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Economy in Brief

Dallas Fed Factory Sector Activity Continues To Ease; Outlook Improves
by Tom Moeller  February 23, 2015

The Federal Reserve Bank of Dallas reported that its February Composite index of factory sector activity remained negative at -11.2 following -4.4 in January. It was the first time that two months were successively negative in two years. The figure reflected weakness amongst all of the component series, most notably the volume of shipments which were at their weakest since June 2010. The company outlook measure fell to its lowest since May 2013 and the production index value held steady at its lowest level since April 2013. Employment also fell to its lowest point since May 2013. Pricing power improved but just slightly. The index reading of prices received for finished goods remained negative at 6.7, up slightly from January but still the second weakest reading since May 2013. Raw materials pricing remained depressed with lower commodity prices.

The business activity reading for six months ahead recovered to 5.5 following a January turn into negative territory. The company outlook figure also moved up a bit m/m but remained depressed versus its high in January of last year. The future production figure also notched up m/m but remained near its weakest reading since the end of the recession. Expected new orders growth slipped to its weakest figure since November 2012. The reading for future employment collapsed to its lowest level since since November 2012. The reading for wages expected in six months improved, however, and recovered its January decline. Workers' hours remained weak. The expected workweek fell to its lowest level since May 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.

Dallas Federal Reserve Manufacturing Survey (SA, Percent Balance) Feb Jan Dec Feb '14 2014 2013 2012
General Business Activity Versus One Month Ago -11.2 -4.4 3.5 1.4 8.3 2.2 -0.6
   Production 0.7 0.7 16.4 11.5 14.6 9.8 8.7
   Growth Rate of New Orders -16.3 -18.0 -4.0 6.4 4.7 0.1 -2.8
   Number of Employees 1.3 9.0 10.0 9.9 11.5 5.6 11.8
   Prices Received for Finished Goods -4.4 -6.7 4.2 11.9 8.3 2.9 0.9
Business Activity in Six Months 5.5 -6.4 13.0 15.5 17.4 11.0 7.6
   Production 24.9 22.1 33.1 47.7 42.7 37.1 32.4
   Future New Orders Growth Rate 12.8 12.9 26.2 35.4 31.5 25.0 19.5
   Number of Employees 9.2 15.3 20.2 33.1 28.6 23.1 19.1
   Wages & Benefits 37.2 28.2 38.0 43.1 43.0 38.2 34.2
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