Dallas Federal Reserve: Regional Manufacturing Survey Gained Even More Stream in May

The Texas Manufacturing Outlook Survey, the Dallas Federal Reserve gauge of regional factory activity, at 17.2 easily beat expectations for a 15.4 reading. This is the seventh straight month of significant strength for this index, which fell deeply into contraction following the 2014 collapse in oil prices.

In the regional manufacturing survey, firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.

Production posted a strong reading of 23.3, representing an increase of almost 9 points. Employment was also strong, hitting a 6-year high at 15.7 and 8.3 hours worked, indicating increased demand for employment in the future. Order readings were also solid. New orders came in at 18.1 and unfilled 8.1.

This all translates into stronger upward pressure on wages.

The Dallas Federal Reserve’s Texas Manufacturing Outlook Survey is only the latest in a string of solid regional reports showing serious strength in national factory activity. However, it has not yet translated into national readings and on Thursday we will have the new Institute for Supply Management (ISM) report of national activist.

The new jobs report is due out on Friday, which will give us more insight into added factory payrolls.

The Dallas Federal Reserve conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected May 16–24, and 113 Texas manufacturers responded to the survey.