According to a report from the Dallas Fed, the Manufacturing Index for April remained in negative territory with a reading of -14.5. However, there are signs of improvement compared to the previous month. The Production Index improved to +4.8 from -4.1, indicating an increase in production activity. Capacity Utilization also increased to +4.2 from -5.7, suggesting a higher utilization of manufacturing capacity. Shipments rose to +5.0 from -15.4, indicating an improvement in the volume of goods being shipped. However, New Orders declined to -5.3 from -11.8, suggesting a decrease in demand for new orders. Employment also decreased slightly to -0.1 from +1.5, indicating a slight decline in employment levels [0956004d].
Despite the overall negative reading, there are some positive signs for the future. The future production index rose to 34.8, indicating expectations for increased production activity in the coming months. The future general business activity index also increased from 1.3 to 7.9, suggesting optimism about future business conditions [0956004d].
The report also highlighted some other trends in the manufacturing sector. Wage pressures increased in April, with the wages and benefits index reaching a seven-month high of 30.6. This suggests that manufacturers are facing upward pressure on wages and benefits. On the other hand, price pressures retreated, with the raw materials prices index falling to 11.2 from 21.1. This indicates a decrease in the cost of raw materials for manufacturers [0956004d].
Meanwhile, the May Empire State Manufacturing Index for New York State was -15.60, lower than the consensus of -9.90 and the previous reading of -14.30 [7673e214]. New orders declined significantly, while shipments held steady. Unfilled orders continued to decline. Delivery times shortened, and inventories were little changed. The index for future business conditions edged down two points to 14.5, with about a quarter of respondents expecting conditions to be worse in six months, though 40 percent expect improvement [7673e214].
The Richmond Fed Manufacturing gauge for May rose to 0, exceeding the consensus forecast of -6 and the previous reading of -7. Shipments improved to 13 from -10, while capacity utilization was -7 compared to -5. The volume of new orders was -6, better than the previous reading of -9. Manufacturing activity in the Federal Reserve's Fifth District improved but remained sluggish. Firms reported declining backlogs and vendor lead times. The average growth rate of prices paid increased slightly, while the average growth rate of prices received decreased. Firms expect price growth to pick up slightly over the next 12 months [8defdc37].
The Philly Fed Manufacturing Index for June came in at -1.3, lower than the expected +4.8 and the previous +4.5. Employment showed a reading of -2.5 compared to the previous -7.9, while new orders had a reading of -2.2 compared to the previous -7.9. The price paid index increased to 22.5 from the previous 18.7. The diffusion index for current general activity decreased to 1.3, the slowest reading since January. 24% of firms reported increases in general activity, while 23% reported decreases and 50% reported no change. Future activity indicators remained positive but suggested less widespread expectations for overall growth over the next six months [64a3eef4].
The Dallas Fed Manufacturing Index remained in negative territory in June, with a reading of -15.1 compared to a consensus estimate of -14.0 and a previous reading of -19.4. The index measures perceptions of broader business conditions, which continued to worsen but were less negative than in May. The general business activity index improved to -15.1 from -19.4, and the company outlook index rose seven points to -6.9. Production showed a slight increase of 0.7, while capacity utilization declined to -4.8 and new orders decreased to -1.3. Expectations for future manufacturing activity improved, with the future production index surging 10 points to 27.1 and the future general business activity index jumping 16 points to 12.9, its highest level since early 2022 [218efa56].
Overall, while the Dallas Fed Manufacturing Index showed signs of improvement, the Empire State Manufacturing Index continued to decline, and the Philly Fed Manufacturing Index contracted in June. These mixed reports suggest a varied outlook for the manufacturing sector in the US economy. The increase in production activity, capacity utilization, and shipments in the Dallas Fed report indicate a potential rebound, while the decline in new orders and the negative reading in the Empire State report raise concerns. The Richmond Fed Manufacturing gauge exceeding consensus forecasts indicates some positive momentum in the Fifth District. The Philly Fed Manufacturing Index contraction in June suggests a slowdown in manufacturing activity. It will be important to monitor these indicators in the coming months to assess the overall health of the manufacturing sector [0956004d], [7673e214], [8defdc37], [64a3eef4], [218efa56].