After breaking to 6 year lows in May, expectations were for a bounce in Dallas Fed's Manufacturing Outlook from -20.8 to -16. After missing expectations for six straight months, June's bounce to a -7.0 print is the biggest best since January 2012. This surge was all due to the current conditions shift as future hope for new orders and production tumbled. While most subindices rose, we note that CapEx fall once again to 3-month lows. This is the 6th consecutive negative (contractionary) print in a row for Dallas Fed - something not seen outside of a recession.
Bounce... or Trend?
[4]
The imrpovement was all current conditions as future hope tumbled...
[5]
Why is it still not growing again? Simple - rain!
Fabricated Metal Manufacturing
We currently believe we are seeing the bottom of the downturn in oil and gas. So far, it appears it is holding true as new orders received in June are equal to the prior month for the first time in 2015. Sales and orders are increasing, but costs are increasing at a greater rate.
First we faced strikes, now storms. It is tough out there. Signs of some stability in oil and gas exploration and production are emerging. If that continues, then our business conditions will benefit in the coming months.
Weather in the Texas region continues to slow home building and renovation. Due to the wet conditions, most of my customers are unable to work on projects and their backlog continues to grow.
May's rains will impact construction activity over the next couple of months.
Charts: Bloomberg
