Dallas Fed Manufacturing Contracts Slightly in February

This article was originally written by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.

The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for February. The latest general business activity index came in at -13.5, down 5.1 from last month. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Texas factory activity declined in February for the first time since May 2020, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, edged down from 0.2 to -2.8, a reading suggestive of a modest contraction in output.

Other measures of manufacturing activity also indicated contraction this month. The new orders index was negative for a ninth month in a row and moved down nine points to -13.2. The growth rate of orders index fell from -12.3 to -16.9. The capacity utilization index returned to negative territory after two positive readings, falling 10 points to -4.1, while the shipments index was largely unchanged at -5.0.

Perceptions of broader business conditions worsened in February as pessimism increased. The general business activity index pushed down from -8.4 to -13.5. The company outlook index has been negative for a full year and plummeted 15 points this month to -17.5. The outlook uncertainty index moved up to 25.0, a four-month high.

Labor market measures suggest relatively flat employment and longer workweeks. The employment index dipped below zero to -1.0 after tracking above average for more than two years. Fifteen percent of firms noted net hiring, while 16 percent noted net layoffs. The hours worked index held fairly steady at 4.9.

Price and wage pressures increased in February. The raw materials prices index moved up five points to 25.1, though it remained slightly below its series average of 28.0 for the fourth month in a row. The finished goods prices index rose from 9.9 to 15.8, elevated relative to its series average of 9.0. The wages and benefits index remained well above average and inched up two points to 32.7.