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First Cut: Dallas Fed Texas Manufacturing Outlook Survey showed deepening decline in April

Although the general business conditions index in the Dallas Fed Texas Manufacturing Outlook Survey didn’t fall all that much relative to March, it reflected a deeper entrenchment of stalled activity. The index fell to a new series low of -73.7 in April and -70.0 in March. The index for six months from now had a similar performance at -42.1 in April after -39.5 in March. The index for uncertainty backed down from its record high but is still consistent with difficult to answer questions about current conditions and the outlook. It dipped to 54.4 in April after 62.6 in March.

The detail indexes in the report — which are not used to compute the general business conditions index — were almost universally lower, and effectively unchanged where there was a small gain. Across-the-board the index levels are into well into negative territory.

The index for new orders fell to a series low of -67.0 in April after -41.3 in March. Order backlogs have been pretty much wiped out with that index at -25.7 after -22.4. Without orders, production is minimal. The production index — which the Dallas Fed highlights in its report — reached a series low of -55.3 in April after -35.3 in March. The same was true for shipments which fell to -56.6 after -33.8.

 

The indexes associated with employment were consistent with recessionary conditions. The employment index actually nipped a trifle higher, but to a still slow -21.2 in April after -23.0 in March when it was the lowest since -23.4 in July 2009. The index for wages fell to -2.7 in April after 5.5 in March and was the first negative since -0.6 in July 2009. The average workweek index collapsed to -40.2 after -22.4 and was the second lowest on record after the -48.3 in March 2009.

Supplier delivery times slowed in April to -14.3 after -3.0 in the prior month. Inventories continued to contract at -8.8 after -6.5. Goods are simply not moving along the pipeline due to lack of demand and low inventories.

The index for prices paid fell to -19.6 in April after -5.9 in March. Energy costs played a part in bringing prices input costs lower. However, the index for prices received fell to -24.6 after -9.2. Both were at recessionary levels.

The Dallas-ISM equivalent index — calculated from the five components closest to the ISM Manufacturing Index — fell to 33.3 April after 39.1 in March. Its correlation with the ISM index (0.726) is the weakest among the five District Bank surveys, but it is still a reasonably good one. It adds to the evidence that the ISM Manufacturing Index for April is going to be a very weak number when it is released at 10:00 ET on Friday, May 1.

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