Dallas Fed Manufacturing Survey: Tracking Factory Activity in Texas

The Dallas Fed Manufacturing Survey is a monthly indicator of factory activity in Texas, with firms reporting changes in output, employment, orders, prices, and other indicators. The survey provides insights into the state of the manufacturing industry in Texas and can be used to gauge the overall health of the US economy.

The Dallas Fed Manufacturing Survey, released on July 25, 2025, indicates that Texas factory activity continued to expand in June, with the production index showing an increase. This survey provides valuable insights into the state of the manufacturing industry in Texas and can be used to gauge the overall health of the US economy.

The survey, conducted monthly, gathers data from firms across Texas on changes in output, employment, orders, prices, and other indicators. According to the latest report, the production index rose, signaling an increase in factory activity. This positive trend suggests that manufacturing in Texas is growing, which can have a spillover effect on the broader US economy.

The survey also highlighted that employment in the manufacturing sector increased, with firms taking on additional staff to meet rising backlogs of work. This growth in employment is a positive sign of economic health, as it indicates that businesses are expanding their operations and investing in their workforce.

However, the survey also noted some areas of concern. The report indicated that the inventory build seen earlier in the year was fading, with manufacturers reporting lower stock holdings. This could be a sign of businesses becoming more cautious about their inventory levels, potentially due to economic uncertainty or higher costs.

Additionally, the survey found that price pressures were intensifying across both manufacturing and service sectors. Higher goods prices due to tariffs and rising labor costs were contributing to this inflationary pressure. The PMI Prices Charged index readings were substantially above levels historically consistent with inflation running at 2%, suggesting that official measures of inflation will show higher annual rates of increase in coming months.

Despite these concerns, the survey data collectively support expectations that the Federal Open Market Committee (FOMC) will keep interest rates steady in the coming months, likely until December. The Fed is expected to maintain a "wait and see" approach to policy in light of changing economic conditions generated by recent US policy announcements, including tariffs.

In conclusion, the Dallas Fed Manufacturing Survey provides valuable insights into the state of the manufacturing industry in Texas. While there are some areas of concern, such as fading inventory builds and intensifying price pressures, the overall trend of growing factory activity and employment is a positive sign for the US economy.

References:
[1] https://www.bondbuyer.com/tag/manufacturing?0000015a-1fe3-d6ec-a3ff-1ff3adff0000-page=5&offset=230
[2] https://www.spglobal.com/marketintelligence/en/mi/research-analysis/growth-in-the-us-accelerates-in-july-as-rising-demand-for-services-offsets-manufacturing-dip-Jul25.html