Dallas Manufacturing Index Rises to 13.4 in October, Beating Market Forecasts
Key Facts
The general business activity index in the Federal Reserve Bank of Dallas’ manufacturing survey rose to 13.4 points in October, from 9.8 points in September, beating forecasts of 8.8 points, according to InvestingLive. The reading measures factory conditions in Texas and is not, on its own, a measure of manufacturing activity across the United States as a whole. The index’s rise follows improvements in the orders and employment indexes in the September survey from August. The index is read alongside a group of regional indicators that track business trends ahead of broader national data releases. Attention is also turning this week to durable-goods data and the Federal Reserve meeting.
Details of the September survey show that the new orders index rose to 30.7 points from 22.0 points in August, while the orders growth index climbed to 19.1 from 8.1. The unfilled orders index moved to 22.7 points after -1.3 in the previous month, signaling a buildup in backlogs among surveyed companies. The production index also jumped to 29.5 from 16.1, and capacity utilization rose to 23.9 from 12.8. The shipments index registered 24.8 points, compared with 14.1 in August. Together, these readings point to simultaneous improvement in aspects of demand, production and deliveries ahead of the October reading.
The improvement in September extended to factory labor markets, with the employment index rising to 15.1 points from 8.0 in August. The hours worked index was little changed at 5.6 points, compared with 5.9 in the previous month. The survey measures the direction of changes reported by companies in employment and hours worked, as well as production, orders and prices. The Dallas Fed says positive values generally indicate growth, while negative values generally indicate contraction. The regional reading therefore reflects how widely improvement or deterioration is spread among participating companies; it does not directly measure the size of national industrial output.
On prices, the raw materials prices index rose to 52.2 points in September from 44.1 in August, while the finished goods prices index climbed to 27.6 from 22.7. The direction of the two indexes means companies reported higher pressure on input costs and on the prices they received for their products during the month. Meanwhile, the business outlook index remained positive at 8.7 points, but fell from 19.2 in August. The outlook uncertainty index rose to 11.3 points from 8.7. These indicators suggest optimism remained in place in September, but companies’ outlook weakened as uncertainty and price pressures increased.
Expectations for the next six months were mixed: the future production index stood at 40.3 points, while the future general business activity index fell to 20.8 from 37.2 in August. The September survey collected responses from 63 of the 113 Texas manufacturing companies surveyed. Responses were collected between 15 and 23 September, defining the period reflected in that month’s published results. These details provide context for reading the October survey, whose general index was higher than September’s reading but remains part of a monthly regional series. U.S. durable-goods orders data are scheduled for release on 27 October, according to the Federal Reserve Bank of New York’s economic calendar.
The Federal Open Market Committee will meet on 27 and 28 October, with a press conference scheduled for 28 October. The meeting follows the release of the Dallas survey and durable-goods data scheduled for its first day. U.S. stocks were higher in morning trading on 26 October: the S&P 500 rose 0.6%, the Dow Jones gained 356 points, or 0.7%, and the Nasdaq advanced 0.6%, according to The Associated Press. The market data cited in the sources did not specify how much the Dallas reading contributed to those moves. The regional index reading remains one of the data points preceding the central bank meeting, alongside other economic indicators.