Dallas Manufacturing Report Accelerating

The Dallas manufacturing report never did show any ill effects from Hurricane Harvey and now readings are accelerating during October. The general activity index jumped 6.3 points from an already very strong September to 27.6 in October. Production is up 6 points to 25.6 and manufacturers in the sample are producing at full throttle with capacity utilization, at 22.5, hitting a decade high.

New orders are up 6 points to 24.8 with the company outlook steady at a very strong 25.8. Employment is steady and solid at 16.7 with, in an unusual positive, less than 5 percent of the sample reporting monthly layoffs.

High employment is a recipe for wage gains which are at a strong 22.5. Input price pressures continue to go up with pass through to selling prices limited but tangible.

This report falls in line with other regional surveys that are pointing, with heightened emphasis, to a strong upturn underway in the factory sector. Watch for factory payrolls in October's employment report followed by factory orders for September, both on Friday.

Recent History Of This Indicator:
Hurricane Harvey had no effect on the Dallas Fed general activity index in September which surged instead of sank. Readings are robust with employment at a multi-year high. Econoday's consensus for October's general activity index is for a second straight 21.3.