It's a quiet start to the week for economic data with the only US release being the Dallas Fed's Manufacturing Survey for the month of July. Other regional surveys already released this month have been mixed with the reports out of New York and Philadelphia coming out better than expected whereas Richmond was much weaker than expected. The Dallas Fed was more in line with that Richmond report. The headline number was expected to improve rising from last month's contractionary reading of -15.1 up to -14.2. Instead, it fell deeper into contraction at -17.5.

Although that reading doesn't make for any sort of new low, it did mark a 27th consecutive month with a contractionary reading. As shown below, there has only been one other streak lasting as long: an identically long streak ending in November 2009.

Additionally, while the current conditions index continues to sit in contraction, expectations have surged. General Business Activity Future Expectations rose to 21.6 which is the highest level since November 2021. Taking the spread of current conditions versus expectations, the July reading registered the second lowest reading in the survey's history behind a slightly lower -42.8 in March 2009.

In the table below, we show the readings in July and June and how those rank relative to the whole survey history for each category of the report. The headline reading is only in the 17th percentile of all months since the start of the survey in 2004. Weakness is seen throughout most other indices with significant month-over-month declines as well. The only current conditions index that is currently above its historical median is wages and benefits. Similarly, even though the General Business Activity expectations are elevated relative to current conditions, only a handful of expectation indices are in the 50th percentile or better. Granted, breadth this month was strong with all but two expectation categories rising month over month.

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The single weakest category for current conditions was unfilled orders. That index is contracting rapidly, falling 21.9 points month over month (the third largest MoM decline to date) to -26.6 and in the bottom 2% of readings. It even surpasses the COVID lows for the worst reading since the first quarter of 2009. Shipments are not as depressed, but after a 19.1 point MoM decline, it has turned from expansion to one of the largest contractions of the past couple of years.

Pivoting over to the employment indices, there were some mixed findings. For starters, the employment index measuring whether businesses are on net hiring or firing rose to the most expansionary reading since September. However, hours worked has cratered. At -13.8, that index is now down to the lowest levels since the spring of 2020 and before that, it was only lower during the depths of the 2008-2009 recession (although the troughs of both those periods was much deeper).

In tonight's Closer, we will plug this data into our Five Fed Manufacturing Composite as well as dive into the findings of the special questions segment of the survey.

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