The Dallas Federal Reserve is out with its August manufacturing and business activity report. The report on business activity came in to -1.6 in the month of August, versus a reading of -13.2 in the month of July. Unfortunately, the manufacturing component came down to 6.4 in the month of August from 12.0 in the month of July.
The report was titled “Texas Manufacturing Growth Slows but Six-Month Expectations Improve.” While improvements may be expected, the report said:
Other indexes of current manufacturing activity also declined in August. The new orders index edged down to a reading of zero, suggesting flat demand. The capacity utilization index fell from 8.7 to 1.7, reaching its lowest reading since April. Shipments declined slightly in August; the index dipped into negative territory, with more than a quarter of manufacturers noting a decrease in shipment volumes.
Another key issue is employment, with 24% of firms reporting net hires and 10% reporting net layoffs on stronger labor demand, but unchanged also on work weeks. The employment index ticked up to 14.2 in August, which is the highest reading in five months.
This reading is often looked at closely due to the Dallas Federal Reserve having such an insight into the ongoing trends in the U.S. oil and energy sectors. After all, the Dallas Fed serves the Eleventh Federal Reserve District, which is made up of Texas, northern Louisiana and southern New Mexico.
JON C. OGG