An altogether mixed report on manufacturing activity for the Dallas Fed district as current production surges while overall business conditions sink further into contraction.

The Dallas Fed's general activity index comes in at minus 10.4 in November versus minus 5.0 in October and minus 8.7 in September. As a 0 figure indicators flat business conditions, these numbers indicate faster contraction.

Current production, on the other hand, accelerates to 20.5 in November versus 5.2 in October and 5.2 September, suggesting much better growth. The production index for six months ahead is also much better at 33.7 in November versus 21.0 in October.

New orders, the leading indicator, comes in at 4.8 in November minus 1.7 in October and minus 2.6 in September. That shows an improving outlook as expanding new orders points to better business ahead.

Employment is at 1.2 in November versus 2.0 in October and minus 3.4 in September.

Capex comes 9.8 in November versus 4.8 in October versus 13.3 in September.

Prices paid for raw materials registers 35.3 in November, up from
33.4 in October and 43.4 in September. Prices received is at 10.8 in November versus 7.7 in October and 11.7 in September.

On the six-month outlook, general business conditions are notably better at 11.0 in November versus 7.0 in October and 8.4 in September.

The Dallas Fed Manufacturing Survey tracks factory activity in Texas on a monthly basis. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month. Responses are aggregated into balance indexes where positive values generally indicate growth while negative values generally indicate contraction. About 100 manufacturers regularly participate in the survey.

Investors track economic data like the Dallas Fed Manufacturing Survey to understand the economic backdrop for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers a moderate growth environment that will not generate inflationary pressures. The Dallas Survey gives a detailed look at Texas' manufacturing sector, how busy it is and where it is headed. Since manufacturing is a major sector of the economy, this report can have a big influence on the markets. Some of the survey indexes also provide insight on inflation pressures -- including prices paid, prices received, wages & benefits, and capacity utilization. The Federal Reserve closely watches this report because when inflation signals are flashing, policymakers can reset the direction of interest rates. As a consequence, the bond market can be highly sensitive to this report. The equity market is also sensitive to this report because it is an early clue on the nation's manufacturing sector, reported in advance of the ISM manufacturing index and often in advance of the NAPM-Chicago index.