Dallas Fed January manufacturing index improves to -1.2 from -11.3

• Prior was -10.9
• Production +11.2 vs -3.0 prior
• New orders +11.8 vs -6.6 prior
• Capex +7.1 vs -4.6 prior
• Employment +8.2 vs -1.4 prior
• Outlook +2.9 vs -12.3 prior

This is a nice improvement with rebounds across the main metrics. New orders, in particular, look strong.

Comments in the report. I find the one about transshipment and customs fraud to be particularly pertinent. I’ve been writing about for awhile: There is widespread customs fraud because the whole system isn’t built for tariffs, it was built to counteract contraband smuggling and there’s nowhere near enough hiring to inspect cargoes and paperwork. It’s basically run on the honor system.

Beverage and tobacco product manufacturing

• We continue to see a lot of uncertainty in the market. The
  economy seems to be doing well, although the job market is tough if you
  are looking for a job. We have seen our employee retention slowly
  increase, most likely because of the poor job market. With the invasion
  of Venezuela, random threats against other countries, potential to blow
  up NATO between Greenland and Ukraine, there is general unease about
  where the economy will be in a year.

Chemical manufacturing

• End markets are still highly uncertain in durable goods,
  building and construction, and automotive. As interest rates continue to
  fall, we are hopeful for increasing activity. China’s economic
  policies and influence on the global market are still driving
  significant uncertainty for large exporters from the U.S.

Fabricated metal product manufacturing

• There seems to be a reluctance to initiate any substantial new work projects.
• We saw recent uptick in orders for the first half of 2026. The
  full-year volume is still expected to be relatively flat vs. 2025.

Food manufacturing

• On top of previous challenges, some customers have gone out of
  business. Others are struggling with cash flow and are demanding or
  taking longer terms to pay their orders. This has strained our cash
  flow.
• It was a slow fall, but business seems to be picking up, and we have a few new accounts commencing in first quarter 2026.
• The growing stigma related to doing business with nonprofit
  organizations, the general political climate and diminished funding for
  our customers to buy threaten our business.

Furniture and related product manufacturing

• We’ve seen a definite reduction in corporate headquarters work
  and commercial office buildings. Hospitality has slowed, and we’ve seen
  increases in health care and data center work.

Machinery manufacturing

• Let the market pick winners and losers.
• December sales ended stronger than usual, and this trend has continued in January resulting in optimism for 2026.
• Business is booming and for that we are pleased. We are buying
  new equipment to increase production, since we are falling behind on
  our inventory requirements, and sales have increased significantly.
• The economy is booming. Markets are at new highs. Inflation is
  contained. Tariffs are working. Our expansion efforts into new markets
  have been effective. We are pleased to say that for the first time in a
  very long time our crystal ball is indicating extremely encouraging
  times for our operation in 2026.

Miscellaneous manufacturing

• Our increase in sales volumes is attributable to new business
  we landed, not higher volumes from existing customers. High metals
  prices (copper and aluminum) make it difficult to pass costs to
  customers. Wildly swinging tariff threats and tariffs, ICE acting
  illegally and brutally and the unchecked authority and aggressive
  behavior from the executive branch continue to increase uncertainty and
  volatility. We have no capital expenditures planned in 2026 due to
  uncertainty and volatility.

Nonmetallic mineral product manufacturing

• There are indicators that new home construction will increase
  in the second half of the year, which will increase demand for our
  products.
• The only thing certain is the uncertainty. It is very hard to
  plan. We have stopped all capital expenditures and expansion plans.

Paper manufacturing

• Looks like we are starting off 2026 with more of the same slowness. Optimism is falling.

Primary metal manufacturing

• We continue to be negatively impacted by widespread
  circumvention of Section 232 tariffs. Foreign producers are exploiting
  the customs process by submitting two invoices: one reflecting only a
  partial value of the raw aluminum and a second invoice covering the
  remaining value of the finished aluminum extrusions. This practice
  significantly understates the true import value and enables product to
  enter the U.S. market at prices below domestic levels. In addition, our
  industry is being severely harmed by finished goods and parts entering
  the United States under Harmonized Tariff Schedule 7600 classifications
  at prices below domestic production costs, effectively bypassing the
  intent of the tariffs. We also have credible reports that Chinese
  aluminum extrusions continue to be transshipped through Vietnam,
  Cambodia, Malaysia and Mexico before entering the U.S. market, further
  undermining fair trade and enforcement efforts.

Printing and related support activities

• Demand continues slow for reasons we cannot figure out. It’s
  as if our customers just don’t need us right now. We know we will be
  busier in six months because of a large job we typically get and work on
  during the summer; however, without those kinds of jobs our everyday
  work just keeps getting smaller and smaller. I still think a lot has to
  do with the chaos coming out of Washington.

Textile product mills

• Our busiest time (in terms of production, orders and capacity
  utilization) is in fourth quarter, December and November, so January is
  down from last month but up about 50 percent from last January. We are
  seeing strong order volume and input and raw material prices are steady
  (no increases). We are feeling much better about business in January and
  first quarter 2026 relative to how we felt in January 2025. We are
  still unsure how the market and demand will be six months from now and
  not sure if this is a temporary positive bump.

Transportation equipment manufacturing

• Trucking segment indicators appear to be improving, driving up
  new orders. We have concern pertaining to raw material costs increasing
  such as copper
  Dallas Fed January manufacturing index improves to -1.2 from -11.3