Of the five Federal Reserve districts which have released their July manufacturing surveys – three are in expansion and two are in contraction.
Analyst Opinion of Dallas Fed Manufacturing Survey
This survey remains in positive territory year-over-year with subindices new orders increasing (and in expansion) and unfilled orders declining and now in contraction. This should be considered a worse report than last month.
The expectations from Econoday was -6.0 to 0.4 (consensus -3.5) for the general activity index, and the reported value was 9.3. From the Dallas Fed:
Texas factory activity continued to expand in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, moved from 8.9 to 9.3, indicating output growth continued at roughly the same pace as in June.
Other measures of manufacturing activity suggested a slightly faster expansion in July. The new orders index edged up to 5.5, and the growth rate of orders index rebounded into positive territory, climbing nine points to 2.7. The capacity utilization index inched up to 11.2, and the shipments index jumped nine points to 10.2.
Perceptions of broader business conditions were less negative in July. The general business activity index rose six points but remained in negative territory for a third month in a row, coming in at -6.3. The company outlook index rose five points to -0.9, with the near-zero reading indicating that the share of firms noting a worsened outlook roughly equaled the share noting an improved outlook. The index measuring uncertainty regarding companies’ outlooks retreated 12 points from its June peak, coming in at 9.7.
Labor market measures suggested robust growth in employment and work hours in July. The employment index rose seven points to 16.0, a reading well above average. Twenty-four percent of firms noted net hiring, while 8 percent noted net layoffs. The hours worked index pushed further above average as well with a reading of 6.6.
Input costs and wages continued to rise in July, while selling prices held mostly steady. The raw materials prices index was largely unchanged at 17.0, holding well below the readings seen last fall. The wages and benefits index inched down to 20.1, close to the long-run average for this measure. Meanwhile, the finished goods prices index hovered around zero for a third month in a row, suggesting no growth in selling prices again this month.
Expectations regarding future business conditions improved in July. The index of future general business activity returned to positive territory, rising nine points to 6.0. The index of future company outlook moved up six points to 9.1. Both readings, while positive, remain well below average. Other indexes for future manufacturing activity pushed further into positive territory.
Dallas Fed (hyperlink to reports):
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Source: Dallas Fed
Summary of all Federal Reserve Districts Manufacturing:
Richmond Fed (hyperlink to reports):
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Kansas Fed (hyperlink to reports):
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Philly Fed (hyperlink to reports):
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New York Fed (hyperlink to reports):
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Federal Reserve Industrial Production – Actual Data (hyperlink to report):
Holding this and other survey’s Econintersect follows accountable for their predictions, the following graph compares the hard data from Industrial Products manufacturing subindex (dark blue bar) and US Census manufacturing shipments (red bar) to the Dallas Fed survey (light blue bar).
Comparing Surveys to Hard Data:
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In the above graphic, hard data is the long bars, and surveys are the short bars. The arrows on the left side are the key to growth or contraction.
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