5.8 after pushing into positive territory last month.
• The general business activity index remained negative for a 21st consecutive month, although it edged up to −3.7.
• The company outlook index rose to 6.7 and reflected optimism as it pushed into positive territory for the first time since November 2015.
• The employment index came in at 2.3, its first positive reading in nine months.
• Some 19% of firms noted net hiring, while 16% of firms noted net layoffs.
• The hours worked index also moved up to positive territory, coming in at 3.7 in September.
• Upward pressure on input costs continued this month, with the raw materials prices index holding fairly steady at 13.3.
• Selling prices were little changed in September.
• Wages and benefits continued to rise, with the index climbing to 21.0.
• The index of future general business activity rose to 9.3, its fourth positive reading in a row.
• The index of future company outlook rose to 17.8.
• Other indexes for future manufacturing activity fell but stayed in solid positive territory.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly as a semi-live assessment of the state’s factory activity. Data were collected between September 13 to September 21, with 108 manufacturing firms in Texas responding to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.