Dallas Fed Manufacturing: 15th Consecutive Decline

Bottom Line: Manufacturing activity of Texas based businesses shrank for the 15th consecutive month, but less than market expectations. So far the regional surveys are in favor of better activity, suggesting a modest positive surprise is possible for ISM Manufacturing due on April 1 (market consensus is 50.7% compared to 49.5% last month). Chicago PMI on Thursday will be an important final indicator before ISM. The Dallas Fed Index ROSE by 18.2 points in March to -13.6%, compared with market expectations for a decline to -25.8%. This index is still in negative territory and suggests that manufacturing activity in the Texas region continued to contract moderately. On an ISM-weighted basis, the index also contracted, indicating that the details were slightly less negative compared to the headline figure. Production increased modestly by 3.3%, the first increase in 3 months. New Orders fell modestly by 4.8%, for the 4th consecutive month. Shipments increased slightly by 0.3%, their first increase in 3 months. Unfilled Orders fell moderately while Inventories dropped, their 8th consecutive decline. Employment declined sharply by 10.3% for 3rd straight month while Average Workweek fell moderately. This portends weaker factory job creation in the upcoming March payroll employment report. Prices Paid declined slightly. The 6-Month Outlook declined moderately.