Dallas Fed’s Manufacturing Activity Index Slips in September

The Dallas Fed’s general business activity index for Texas manufacturing edged down to 9.8 in September 2026 from 11.6 in August. Perceptions of broader business conditions continued to improve, albeit unevenly. The company outlook index improved at a much slower pace, falling to 8.7 from 19.2, while the outlook uncertainty index rose three points to 11.3. Employment growth picked up, with the employment index rising seven points to 15.1 from 8.0, while the hours worked index was little changed at 5.6. Price and wage pressures increased broadly, with the finished goods prices index rising five points to 27.6, the raw materials prices index advancing eight points to 52.2, well above its series average of 28.0, and the wages and benefits index increasing six points to 27.4. Expectations remained positive, with the future production index little changed at 40.3, while the future general business activity index fell to 20.8 from 37.2.

The Dallas Fed's general business activity index for Texas manufacturing jumped to 11.6 in August 2026, the highest level since January 2025, up from 1.3 in July. Broader conditions strengthened, with the company outlook index jumping 5.8 points to 19.2. Manufacturing activity accelerated, with a jump in production (16.1 vs 10.1), supported by a surge in assessments of new orders (22 vs. 6.4) and shipments (14.1 vs. 8.8). Capacity utilization also increased to 12.8 from 5.9. However, uncertainty remained elevated, with inventories building further and delivery times lengthening significantly. Employment slowed and work hours were relatively stable in August. Price pressures were relatively stable but remained markedly elevated, rising further for prices paid but easing slitghly for prices received. Looking ahead, firms remained optimistic about activity over the next six months, with future production (40.9 vs 34.6) and general business activity (37.2 vs 26.5) edging higher.

The Dallas Fed's general business activity index for Texas manufacturing rose to 1.3 in July 2026, up from 0 in June. Broader conditions strengthened, with the company outlook index jumping 11 points to 13.4 as uncertainty eased (6.4 vs. 10.9). Manufacturing activity accelerated, with the production index rising to 10.1 from 4.1, supported by stronger new orders (6.4 vs. 2.3) and shipments (8.8 vs. 7.1). Meanwhile, finished goods inventories declined (1.5 vs. 7.8), while delivery times lengthened slightly (2.3 vs. 0.9). Labor market conditions remained broadly stable, although employment (12.2 vs. 13.9) and hours worked (4.3 vs. 5.9) eased, while the wages and benefits index climbed (30.8 vs 25.8). Price pressures remained elevated despite slight moderation in prices paid and received. Looking ahead, firms continue to expect strong manufacturing activity over the next six months, with future production (34.6) and general business activity (26.5) remaining little changed.