Dallas Fed Manufacturing: Business Conditions Continue to Worsen in September

The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for September. The latest general business activity index came in at -18.1, down 0.9 from last month. This is the first monthly decline in the general business activity index in the past 4 months and marks the 17th consecutive month it has been in contraction territory. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Growth in Texas factory activity resumed in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rebounded nearly 20 points to 7.9—its highest reading of the year.

Other measures of manufacturing activity also moved up this month, though some remained in negative territory. The new orders index pushed up 11 points to -5.2, a reading still indicative of falling demand though not at the pace seen in the past several months. The capacity utilization index rebounded into positive territory, rising from -3.7 to 7.8, while the shipments index moved up to near zero after slipping to -15.8 in August.

Perceptions of broader business conditions continued to worsen in September. The general business activity and company outlook indexes remained largely unchanged at -18.1 and -17.5, respectively. Uncertainty regarding outlooks picked up notably, with the corresponding index pushing up 14 points to 27.0, its highest reading in nearly a year.

Labor market measures suggest stronger employment growth and longer workweeks in September. The employment index rebounded nine points to 13.6, a reading well above the series average of 7.9. Twenty-three percent of firms noted net hiring, while 9 percent noted net layoffs. The hours worked index climbed back into positive territory, coming in at 5.1.

Price and wage pressures were mixed. The raw materials prices index rose again this month, to 25.0. This is after trending down in the first half of the year—all the way to a near-zero reading in June—and now trending back up to near its average reading. The finished goods prices index, however, has remained in a -2.0 to 2.0 range since retreating to zero in May. The index held steady at 1.8 this month, suggesting little price growth. The wages and benefits index remained highly elevated at 34.8.