Texas factory output picked up in July, and the survey's price indexes stayed far above their long-run averages

Texas factories made more in July than they made in June.

The Dallas Fed published the month's Texas Manufacturing Outlook Survey on Monday, and the production index, which the bank treats as its main measure of state factory conditions, rose six points to 10.1. New orders rose to 6.4 from 2.3. Shipments at 8.8 and capacity utilization at 5.9 were close to where they sat a month earlier. On the broader questions the improvement was in sentiment rather than in conditions: the general business activity index barely moved, at 1.3 against 0.0, while the company outlook index jumped 11.1 points to 13.4 and the index measuring uncertainty about that outlook fell to 6.4 from 10.9.

Hiring cooled a little. The employment index slipped to 12.2 from 13.9, which still leaves it above its series average of 7.1, and hours worked edged down to 4.3 from 5.9. Capital expenditures rose slightly, to 12.2.

Now the part that has not improved.

Prices paid for raw materials came in at 41.3. The long-run average for that index is 27.9, and it has been in positive territory, meaning more firms reporting increases than decreases, for 75 consecutive months. Prices received for finished goods fell three points to 25.6, which sounds like relief until it is set against a series average of 9.1. Wages and benefits rose 4.8 points to 30.8 against an average of 21.1. Three cost indexes, all of them running well hot, and only one of them falling.

The forward-looking answers say the firms do not expect that to reverse. The future production index was unchanged at 34.6 and future general business activity unchanged at 26.5, both comfortably positive. But the future raw materials prices index rose 13.5 points to 45.5, which is higher than the current reading and the largest single move anywhere in the release.

The survey rests on 64 replies out of 110 manufacturers contacted, collected between July 14 and July 22. That is a small and regional sample, and the Dallas Fed builds each index by subtracting the share of firms reporting a decrease from the share reporting an increase, so the numbers describe breadth rather than magnitude. An index of 41.3 does not say costs rose 41.3 percent. It says a great many more firms saw them rise than saw them fall. The next release is August 31.