Texas Manufacturing Slips Further in December

The Dallas Fed’s general business activity index for Texas manufacturing increased 10 points to -1.2 in January 2026, reversing December’s contraction, while the outlook index rebounded into positive territory at 2.9, indicating an improvement in perceptions of broader business conditions. Manufacturing activity strengthened across the board. The production index jumped to 11.2, signaling a solid expansion in output. New orders rose 18 points to 11.8, capacity utilization moved up 12 points to 7.1, and the shipments index increased to 12.0. Labor market indicators pointed to resumed hiring and steady workweeks. The employment index increased to 8.2, with firms reporting net hiring. The hours worked index moved up to 0.7, indicating no change in hours worked. Selling price pressures increased, input price pressures were little changed and wage growth slowed slightly.

The Dallas Fed’s general business activity index for Texas manufacturing fell 0.5 points to -10.9 in December 2025, its lowest level since June, while the outlook index sank deeper into negative territory at -11.9, indicating a deterioration in perceptions of broader business conditions. Manufacturing activity weakened across the board. The production index dropped 24 points to -3.2, signaling a modest decline in output. New orders fell 11 points to -6.4, capacity utilization plunged 24 points to -4.5, and the shipments index slid to -10.6, its lowest reading in 17 months. Labor market indicators pointed to largely unchanged headcounts but shorter workweeks. The employment index edged down to -1.1, with 12% of firms reporting net hiring and 13% reporting net layoffs. The hours worked index fell sharply by 17 points to -7.5. Price pressures were little changed, while wage growth showed a slight pickup.

The Dallas Fed’s general business activity index for Texas manufacturing fell to -10.4 in November 2025, from -5 in the prior, signaling a fourth consecutive monthly contraction in manufacturing activity and the steepest since June. The production index rose to 20.5, signaling a notable pickup in output growth. Outlooks worsened, with the company outlook index falling to -6.3, though uncertainty eased to 15.7. The new orders index increased to 4.8, while capacity utilization jumped to 19.4. The shipments index rose to 15.1. Employment conditions were essentially flat, with the employment index at 1.2, as 17% of firms reported hiring and 16% layoffs. Hours worked increased to 9.9. Price and wage pressures increased slightly, with raw material prices rising to 35.3, finished goods prices to 10.8, and the wages and benefits index to 15.4. Six month expectations remained positive, with future production up to 33.7 and future general business activity at 11.