Monday, November 28, 2011

Dallas Fed Manufacturing Survey shows contraction in November

by Bill McBride on 11/28/2011 04:09:00 PM

This is the last of the regional Fed surveys for November. The regional surveys provide a hint about the ISM manufacturing index - and the regional surveys were mixed and still fairly weak in November.

From the Dallas Fed: Texas Manufacturing Activity Declines

Texas factory activity decreased in November, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, dipped from 4.1 to –5.1, registering its first negative reading in two years.

Other measures of current manufacturing conditions also indicated contraction in November. The new orders index suggested deterioration of demand, falling to –5.1 after a year in positive territory. ... The capacity utilization index tumbled to –10.2 after several months of weak readings centered around zero.

Perceptions of broader economic conditions improved slightly in November. The general business activity index posted its second positive reading in a row, and it edged up from 2.3 to 3.2. The company outlook index remained positive but moved down from 7.2 to 4.7. More than 90 percent of manufacturers said their outlooks were unchanged or improved from last month.

Labor market indicators reflected continued labor demand growth, albeit at a slower pace. The employment index came in at 9, down from 15.1 in October.
Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Fed Manufacturing Surveys and ISM PMI Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (dashed green, through November), and five Fed surveys are averaged (blue, through November) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through October (right axis).

The ISM index for November will be released Thursday, Dec 1st and the regional surveys suggest another fairly weak reading in November. The consensus is for a slight increase to 51.7 from 50.8 in Octobeber.

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