- Dallas Fed manufacturing index of general business activity fell to -27.4 in January versus -10.4 in December 2024.
- Output index -15.4 versus +1.2 in December
looking at some of the key components:
- production fell to -15.4 from 1.2 last month
- new orders fell 2-12.5 from -10.1 last month
- shipments fell -16.6 versus -5.3 last month
- employment fell to -9.7 from -2.8 last month
- hours worked fell to -11.8 from -0.2 last month
- wages and benefits fell to +20.8 from +25.1 last month
- prices paid for raw materials rose to 20.2 from 17.8 last month
- prices received fell to 0.1 from 6.1 last month
- capital expenditures rose to 4.7 from 2.8 last month
The index is at its lowest level since May 2023 when it fell to -29.10
From the Dallas Fed's Texas Manufacturing Outlook Survey for January, the following key points summarize the state of factory activity and expectations from the official report:
Contracting Factory Activity: Texas factory activity contracted in January, with the production index falling 17 points to -15.4, marking its lowest reading since mid-2020.
Decrease in Orders and Shipments: The new orders index declined to -12.5, and the shipments index dropped to -16.6, both indicating a contraction in manufacturing activity. The growth rate of orders index also remained negative but improved slightly to -14.4.
Lower Capacity Utilization: The capacity utilization index decreased to -14.9, reaching a multiyear low.
Worsening Business Perceptions: Perceptions of broader business conditions continued to deteriorate, with the general business activity index dropping to -27.4 and the company outlook index falling to -18.2.
Employment Declines: The labor market showed signs of stress, with the employment index dropping to -9.7, its lowest since mid-2020, indicating net layoffs were more common than net hiring.
Stable Work Hours and Wages Increase: Work hours decreased, as shown by the hours worked index at -11.8. However, wages and benefits continued to rise, with the index slightly decreasing to 20.8 but remaining in line with its average.
Input Costs Rising, Selling Prices Flat: Input costs saw a modest increase, with the raw materials prices index at 20.2. Finished goods prices remained unchanged from December, as indicated by a finished goods prices index of 0.
Mixed Future Expectations: Expectations for future manufacturing activity improved, with the future production index rising to 21.7. However, the future general business activity index stayed negative at -10.4, showing little change from December.
This summary reflects a challenging start to the year for the Texas manufacturing sector, with contraction in activity, worsening business perceptions, and employment declines, alongside stable or increasing costs.
The decline is congruent with the other regional indices from NY, Philly, and Richmond.
