The general business conditions index in the Dallas Fed’s Texas Manufacturing Outlook Survey for December worsened to -3.2 after -1.3 in November. The index has now been in contraction for three straight months. The six months expectations index slid to 6.4 in December after 7.3 in November. The uncertainty index retreated to 5.6 in December after 17.1 in November and was its lowest since 6.8 in April. Altogether, it would suggest that manufacturers in the District are surer that present conditions are weak and the near future has the prospect of only modest expansion.
Although the index for new orders turned positive again at 1.6 in December after -3.0 in November, this is only narrowly positive and could easily slip into negative territory again. Order backlogs continued to contract for a sixth month in a row at -5.4 in December after -7.7 in November. Production was slightly firmer at 3.6 after -2.4.
The index for employment rose to 6.2 in December after 0.9 in November. However, the index for wages declined to 14.6 after 21.1. The workweek expanded to 2.6 after -4.3. It is not unusual for hiring to slow around year-end but the December numbers hint that payroll gains are limited and businesses are less inclined to offer higher wages to those coming in.
Delivery times widened further to -7.0 in December after -4.6 in November. There is nothing to impede movement of goods in the pipeline right now. Inventories shrank to -12.3 after -10.6 and were contracting for a ninth straight month.
The index for prices paid remained at a level that indicated only mild upward pressure on prices at 14.5 after 17.8 in the prior month. Prices received in December had little upward pricing power at 0.7 after 1.9 in November.
The Dallas-ISM equivalent index — calculated from the five components closest to the ISM Manufacturing Index — rose to 49.2 in December after 48.0 in November. It probably does not signal any significant improvement in the ISM report when it is released at 10:00 ET on Friday, January 3.
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