SURPRISING MISS: Dallas Fed Manufacturing Survey Plunges To 10.8

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Photo: Damian Szczepaniak via Wikimedia Commons

UPDATE:Manufacturing conditions remained relatively robust in the Southwest, but came in substantially below analyst expectations, new data from the Federal Reserve Bank of Dallas shows

The key general business activity index declined 7 points to 10.8 in March. Economists polled by Bloomberg had predicted a reading of 17.0. 

The reading marked the third consecutive month that the general business index was above zero. A positive reading indicates optimism.

“20-three per cent of firms noted improvement in the level of business activity, while 12 per cent noted a worsening,” the Dallas Fed said in a statement. “The company outlook index posted a sixth consecutive positive reading, but it also retreated slightly, falling to 9.5 from 15.8 last month.”

A reading of production in the eleventh Federal district, which includes Texas, northern Louisiana, and southern New Mexico, fell just slightly, to 11.1. An employment sub-index declined to 21.7 from 25.2 in February. 

“Demand in our line of business remains fairly strong,” one machinery manufacturing executive told the Fed. “We expect active turnaround seasons both this spring and next fall. Regarding the general economy, we are confused by conflicting data. The employment data look good, but how is that sustainable with low GDP growth? We are maintaining a cautious overall market outlook.”

Outlook for the next six months was surprisingly strong in comparison to March’s current results. The future business activity index improved to 19.1 from 15.9. Only 8.5 per cent of respondents were more pessimistic about the next half year.

“If our customers are correct, we are in for a very strong year,” a chemical manufacturer said.


A reading of manufacturing activity in the Southwest is minutes away, with expectations for new data out of the Federal Reserve Bank of Dallas to remain mostly positive.

Economists polled by Bloomberg forecast the key index declining 80 basis points to 17.0 in March. The eleventh district has posted consistently strong results over the past several month. Major components of the report, including the employment, production, and company outlook sub-indicators, have been on the rise.

The eleventh district includes activity in Texas, northern Louisiana, and southern New Mexico. The Dallas Fed will next release manufacturing data on Feb. 27. 

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