FX.co ★ Texas Manufacturing Sector Downturn Eases

In May 2025, the Dallas Fed’s general business activity index for Texas manufacturing demonstrated an improvement, moving from a near five-year nadir of -35.8 in April to -15.3. This marks the fourth consecutive month of contraction, albeit with a less severe decline than the preceding month. The company outlook index stayed negative but showed an upward shift to -11.3 from -28.3, and the outlook uncertainty index decreased to 12.7, signifying a slower increment in uncertainty. In contrast, the production index dropped to nearly zero, reflecting stagnant output after modest growth seen in March and April. New orders displayed an uptick, improving to -8.7 from -20.0, while capacity utilization improved slightly to -1.5. Shipments recovered, returning to positive ground at 0.5. Labor market indicators revealed a modest rise in head counts alongside shorter workweeks for this month. Regarding prices, inflationary pressures remained above average, although wage growth was subdued. Prospects for manufacturing activity over the next six months showed considerable optimism, with the future production index climbing 16 points to 31.1.