When the price of oil falls from $60 to $20 a barrel over a 90-day period, and then gets far worse, it’s bad for the entire energy sector. As oil drillers and exploration companies are only working on production that is hedged at higher prices, the orders for manufactured goods are being pushed out. The latest Dallas Federal Reserve manufacturing report for Texas has atrocious numbers.

The data was collected from April 14 to April 22, but this month’s data release does not include annual seasonal factor revisions, which have been postponed to May. Texas business executives also were asked supplemental questions on the impacts of COVID-19.

According to the Dallas Fed, Texas factory activity fell again in April in its monthly Texas Manufacturing Outlook Survey. The production index went to −55.3 in April from −35.3 in March, signaling just how weak manufacturing in the state is at this time. The monthly Federal Reserve survey also pointed out that other measures of manufacturing activity are signaling an even weaker April than the weakness seen in March.

The Dallas Fed reported that the monthly new orders index fell by 26 points to −67.0 in April, and that was characterized as the lowest reading since the survey began back in 2004. The growth rate of orders index also fell to −62.2. The capacity utilization index fell to −54.5, and the shipments index fell to −56.6. Another drop was seen in the capital expenditures index, as it fell 20 points to −54.3. According to the Dallas Fed, these were historical lows for each of those April readings.

Other aspects of the report are also deep into contraction. The broad general comments suggested that the perceptions of broader business conditions remained very pessimistic in April, at the same time that there are further declines in employment and in the average workweek. Expectations regarding future business conditions were also shown to have remained quite negative in April. Prices and wages both declined in the month.

Additional data from each of the subindex readings has been shown below:

• The general business activity index inched down from −70.0 to −73.7, a new historical low.
• The company outlook index remained near an all-time low but ticked higher from −65.6 to −62.6.
• The index measuring uncertainty regarding companies’ outlooks fell slightly to 54.4, a reading still indicative of sharply increased uncertainty.
• The employment index held steady at −21.2.
• Only 3% of firms noted net hiring, while 24% noted net layoffs.
• The hours worked index dropped 18 points to −40.2, a signal that average workweeks have been notably reduced.
• The raw materials prices index fell from −5.9 to −19.6, its second negative reading in a row and a low since mid-2009.
• The finished goods prices index fell from −9.2 to −24.6 for a low not seen since mid-2009.
• The wages and benefits index dipped into negative territory at −2.7, the first negative reading since the Great Recession.
• The indexes of future general business activity and future company outlook came in at −42.1 and −41.5, respectively, holding within a few points of their March readings.
• Other indexes for future manufacturing activity inched up but remained in negative territory.

The sharp drops and negative readings show just how bad things are in the Texas region. Much of this is tied to weakness in oil and gas spending, but capital spending, housing, autos and so on are all extremely weak as well.

It is already expected that first-quarter gross domestic product will have gone negative, with Dow Jones calling for −3.5% GDP. April is the first month of the second quarter, and the expected reports should look a lot like Great Depression–era readings during the second quarter, even as the economy slowly comes back to life.

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