Dallas Fed Manufacturing: Business Conditions Continue to Worsen in January

The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for January. The latest general business activity index came in at -27.4, down from -10.4 from last month. This marks the 21st consecutive month the index has been in contraction territory. All figures are seasonally adjusted.

Here is an excerpt from the latest report:

Texas factory activity contracted in January after stabilizing in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, dropped 17 points to -15.4—its lowest reading since mid-2020.

Other measures of manufacturing activity also indicated contraction this month. The new orders index ticked down from -10.1 to -12.5 in January, while the growth rate of orders index remained negative but pushed up eight points to -14.4. The capacity utilization index dropped to a multiyear low of -14.9, and the shipments index slipped 11 points to -16.6.

Perceptions of broader business conditions continued to worsen in January. The general business activity index fell from -10.4 to -27.4, and the company outlook index fell from -9.4 to -18.2. The outlook uncertainty index held fairly steady at 20.9.

Labor market measures suggested employment declines and shorter workweeks in January. The employment index moved down seven points to -9.7, its lowest reading since mid-2020. Fourteen percent of firms noted net hiring, while 23 percent noted net layoffs. The hours worked index came in at -11.8 after a near-zero reading last month.

Wage and input costs continued to increase this month, while selling prices were flat. The wages and benefits index edged down to 20.8, in line with its average reading. The raw materials prices index inched up to 20.2, a reading below average and indicative of more modest cost growth than usual. The finished goods prices index came in at 0, suggesting prices in January were similar to those in December.