UPDATE: The Dallas Fed’s regional manufacturing activity index reading for the month of January is out.Click here to refresh for updates >
The headline index rose to 5.5.
Last month’s figure was revised down to 2.5 from 6.8.
Gains were led by big jumps in new orders (+13.2), capacity utilization (+11.9), delivery time (+11.2), prices received for finished goods (+11.1), and employment (+11.0).
Below is a breakdown of the sub-components of the index (click to enlarge):
Photo: Dallas Fed
Below is the full text from the release:
This month’s survey data include annual seasonal factor revisions. In January of each year, the Federal Reserve Bank of Dallas revises the historical data for the Texas Manufacturing Outlook Survey after calculating new seasonal adjustment factors. Annual seasonal revisions result in slight changes in the seasonally adjusted series. Read more information on seasonal adjustment.
Texas factory activity rose sharply in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 3.5 to 12.9, which is consistent with faster growth.
Other measures of current manufacturing activity also indicated stronger growth in January. The new orders index jumped 13 points to 12.2, its highest reading since March 2011. The capacity utilization index shot up from 2.1 to 14.0, implying utilization rates increased faster than last month. The shipments index rose 9 points to 21.9, indicating shipments quickened in January.
Perceptions of broader business conditions were more positive in January. The general business activity index increased from 2.5 to 5.5, its best reading since March. The company outlook index also rose sharply to 12.6, largely due to a drop in the share of firms reporting a worsened outlook from 10 per cent in December to 6 per cent in January.
labour market indicators reflected a sharp increase in hiring but flat workweeks. The employment index jumped out of negative territory to 8.7, with about 20 per cent of employers reporting hiring and 11 per cent noting layoffs. The average workweek index edged down to a reading of 0.8, which is consistent with unchanged hours worked.
Price and wage pressures increased in January. The raw materials price index moved up from 21.9 to 27.8, indicating input costs rose faster this month. The finished goods price index rose sharply from about zero to 10.2, its highest reading since February 2012. The wages and benefits index rose four points to 19.2, reflecting rising wage pressure, although the great majority of manufacturers continued to note no change in compensation costs. Looking ahead, 44 per cent of respondents anticipate further increases in raw materials prices over the next six months, while 25 per cent expect higher finished goods prices.
Expectations regarding future business conditions improved slightly in January. The index of future general business activity ticked up from 7.1 to 9.2. The index of future company outlook rose from 15.4 to 20.8. Indexes for future manufacturing activity moved up strongly this month.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected Jan. 15–23, and 88 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.
ORIGINAL: Minutes away from the January reading of the Dallas Fed Manufacturing Activity index, due out at 10:30 AM ET.
Economists expect the index to fall to 4.0 from last month’s 6.8 reading.
However, Markit’s flash U.S. PMI, a nationwide measure of manufacturing activity, got a big boost in January.
In other words, manufacturing indicators have been diverging this month, so this one should be interesting to watch.
We will have the full release LIVE at 10:30 AM ET. Click here to refresh for updates >
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