12:25 PM EDT, 09/30/2024 (MT Newswires) -- Texas manufacturing activity unexpectedly improved in September into shallower contraction territory while output turned negative, according to the Federal Reserve Bank of Dallas.

The general business activity index edged up to minus 9 in the current month from minus 9.7 in August, data from the Dallas Fed showed Monday. Analysts surveyed in a Bloomberg poll were expecting a month-over-month drop to minus 10.3.

Production, which the Dallas Fed calls a key measure of state manufacturing conditions, swung to minus 3.2 from positive 1.6. Shipments fell to minus 7 in September from positive 0.8 the month prior. New orders deteriorated to minus 5.2 from minus 4.2 month to month, the regional Fed's survey showed.

"The Texas manufacturing sector continued to exhibit weakness, with survey indicators suggesting declining output and demand," said Emily Kerr, senior business economist at the Dallas Fed. "Employment grew slightly, however, and expectations for future production edged further optimistic."

The employment index rebounded to 2.9 this month from minus 0.7 in August, according to the Fed branch. About 20% of firms reported net hiring in September, while 17% reported net layoffs.

The prices paid index dropped to 18.2 from 28.2 while the prices received index dipped to 8.4 from 8.5 on a monthly basis. However, "moderate upward pressure" on prices and wages continued, the Dallas Fed wrote.

Six months out, the gauge for general business activity ticked down to 11.4 in September from 11.6 in August. The future production index rose to 35.2, its highest reading since early 2022, from 33.7. Forward-looking indicators for new orders increased by 2.6 and declined by 1.3 for shipments.

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