US Economy

Dallas Fed: Corporate outlook at recessionary levels

Share
The Texas flag flies in downtown Sweetwater on January 19, 2016 in Sweetwater, Texas.
Getty Images

The corporate outlook in Texas is at its lowest since the state was in recession, the Dallas Federal Reserve said Monday.

The general business activity and company outlook indexes came in at their lowest readings since April 2009, the report said — a time period that saw Texas in recession. The Dallas Fed's general business activity index fell 13 points to -34.6, and its company outlook index slipped to -19.5.

The report also found that six-month expectations on "prices received for finished goods" went negative in January, suggesting the expectation of a deflationary environment.

A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.
Do Houston's oil troubles spell danger for the Texas economy?

Analyst Peter Boockvar said in a Monday note that his team had been expecting a negative print out of Dallas, and "we got that and then some."

"Bottom line, the data speaks for itself and reflects the major recession the energy patch is in and the ripple effect on other industries," he wrote.

The Texas economy has been hurt by oil prices well off their triple-digit highs. On Monday morning, WTI crude traded at about $31.

Within certain manufacturing sectors, the bank's report saw frequent reference to oil and gas prices. For instance, survey respondents from the fabricated metal product manufacturers said they expected the "continued depression in the oil and gas industry to negatively impact our customer base and result in significant demand reduction."

Wonderful Citrus Sweet Scarletts Texas red grapefruit sit in a box for shipment at the company's facility in Mission, Texas. The Wonderful Co. are throwing their marketing muscle at Citrus paradisi, aiming to replicate
Texas hunkers down for another oil bust

The strong dollar has also impacted the state's fortunes, as it puts pressure on demand for U.S. exports.

"It is getting pretty ugly, and the strength of the dollar is really making us noncompetitive," an unnamed fabricated metal product manufacturing respondent said in the bank's report.

The Dallas Fed also found that expectations about future business conditions "weakened notably" in January, with its index of future company outlook registering its first negative reading — -1.3 — in almost seven years.