Dallas Fed Manufacturing Index Continues Decline in December Amid Broad Weakness in Texas Factory Activity

Dallas | EcoPulse24

Data from the Dallas Federal Reserve indicates that manufacturing activity in Texas continued to deteriorate in December 2025. The general business activity index for the manufacturing sector dropped by 0.5 points to -10.9, marking its lowest level since June and signaling a widening slowdown across the sector.

The future outlook index also fell deeper into negative territory, reaching -11.9. This reflects a worsening business sentiment among firms for the coming period, amid demand pressures and heightened economic uncertainty.

On the operational front, the data showed broad-based weakness across various components. The production index declined by 24 points to -3.2, indicating a moderate fall in output levels. The new orders index dropped by 11 points to -6.4, pointing to softer industrial demand.

Capacity utilization fell sharply, with the index down 24 points to -4.5, while the shipments index declined to -10.6, its lowest in about 17 months, highlighting slower product deliveries and reduced operational momentum.

In the labor market, indicators showed relative stability in employment numbers, offset by a reduction in hours worked. The employment index dipped slightly to -1.1, with 12% of firms reporting net hiring and 13% reporting net layoffs. Conversely, the hours worked index fell sharply by 17 points to -7.5, indicating firms are cutting hours rather than headcount.

Regarding costs, price pressures remained largely unchanged from the previous month, while wage growth saw a slight acceleration. This suggests some ongoing labor market pressures despite the manufacturing slowdown.

These figures underscore persistent challenges facing the U.S. manufacturing sector, particularly in Texas, as demand slows, financial conditions tighten, and companies remain cautious about economic growth prospects in the near term.