Dallas Fed: Manufacturing Remained Healthy in November Despite Slowing from an 11-and-a-Half-Year High

The Dallas Federal Reserve Bank reported that manufacturing activity remained healthy in November despite slowing from an 11½-year high in October.

The composite index of general business activity declined from 27.6 in October, its best reading since March 2006, to 19.4 in November. As such, manufacturers in the Texas district continued to report “solid” gains in activity even with some easing in many of this month’s indicators.

This included some softening—but still strong—expansions for new orders (down from 24.8 to 20.0), production (down from 25.6 to 15.1), capacity utilization (down from 22.5 to 17.3), shipments (down from 20.9 to 16.7) and hours worked (down from 13.7 to 11.5). Hiring (down from 16.7 to 6.3) was modest, growing for the 11th straight month. At the same time, capital expenditures (up from 13.3 to 15.8) were a bright spot in this survey, accelerating at its fastest pace since January.

Moving forward, manufacturing leaders remained very positive about the next six months, with the forward-looking measure increasing from 38.5 to 39.0—also its highest point since January. Roughly half of respondents felt that new orders, production, shipments and capacity utilization would rise in the coming months, and 40.5 percent and 41.5 percent anticipate more hiring and capital spending, respectively. Meanwhile, pricing pressures for raw materials (up from 36.5 to 48.4) were also anticipated to pick up the pace robustly, with that index at its quickest clip since March 2012.

In addition, the sample comments once again noted difficulties in attracting qualified labor, and this was echoed in some special questions. Two-thirds of those completing the survey said that they were having problems finding workers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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