Dallas Fed Manufacturing Survey Shows Contraction

Texas manufacturing activity continued to contract but at a slower pace in November, with the general business activity index rising 3.8 points to minus 1.3, near the top of the range of forecasts. The production index indicated worsening conditions, however, dropping into contraction for the first time since 2016 with a monthly decline of 6.9 points to minus 2.4.

Nearly all measures of manufacturing activity showed negative readings suggesting contraction versus October. Shipments led weakness, plummeting 10.5 points to minus 4.5, followed by capacity utilization, which fell 8.9 points to minus 5.3. Finished goods inventories also worsened, falling 6.1 points to 10.6 . Improving from October but remaining in contraction were new orders, rising 1.2 points to minus 3.0, and unfilled orders, up 1.7 points to minus 7.7.

Employment plunged 10.1 points and barely remained in expansion territory at 0.9, while hours worked fell 9.0 points to minus 4.3 and wages & benefits fell 1.1 points to 21.1.

On the inflation front, growth of input costs and output prices declined, with the index for prices paid for raw materials falling 5.0 points to 17.8, while prices received for finished goods fell 2.9 points to 1.9.