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Economy in Brief

Dallas Fed Factory Sector Activity Weakens
by Tom Moeller  January 26, 2015

The Federal Reserve Bank of Dallas reported that its January Composite index of factory sector activity of -4.4 was negative for the first time since May 2013. The figure reflected weakness amongst all of the component series, most notably the growth rate of new orders which collapsed to -18.0. That was its weakest reading since the end of the recession in June of 2009. The production index value of 0.7 was its lowest figure since April 2013. Wages & benefits turned sharply lower to the lowest since October 2013. Employment, however, was off just slightly at 9.0. Pricing power also evaporated. The index reading of prices received for finished goods turned to a negative 6.7, the weakest reading since May 2013 and raw materials pricing collapsed with lower commodity prices.

The business outlook fared no better. The business activity reading for six months ahead, at -6.4, was its first negative figure since May 2013 and the lowest reading since the recession. The company outlook figure similarly stalled, but remained a positive 2.5 versus 35.5 twelve months ago. The future production figure dropped to 22.1, its weakest reading since the end of the recession. Expected new orders growth at 12.9 was its weakest figure since September 2012. The same weakening was noted on the labor front with wages expected in six months dropping to 28.2, the easiest figure since June 2012. The expected workweek ticked up into positive territory, but at 0.7 was off versus 26.5 in December 2013.

The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month. The data can be found in Haver's SURVEYS database.

The Inflation Expectations of Firms: What Do They Look Like, Are They Accurate, and Do They Matter? from the Federal Reserve Bank of Atlanta is available here.

Dallas Federal Reserve Manufacturing Survey (SA, Percent Balance) Jan Dec Nov Jan '14 2014 2013 2012
General Business Activity Versus One Month Ago -4.4 3.5 10.1 5.0 8.3 2.2 -0.6
   Production 0.7 16.4 6.5 9.1 14.6 9.8 8.7
   Growth Rate of New Orders -18.0 -4.0 -1.0 7.1 4.7 0.1 -2.8
   Number of Employees 9.0 10.0 10.3 9.5 11.5 5.6 11.8
   Prices Received for Finished Goods -6.7 4.2 9.5 12.3 8.3 2.9 0.9
Business Activity in Six Months -6.4 13.0 17.7 23.3 17.4 11.0 7.6
   Production 22.1 33.1 39.3 51.4 42.7 37.1 32.4
   Future New Orders Growth Rate 12.9 26.2 28.8 48.1 39.6 34.3 29.5
   Wages & Benefits 28.2 38.0 41.0 51.0 43.0 38.2 34.2
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