Global| Aug 31 2015Dallas Fed Factory Sector Activity Deteriorates Along With Outlook
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve Bank of Dallas reported that its August Composite index of factory sector activity declined to -15.8, its weakest reading in three months. The production component was near break-even, up sharply from three months [...]
The Federal Reserve Bank of Dallas reported that its August Composite index of factory sector activity declined to -15.8, its weakest reading in three months. The production component was near break-even, up sharply from three months ago. The growth rate of new orders, however, reversed most of its July improvement. The employment reading remained slightly negative, where it's averaged since the beginning of the year. During the last ten years there has been a 78% correlation between the index and the m/m change in factory sector payrolls. Wages & benefits rose to the highest level since January but prices received declined sharply to the lowest point since 2009.
The six-months ahead reading for factory sector activity reversed three months of improvement as the production outlook fell to a six-month low. The expected new orders growth rate similarly deteriorated along with shipments. The expected employment reading retrenched as wage & benefit expectations remained near the expansion low.
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) | Aug | Jul | Jun | Aug '14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| General Business Activity Versus One Month Ago | -15.8 | -4.6 | -7.0 | 7.1 | 8.3 | 2.2 | -0.6 |
| Production | -0.8 | -1.9 | -6.5 | 7.4 | 14.6 | 9.8 | 8.7 |
| Growth Rate of New Orders | -14.0 | -5.2 | -16.5 | -7.6 | 4.7 | 0.1 | -2.8 |
| Number of Employees | -1.4 | -3.3 | -1.2 | 12.0 | 11.5 | 5.6 | 11.8 |
| Prices Received for Finished Goods | -15.7 | -2.9 | -1.9 | 9.4 | 8.3 | 2.9 | 0.9 |
| Business Activity in Six Months | 3.4 | 18.8 | 8.1 | 19.0 | 17.4 | 11.0 | 7.6 |
| Production | 28.0 | 37.4 | 35.2 | 44.3 | 42.7 | 37.1 | 32.4 |
| Future New Orders Growth Rate | 18.6 | 29.7 | 21.1 | 29.8 | 31.5 | 25.0 | 19.5 |
| Number of Employees | 11.4 | 17.4 | 16.9 | 28.7 | 28.6 | 23.1 | 19.1 |
| Wages & Benefits | 32.4 | 31.2 | 31.0 | 42.8 | 43.0 | 38.2 | 34.2 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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