The Dallas Fed's Texas manufacturing general business activity index rose to 13.4 in October from 9.8 in September, beating expectations, even as the production index fell to 15.8 and new orders dropped to 9.3.
Texas factory activity improved in October, according to the Federal Reserve Bank of Dallas, with the Texas Manufacturing Outlook Survey's general business activity index rising to 13.4 from 9.8 in September, well above the 7.0 consensus. The headline gain came even as the survey's production measure slowed, a split that captures a manufacturing sector still expanding but losing momentum.
The production index fell 14 points to 15.8, but stayed above its series average, which the Dallas Fed reads as slower but solid expansion. The company outlook index rose seven points to 16.1 and perceptions of broader business conditions improved, while the outlook uncertainty index edged down three points to 7.9, suggesting firms felt slightly surer about what comes next.
The weak spot was demand. New orders dropped sharply to 9.3 from 30.7, employment growth slowed even as work hours picked up, and price pressures ticked higher, with finished goods prices rising to 29.9 from 27.6 and raw materials prices edging up three points to 55.3. A factory sector reporting better conditions while new orders fall that fast is a sector living off its backlog, and backlogs do not last forever.
Dow Jones reporting of the Dallas Fed release confirms the headline, production and orders figures, and a Reuters table of the same release matches them, giving the numbers two independent published sources. The survey is a diffusion index of Texas manufacturers, not a measure of national output, so its signal is regional, and a single month's orders drop can reflect timing as much as trend.
For the wider economy the Texas data tempers the Chicago Fed's national picture released the same day. Both point to production holding up while demand softens, and both leave the Federal Reserve, which meets on October 27-28, with evidence that is mixed rather than decisive.
The next Texas manufacturing survey will show whether October's collapse in new orders was a one-month drop or the start of a thinner order book, and that distinction matters more than the headline gain.