US August Dallas Fed Manufacturing Index Improves Sharply, Regional Fed Data Suggests Strong ISM and PMI
Macro
The US August Dallas Fed manufacturing activity index rose to 11.6, up from July's positive 1.3, beating expectations and reaching its highest level since January of last year. The production component rose to 16.1, and new orders rose to 22.0, but the employment component fell from 12.2 to 8.0, suggesting a softening labor market. Materials costs rose to 44.1, indicating strong price pressures, while selling prices fell to 22.7, suggesting companies are unable to pass on costs. The New York Fed manufacturing index was 20.6, the Philadelphia Fed manufacturing index was 46.4, and the Kansas City Fed manufacturing index was 10, with regional Fed data generally showing improvement, suggesting that August ISM and PMI data will also show improved manufacturing activity. The final PMI manufacturing reading, due for release on September 1, is expected to be revised up to 53.3, while the ISM manufacturing index is expected to dip slightly to 55.2. Solid economic growth could strengthen expectations for a September rate hike.
