The Dallas Fed General Business Activity Index improved more than expected to +0.4 in May 2026, recovering from a contraction of –2.3 in April.
Released on May 26, 2026, by the Federal Reserve Bank of Dallas, the near-zero positive reading signals stabilization, indicating that overall factory activity and broader business perceptions in Texas remained virtually unchanged from the prior month. The reading easily cleared the consensus market forecast of –1.0.
Production and Demand Slipped
While the headline business index moved into positive territory, the underlying measures of current growth slowed down:
- Production Index: The key metric tracking current factory output fell 10 points to 9.4. It remains positive but suggests a decelerated, more average pace of expansion.
- Capacity Utilization: Plunged 15 points to 5.2, showing a sharp drop in operating intensity.
- New Orders & Shipments: Continued to cool. The new orders index dipped four points to 6.4, while shipments fell eight points to 7.4.
Divergent Price Pressures
- Raw Materials Prices: Input costs surged six points to 42.7, hitting an eight-month high and squeezing factory profit margins.
- Finished Goods Prices: Conversely, the selling prices index fell nine points to 18.9, indicating that manufacturers have hit a ceiling on passing input costs to consumers.
- Labor & Wages: Payroll growth remained flat as the employment index held completely unchanged at 0.2. The wages and benefits index held steady at 23.6.
Summary of Texas Manufacturing Metrics
- General Business Activity +0.4 –2.3 Improved / Stabilized
- Production Index 9.4 19.0 Decelerated Growth
- New Orders 6.4 10.4 Softened
- Raw Materials Prices 42.7 36.7 Intensified (8-Month High)
- Future Production (6 Mos.) 36.8 34.6 Strongly Optimistic
Looking ahead, Texas factory executives remain highly optimistic about the back half of the year; the future production index tracking activity six months out held strong at 36.8.
Would you like to cross-reference this regional data with other major industrial metrics, such as the Empire State Manufacturing Index or the Philly Fed Survey?
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