Dallas Fed Manufacturing: Business Conditions Weaken in August
The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for August. The latest general business activity index came in at -17.2, up 2.8 from last month. This is the third consecutive uptick in the general business activity index but marks the 16th consecutive month it has been in contraction territory. All figures are seasonally adjusted.
Here is an excerpt from the latest report:
Texas factory activity contracted again in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell six points to -11.2—its lowest level since May 2020.
Other measures of manufacturing activity also indicated contraction in August. The new orders index has been in negative territory for more than a year and posted a reading of -15.8, up slightly from July. The capacity utilization index edged down to -3.7, and the shipments index dropped 14 points to -15.8. The capital expenditures index dropped to -8.6, a three-year low.
Perceptions of broader business conditions continued to worsen in August. The general business activity index stayed negative but ticked up to -17.2, while the company outlook index was largely unchanged at -18.4. Uncertainty regarding outlooks continued to rise, with the corresponding index remaining positive, though it fell eight points in August to its lowest reading in more than two years.
Labor market measures suggest slower growth in employment and shorter workweeks in August. The employment index decreased six points to 4.3, a reading below the series average of 7.8. Eighteen percent of firms noted net hiring, while 14 percent noted net layoffs. The hours worked index slipped back into negative territory, coming in at -3.8.
Price pressures remained rather subdued in August, while wage growth accelerated. The raw materials prices index rose seven points to 17.4, still well below its average reading of 27.6. The finished goods prices index held steady at 1.8, a reading suggestive of little price growth this month. The wages and benefits index shot up 16 points to 34.9, pushing past its average reading of 21.1.