USA Dallas Fed Manufacturing Business Index Falls

Texas factory output grew in December at the same pace compared with the previous month, data from a survey compiled by the Federal Reserve Bank of Dallas showed Monday.

The production index of the Texas Manufacturing Outlook Survey which is a key measure of state manufacturing conditions, fell slightly to 26.7 in December from 27.4 in November, indicating that output continued to expand robustly, the Dallas Fed said.

Nevertheless, the index for general business activity, which assesses broader business conditions in the manufacturing sector, dropped to 8.1 from 11.8, below the 15.0 consensus forecast from economists polled by The Wall Street Journal and signaling that overall activity cooled somewhat.

A positive index signals growth, while a negative reading suggests activity is declining. Factories across the US are bustling due to strong demand, but supply-chain bottlenecks have been constraining output as firms cannot get the necessary raw materials and inputs to produce goods.

Recent surveys show that these supply-side strains could be easing somewhat, but they are still far from improving significantly.

In Texas, other measures of manufacturing activity continued to indicate growth, the report said.

Demand continued to expand, with the new orders index falling slightly to 18.1 from 19.6 the previous month, and the growth rate of orders index edged down to 13.4.

The shipments index declined to 19.1 from 24.3, and the capacity utilization index rose slightly to 27.8 from 26.4, the report said.

Some indicators showed signs of less severe supply-chain strains. The unfilled orders index fell to 11.9 from 17.4 the previous month, and the index which gauges the prices paid for raw materials fell sharply to 66.2 from 82.1, signaling that prices for inputs continued to rise but at a much slower pace than in November.

However, other indicators showed signs of persisting shortages. The delivery times index increased to 25.8 from 21.7, suggesting that delivery times for inputs lengthened more than in November. The index for finished goods prices held broadly steady at a still high 42.3, the data showed.

Labor market measures indicated robust employment growth and longer workweeks, the Dallas Fed said. The employment index rose to 30.9, an eight-month high, with 35% of firms noting net hiring and only 4% reporting net layoffs. The hours worked index also remained elevated and was largely steady at 19.7.