The Dallas Federal Reserve's manufacturing survey collapsed! The business activity index fell to its lowest level since 2020.

On Monday, the Federal Reserve Bank of Dallas in the United States released the April Texas Manufacturing Outlook Survey results. The data showed that the overall business activity index fell sharply to -35.8, hitting its lowest level since May 2020, a decrease of 19.5 points from the previous month, and has been declining for the third consecutive month, reflecting a continuing worsening of business sentiment towards the overall economic environment. Despite the weak overall business atmosphere, the survey showed that Texas manufacturing output continued to grow in April. The production index remained steady at 5.1, indicating that manufacturing activity was still expanding slightly. However, other measures of manufacturing activity showed signs of contraction. The new orders index plummeted by 20 points to -20.0, reaching a new low for the year. The capacity utilization index declined to -3.8, and the shipments index turned negative for the first time this year, dropping from 6.1 last month to -5.5, further highlighting weak demand. Businesses' outlook for the future operating environment also deteriorated significantly. In April, the company outlook index fell to -28.3, hitting its lowest level since the onset of the COVID-19 pandemic; the uncertainty index rose by 11 points to 47.1, indicating a significant increase in uncertainty among businesses about the future. On the employment front, labor market indicators showed a slight decline in hiring this month. The employment index remained slightly stable at -3.9, with 9% of businesses reporting net hiring and 13% reporting net job cuts. The hours worked index fell from -2.9 to -6.4, indicating a reduction in average working hours. In terms of prices, cost pressure increased significantly in April. The raw materials price index jumped by 11 points to 48.4, the highest level since mid-2022. The finished goods price index also rose by 9 points to 14.9, higher than the long-term average. In contrast, the wage and benefit index remained steady at 14.3, slightly below the historical average, indicating relatively stable wage growth. As a key pillar of the US manufacturing industry, Texas generated approximately $296 billion in manufacturing output in 2023, accounting for about 11% of the national manufacturing output. In terms of manufacturing size, Texas ranks second in the US, behind only California, and is also the top state in terms of manufacturing exports. Texas plays a crucial role in the US refining industry, producing significant amounts of oil and coal products. Additionally, Texas contributes over 13% of the national chemical product output, and more than 10% of non-metallic mineral product output (such as bricks, glass, and cement). Looking ahead, the future of the Texas manufacturing industry remains challenging. The overall business activity index for the next six months fell to -15.2, the lowest level since 2023. While the future production index remains positive, it decreased by 13 points to 14.8, indicating a weakening of expansion momentum. With the exception of some indicators, most of the indexes reflecting future manufacturing activity, although still in the expansion range, are significantly lower than historical averages.