Monday, August 31, 2015

Dallas Fed: "Texas Manufacturing Activity Holds Steady, but Outlooks Deteriorate"

by Bill McBride on 8/31/2015 10:46:00 AM

From the Dallas Fed: Texas Manufacturing Activity Holds Steady, but Outlooks Deteriorate

Texas factory activity was essentially flat in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, climbed to near zero (-0.8), suggesting output held steady after five months of declines.
...
Perceptions of broader business deteriorated markedly in August. The general business activity index dropped 11 points from -4.6 to -15.8, and the company outlook index also posted a double-digit decline, coming in at -10.3.
...
Labor market indicators reflected slight employment declines and stable workweek length. The August employment index was negative for a fourth month in a row but edged up to -1.4.
emphasis added
This was the last of the regional Fed surveys for August. Three of the five surveys indicated contraction in August, mostly due to weakness in oil producing areas.

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 (yellow, through August), and five Fed surveys are averaged (blue, through August) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through July (right axis).

It seems likely the ISM index will be weak in August, and will possibly decrease from the July level (although these regional surveys overemphasize oil producing areas).  The consensus is for an increase to 52.8 for the ISM index, from 52.7 in July.