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Economy in Brief

Dallas Fed Factory Sector Activity Remains Weak; Outlook Deteriorates
by Tom Moeller  April 27, 2015

The Federal Reserve Bank of Dallas reported that its April Composite index of factory sector activity was fairly steady m/m at a level of -16.0, the fourth consecutive negative monthly reading. The figure reflected weakness amongst most of the component series. The production index remained close to the weakest level since the end of the recession and growth in new orders contained little indication of a pending pickup. The company outlook measure deteriorated to the lowest level since November 2012 and employment, though it notched up m/m, remained near the weakest reading since early-2013. Pricing power also remained near its recovery low and wage & benefit growth remained depressed after surging last year. Raw materials pricing power eased to its weakest of the economic recovery.

The business activity reading for six months ahead turned negative for the second time since early 2013. At -5.9 it was down from the April 2014 high of 25.3. The company outlook figure also weakened m/m and remained depressed from its January 2014 high. The future production figure also back-pedaled to nearly half the 2013 high. Expected new orders growth also slipped to roughly half the 2014 high. The reading for future employment also eased and remained well below its high early last year. The reading for wages expected in six months held steady m/m but was well below last year's high. The expected workweek held at a five-month high but was down sharply from its recent peak.

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) Apr Mar Feb Apr '14 2014 2013 2012
General Business Activity Versus One Month Ago -16.0 -17.4 -11.2 13.1 8.3 2.2 -0.6
   Production -4.7 -5.2 0.7 25.8 14.6 9.8 8.7
   Growth Rate of New Orders -15.5 -15.3 -16.3 14.2 4.7 0.1 -2.8
   Number of Employees 1.8 -1.8 1.3 20.4 11.5 5.6 11.8
   Prices Received for Finished Goods -7.7 -9.8 -4.4 8.7 8.3 2.9 0.9
Business Activity in Six Months -5.9 3.0 5.5 25.3 17.4 11.0 7.6
   Production 28.2 36.2 24.9 47.8 42.7 37.1 32.4
   Future New Orders Growth Rate 19.6 28.3 12.8 37.4 31.5 25.0 19.5
   Number of Employees 12.4 18.3 9.2 30.7 28.6 23.1 19.1
   Wages & Benefits 34.2 34.2 37.2 39.3 43.0 38.2 34.2
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