Texas factory activity continued to expand modestly in December while general business activity worsened, the Federal Reserve Bank of Dallas said on Monday.
Perceptions of broader business conditions turned negative in December, according to according to business executives responding to the Dallas Fed’s Texas Manufacturing Outlook Survey.
The general business activity index plunged 23 points to negative 5.1 from 17.6 in November, its lowest level since mid-2016. IFR Markets had expected a reading of 14.0.
The company outlook index also fell in December, dropping 17 points to negative 3.4 from 13.7, also a two-and-a-half-year low. More than 20% of manufacturers noted their outlook worsened this month, the Dallas Fed said.
Meanwhile, the production index, a key measure of state manufacturing conditions, inched down to 7.3 from 8.4 in November. Other indexes of manufacturing activity showed modest growth in December, the Fed said. The capacity utilization index fell to 7.6 from 9.4 and the shipments index dipped to 6.1 from 7.7 while the new orders index rose to 14.4 from 9.7 and the growth rate of new orders index gained to 5.8 from 4.8.
“Labor market measures suggested continued but slightly slower employment growth and longer workweeks in December,” the Dallas Fed said. “The employment index retreated five points to 11.0, a level still above average,” the Dallas Fed said, noting that 22% of firms noted net hiring compared with 11% noting net layoffs. The hours worked index remained steady at 5.0.
Price increases eased while wage growth picked up slightly. The raw materials prices index declined to 28.8 from 33.7 and the finished goods prices index dipped to 6.6 from 7.5. The wages and benefits index moved up to 29.2 from 24.9, with almost 30% of firms noting an increase from November.
Expectations regarding future business conditions remained positive, but retreated from November.
The indexes of future general business activity fell to 3.2 from 25.7 and the future company outlook index dropped to 8.8 from 31.4.
