The Dallas Fed's November report on manufacturing activity is out.
The report's headline index unexpectedly fell to 1.9 from October's 3.6 reading, suggesting a continued slowdown in regional manufacturing.
Economists were expecting the index to bounce back to 5.0 after falling to 3.6 in October from September's 12.8 reading.
The November reading of 1.9 is the lowest since March, when the index stood at -10.5.
The Dallas Fed surveys manufacturers across Texas, southern New Mexico, and northern Louisiana to compile the report.
Below is the full text of the release:
Growth in Texas factory activity picked up for a third consecutive month in November, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 13.3 to 16.9, reaching its highest reading in five months.
Other measures of current manufacturing activity indicated further expansion in November. The new orders index came in at 5.4, similar to its October level, and marked a seventh consecutive month of increased demand. The capacity utilization index rose to 16.2, its highest level since March 2011, and the shipments index edged up to 14.8.
Perceptions of broader business conditions remained modestly optimistic in November. The general business activity index posted its sixth consecutive positive reading but edged down to 1.9. The company outlook index also posted its sixth positive reading in a row and moved up to 8, its highest level since June.
Labor market indicators reflected continued employment growth and longer workweeks. The November employment index was 5, down slightly from its October level but still indicative of increased employee headcounts. Fifteen percent of firms reported hiring new workers compared with 10 percent reporting layoffs. The hours worked index held fairly steady at a reading of 4.2, suggesting a slight increase in average workweek length.
Upward pressure on prices and wages continued in November. The raw materials price index was unchanged at 22.6, with 27 percent of firms noting an increase in input costs. The finished goods price index remained positive for the fourth month in a row but edged down to 2.2. The wages and benefits index fell from 20.4 to 14.6, indicating that upward pressure on compensation costs eased slightly this month. Looking ahead, 38 percent of respondents anticipate further increases in raw materials prices over the next six months, while 33 percent expect higher finished goods prices.
Expectations regarding future business conditions remained optimistic in November. The index of future general business activity was little changed at a reading of 7, and the index of future company outlook rose 5 points to 20.1. Indexes for future manufacturing activity pushed further into positive territory.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected Nov. 12–20, and 85 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.
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