Business has been a little soft this month in the Texas manufacturing sector based on the Dallas Fed's July report where most readings show a slower rate of monthly growth. The business activity index slowed to plus 4.4 from June's 6.5 with production at 11.4 vs 17.1 in June.
Data on new orders show slowing while unfilled orders show a small contraction. Capacity utilization is down slightly as are inventories though here the draw may reflect the still solid pace of production.
Employment in fact is up which underscores the relative strength of the report where many readings in June were at recovery highs which made for a tough comparison for July. Manufacturing in general has been picking up the last couple of months and is once again becoming a positive force for economic growth.
Market Consensus before announcement
The Dallas Fed general business activity index in its Texas manufacturing survey for June rose to 6.5 after posting negative readings in April and May. The company outlook index soared 20 points to 13.3, reaching its highest level in 16 months. The production index, a key measure of state manufacturing conditions, rose six points to 17.1, posting its highest reading in more than two years. Notably stronger manufacturing activity was reflected in other survey measures as well. The new orders index climbed to 13 in June, a level not seen since July 2011. The capacity utilization index rose to a two-year high, jumping from 6.4 to 15.3. The shipments index advanced 12 points to 15.4. The company outlook index soared 20 points to 13.3, reaching its highest level in 16 months.