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ORIGINAL POST: Last big economic datapoint of the day: The June Dallas Fed report…This is a key measure of manufacturing industry health for the Dallas region,

Analysts are looking for a reading -2.0, which would be an improvement of -5.1 in the previous month.

Several regional Fed datapoints have been very bad lately, and so this will be a test of how widespread this is.


It’s a beat…

Not all the news is horrible on the regional manufacturing front.

The Dallas Fed just came in at a reading of +5.8, which is well above last month’s -5.1, and well above the -2.0 reading that was expected.

The whole report is below the broken line.


Texas factory activity surged in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 5.5 to 15.5, posting its strongest reading in 15 months.

Other measures of current manufacturing conditions also indicated strengthening activity in June. The new orders index rose to 7.9, following three readings around zero, suggesting demand finally grew after staying flat since February. Similarly, the shipments index rebounded to 9.6 after two months of near-zero readings. The capacity utilization index rose from 5 to 13.3, reaching its highest level since early 2011.

Perceptions of broader economic conditions improved in June. The general business activity index had been negative in April and May but increased to 5.8 this month. 20-four per cent of firms noted improvement in the level of business activity in June, up from 15 per cent last month. The company outlook index edged up from 4.7 to 5.5.

labour market indicators reflected stronger labour demand growth and steady workweeks. Employment grew at a faster pace in June, with the index rising from 8.5 to 13.7. 20-one per cent of firms reported hiring new workers, while 8 per cent reported layoffs. The hours worked index was 1, suggesting little change in workweek length.

Input price pressures dissipated abruptly in June, while selling prices declined and wages rose at a slower pace. The raw materials price index plummeted from 20.2 to 2.7, registering its lowest reading since mid-2009. Selling prices fell for the fourth consecutive month in June; the finished goods price index was -5.8. The share of respondents who anticipate further increases in raw materials prices over the next six months fell 12 points to 28 per cent in June. The share of respondents expecting higher finished goods prices moved down 9 points to 14 per cent, while the share expecting falling finished goods prices tripled. Meanwhile, the wages and benefits index moved down from 20 to 13.2, largely due to a reduction in the share of firms noting increased compensation costs.

Expectations regarding future business conditions slipped in June. The index of future general business activity edged down from 4.3 to 1.3. The index of future company outlook also fell three points from its May level, coming in at 8.4. Indexes for future manufacturing activity moved up slightly in June, pushing further into positive territory.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected June 12–20, and 91 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.

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