By Ed Frankl
Factory activity in Texas sank in January, hit by weakening new orders and shipments, albeit with the future outlook for the sector looking brighter.
The index for general business activity in January declined to minus 27.4 from a revised minus 10.4 in December, according to the Texas Manufacturing Outlook Survey released Monday by the Federal Reserve Bank of Dallas.
The Dallas Fed conducts the monthly survey, which asks Texas business executives about conditions in the industrial sector. A reading below zero describes a contraction in industry.
The production index, measuring state manufacturing conditions, also contracted 16.6 points to minus 15.4, its lowest reading since mid-2020, the Dallas Fed said.
Other components of manufacturing activity also showed contraction in January, with the index for new orders dropping to minus 12.5 from minus 10.1, the shipments index slipping 11.3 points to minus 16.6 as geopolitical concerns involving global shipping rose.
Meanwhile, capacity utilization fell to a multiyear low of minus 14.9, and while the index measuring the growth rate of new orders rose eight points, it still remained in contractionary territory at minus 14.4, the data said.
The labor market also appeared to be weakening, with the employment index falling 6.9 points to minus 9.7, as 23% of firms reported net layoffs, compared with 14% reporting net hiring.
By contrast, expectations regarding future manufacturing activity six months ahead improved in January, climbing 9.7 points to 21.7. Most other indexes measuring future production rose as well, the Dallas Fed said, suggesting the manufacturing sector could be getting past its weakest point.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
01-29-24 1109ET
