Dallas Fed Manufacturing: Business Conditions Continue to Worsen in November

The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for November. The latest general business activity index came in at -19.9, down 0.7 from last month. This is the third consecutive monthly decline in the general business activity index and marks the 19th 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 in November after two months of expansion, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 12 points to -7.2.

Other measures of manufacturing activity also indicated contraction this month. The new orders index has been negative for 18 months and dropped from -8.8 to -20.5 in November. The capacity utilization index returned to negative territory, falling from 5.4 to -10.1, while the shipments index slipped eight points to -9.5.

Perceptions of broader business conditions continued to worsen in November. The general business activity and company outlook indexes remained largely unchanged at -19.9 and -18.8, respectively, having now spent more than a year and a half in negative territory. The outlook uncertainty index stayed slightly elevated at 20.3.

Labor market measures suggest slightly slower employment growth and shorter workweeks in November. The employment index edged down from 6.7 to 5.0, a reading below the series average of 7.8. Twenty-two percent of firms noted net hiring, while 17 percent noted net layoffs. The hours worked index posted a second negative reading and slipped three points to -5.5.

Wage growth normalized this month, while material cost growth remained below average and selling prices fell. The wages and benefits index moved down four points to 20.0, a reading in line with its series average. The raw materials prices index held steady at 12.6, a reading well below average and indicative of more modest price growth than usual. The finished goods prices index decreased from -2.1 to -6.2, its lowest reading since mid-2020.