Dallas Fed Shows Slower Growth in October

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The Federal Reserve Bank of Dallas is now showing that growth is present but slowing in its region. Today’s Texas factory activity increased in October based on the responses of business executives. The Texas Manufacturing Outlook Survey for the month of October showed a production index reading that fell from 10.0 in September down to 7.9 in October.

Today’s report shows a decline in the new orders down to -4.5 from a prior month’s gain of 5.3. Capacity utilization rose slightly to 11.4 from 9.3 in the prior month. Investors and economists better pay attention to that new orders component because this was the lowest reading of the year and indicates decreasing demand. Another component, the shipments index, was flat at 4.7 in October. The only offset there was that perceptions of general business improved as the general business activity index rose to 1.8 as the first positive reading since June. The company outlook index was positive for the sixth month in a row and remained unchanged at 2.4.

The employment index was mostly flat at 5.2 in October, but the Dallas Fed said that labor market indicators reflected slow but steady labor demand growth and shrinking work weeks. Prices and wages increased in October: the raw materials price index reached its highest level since May 2011 jumping 13 points to 35.6 due to input costs; the finished goods price index rose to 4.2; wages and benefits index decreased to 11 from 15.4 the prior month.

FULL REPORT

JON C. OGG

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