There are some very mixed economic figures from the Federal Reserve Bank of Dallas. The Dallas Fed Manufacturing Survey showed that the general activity index was -20.1 in December. Bloomberg was looking for a reading of -6.0, and the November reading was -4.9.

While that headline number is atrocious, the reality is that the actual production index rose to 13.4 in December. It was only at 5.2 in November. This is indicative of stronger output growth, but future expectations and demand remain weak. This is tied almost entirely due to the weakness in oil, with the other impacts likely falling behind oil.

A reading above zero indicates expansion in the manufacturing sector, while a reading below zero indicates contraction.

New orders were down for a fifth straight month, down to -8.9 in December from -1.6 in November. This implies that factory activity is likely to be lower in the months ahead. How manufacturers perceive business conditions also weakened. Additional data was seen as follows:

• The company outlook index fell by some 10 points to -9.7 in December, the lowest reading since August.
• The raw materials prices index fell to -8.6.
• The finished goods prices index fell to -15.9.
• The wages and benefits index ticked up to 20.4.
• The index of future general business activity was down nine points to -1.4.
• The future company outlook index was lower, but still remains positive at 6.6 in December.

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The United States as a whole has seen its manufacturing sector and its exporting companies suffering from a strong U.S. dollar. This regional Texas activity can mostly be tied to the oil and gas sector, within mining and logging.

Lower oil is leading to lower capital spending and SG&A costs from energy companies, both at home and abroad. As a reminder, the economic impact of an energy job is much higher than other jobs.

In December of 2014, the Greater Houston Partnership signaled in the 2015 Houston Employment forecast that the average annual compensation in Houston’s mining sector (mostly oil and gas related) was $185,000 in 2013 and that compensation for all other industries averaged $64,500. Their translation was harsh: just one energy sector job has the purchasing power of three non-energy jobs — at least that was the case in Houston. Nationally that figure is said to be worth about 2.5 jobs elsewhere in other sectors.

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