Dallas Fed Manufacturing: Business Conditions Continue to Worsen in May

The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for May. The latest general business activity index came in at -19.4, down from -14.5 from last month. This marks the 25th 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 edged down in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, slipped from 4.8 to -2.8. The negative reading signals a slight decline in output from April.

Other measures of manufacturing activity also suggested weaker activity this month. The new orders index remained negative, though it inched up to -2.2. The capacity utilization and shipments indexes slipped back into negative territory after turning positive last month, coming in at -2.0 and -3.0, respectively.

Perceptions of broader business conditions continued to worsen in May. The general business activity index moved down five points to -19.4, and the company outlook index fell seven points to -13.4. The outlook uncertainty index was largely unchanged at 16.4—near its historical average.

Labor market measures suggested modest employment declines and slightly shorter workweeks this month. The employment index slipped five points to -5.3. Nine percent of firms noted net hiring, while 14 percent noted net layoffs. The hours worked index held fairly steady at -3.7.

Upward pressure on prices and wages continued in May. The wages and benefits index retreated to an average level after spiking last month, coming in at 21.0. The raw materials prices index pushed up nine points to 20.4, still below its historical average. The finished goods prices index was largely unchanged at 4.1, also a below-average reading.