Dallas Fed Manufacturing Report Cools

Readings cooled noticeably in the Dallas manufacturing report for November with general activity coming in far below consensus, at 17.6 vs expectations for 28.6 and compared with 29.4 in October. The production index also slowed, to 8.4 vs a 17.6 score in October.

New orders likewise slowed, to 9.7 for roughly half the strength of October and the lowest reading in nearly two years. Shipments and hiring slowed as well as the workweek while capacity utilization fell. This report tracks a measure for company uncertainty which increased this month.

Yet some slowing is arguably a plus for this report which had been as strong and perhaps as overheated as any of the regional surveys. Input costs are down 21 points this month from a 7-year high but to a still very elevated 33.7 with selling prices down 10 points to 7.5. Wage costs eased by 8 points to 24.9.

The price of oil is key to this sample and the ongoing downdraft didn't pick up pace until late in the month. It will be the next report for December, where oil's impact will be more fully felt, that could see even greater slowing.