Regional factory reports, in some contrast to government data at the national level, continue to run at unusually strong rates of growth including the Dallas Fed's general activity index which is up more than 10 points in December's data to a much stronger-than-expected 29.7.
New orders keep pouring in, also up more than 10 points to 30.1, and unfilled orders continue to build, at 9.2 which is strong for this reading, as manufacturers in the region struggle to keep up with demand. Hints of constraints include long delivery delays, elevated prices for inputs and traction for finished prices, a sharp rise in hours worked and also wages & benefits, and a jump in employment which is up nearly 15 points to 20.4. Manufacturers in the region are increasing capital spending as capacity utilization continues to climb.
Yet the strength of the Dallas Fed, along with similar reports, has not panned out to quite the same strength for factory orders, which have been solid but still mixed, nor the manufacturing component of the industrial production report which also has been mixed. Still, the factory sector is on the rise and looks to be an important contributor to fourth-quarter growth.