Dallas Fed August Manufacturing Activity Comes At -13.5%, Below Expectations, Confirms July's Plunge To -21.0%
Nothing good to report out of the Dallas Fed, today's last key economic data point, which came in at -13.5%, missing expectations of -10.0%, although a modest rebound from the prior disastrous plunge to -21.0% in July. Special question comments included in the current survey demonstrated
ongoing deterioration, especially in current perceptions of business
conditions, with an emphasis on the hit to businesses due to the recent deepwater drilling moratorium.
Plastics and Rubber Products Manufacturing
Our business is still weak, and our customers are very slow with new projects.
Nonmetallic Mineral Product Manufacturing
The oil spill and policy actions have had a
negative impact on our customer base located in Louisiana, with a
decline in jobs and earnings in the region.
We are involved in some oil and gas
operations, and we have seen an increase in activity in anticipation of
tighter permitting and other rules.
Fabricated Metal Product Manufacturing
The net effects of the deepwater drilling
moratorium remain to be seen. It could potentially have a much larger
impact within the next 12 to 24 months if it continues.
From the release:
Texas factory activity was unchanged in August,
according to business executives responding to the Texas Manufacturing
Outlook Survey. The production
index, a key measure of state manufacturing conditions, came in at
zero, posting a third consecutive month of little to no growth.
Most other indexes for current activity remained negative in August. The new orders index stayed at –9, implying incoming orders continue to fall. The capacity utilization and shipments indexes pushed deeper into negative territory, suggesting further contraction of business.
The general business activity
index was negative for the third month in a row, but advanced in
August as the share of respondents reporting improved activity rose from
10 to 15 percent. The company outlook
index climbed back into positive territory after being negative for
two months, as 23 percent of manufacturers said their outlook improved
in August, compared with 13 percent in July.
index turned negative for the first time in six months, largely due to
the share of firms reporting layoffs rising from 15 percent in July to
23 percent in August, and hours worked contracted again. Wage and benefits costs rose modestly.
The raw materials price
index doubled from 12 in July to 24 in August, reflecting a surge in
input costs. Twenty-eight percent of manufacturers reported an increase
in raw materials prices, while only 4 percent noted a decrease. Finished goods prices
fell again in August, although three-fourths of firms reported no
change in selling prices. The future indexes for both raw materials
prices and finished goods prices were positive and rose.
Most future indexes of manufacturing conditions fell in August, but remained in solid positive territory. The future company outlook
index fell from 16 to 9, with 31 percent of respondents expecting an
improved outlook six months from now. However, the future general business activity index, a broader measure of economic conditions, dipped into negative territory for the first time in more than a year.
The Dallas Fed conducts the Texas Manufacturing
Outlook Survey monthly to obtain a timely assessment of the state’s
factory activity. Data were collected August 17–25, and 99 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 of firms 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.