TEXAS MANUFACTURING EXPANSION CONTINUES BUT AT A SLOWER PACE
Three months of building surge was this month for the Dallas Fed manufacturing report. The general activity index slowed 15 points to 21.4 which is under the lowe estimate but still an extremely favorable reading, and an arguably more favorable reading given that prior strength was pointing to unwanted capacity stress.
Production fell more than 15 points to 12.7 with new orders down 17 points to 8.3 and employment down 8 points to 10.8. Capacity utilization fell 10 points to 9.6 with hours worked, wages, and selling prices both cooling. Input costs, however, ticked higher to a 7-year high which is a reminder that demand in this sample is unquestionably robust.
Outlook measures for Dallas manufacturers also eased but remain very strong, which is the takeaway from today’s report. Watch tomorrow for a March update from the Richmond Fed for an additional read on slowing manufacturing growth.