Dallas Fed manufacturing index -27.4 in January versus -10.4 in December

<ul><li>Dallas Fed manufacturing index of general business activity fell to -27.4 in January versus -10.4 in December 2024.</li><li>Output index -15.4 versus +1.2 in December</li></ul><p>looking at some of the key components:</p><ul><li>production fell to -15.4 from 1.2 last month</li><li>new orders fell 2-12.5 from -10.1 last month</li><li>shipments fell -16.6 versus -5.3 last month</li><li>employment fell to -9.7 from -2.8 last month</li><li>hours worked fell to -11.8 from -0.2 last month</li><li>wages and benefits fell to +20.8 from +25.1 last month</li><li>prices paid for raw materials rose to 20.2 from 17.8 last month</li><li>prices received fell to 0.1 from 6.1 last month</li><li>capital expenditures rose to 4.7 from 2.8 last month</li></ul><p>The index is at its lowest level since May 2023 when it fell to -29.10</p><p>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:</p><ul><li><p>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.</p></li><li><p>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.</p></li><li><p>Lower Capacity Utilization: The capacity utilization index decreased to -14.9, reaching a multiyear low.</p></li><li><p>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.</p></li><li><p>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.</p></li><li><p>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.</p></li><li><p>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.</p></li><li><p>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.</p></li></ul><p>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.</p><p>The decline is congruent with the other regional indices from NY, Philly, and Richmond. </p>

This article was written by Greg Michalowski at www.forexlive.com.