12:18 PM EDT, 07/29/2024 (MT Newswires) -- Texas manufacturing contraction deteriorated more than expected this month as production and shipments fell into negative territory, according to the Federal Reserve Bank of Dallas.

The general business activity index worsened to minus 17.5 in July from minus 15.1 the month prior, data from the Fed branch showed Monday. Analysts surveyed in a Bloomberg poll were expecting a month-over-month contraction to minus 15.5.

Production, which the Dallas Fed calls a key measure of state manufacturing conditions, swung to minus 1.3 from positive 0.7. Shipments fell to minus 16.3 from a 2.8 gain, while new orders decreased to minus 12.8 from minus 1.3, the regional Fed's survey showed.

Demand weakened, outlooks worsened and uncertainty spiked, Emily Kerr, senior business economist at the Dallas Fed, said.

The employment index rebounded to 7.1, its highest level in 10 months, from minus 2.9 in June, according to the Fed branch. About 19% of firms reported net hiring in July, while 12% reported net layoffs. Upward pressure on prices and wages continued, according to the report.

"A bright spot this month was a rebound in the survey's employment index, which signaled net hiring after weakness the past few months," Kerr wrote. "Applicant availability and firms' ability to retain workers continue to improve."

Six months out, the gauge for general business activity jumped to 21.6 in July, its highest reading since fall 2021, from 12.9 last month. The future production index advanced to 32 from 27.1, while the forward-looking indicators for new orders and shipments increased by 0.5 and 1 point to 30.3 and 29.1, respectively.

Last week, the Richmond Fed and Kansas City Fed reported that manufacturing activities in the Mid-Atlantic and Midwest regions unexpectedly slid into deeper contraction territory.