ISRAEL: Report-Trump & Netanyahu Seek Swift Expansion Of Abraham Accords

May's Texas Manufacturing Outlook Survey showed an improvement from April and overall steady activity in the month, with the production index, "a key measure of state manufacturing conditions... indicating flat output this month after modest growth in March and April", per the Dallas Fed.

• Indeed, production fell 4.2 points to 0.9. But the general business activity index rose 20.5 points to -15.3, a three-month best, with 6-month ahead production up 16.3 points to 31.1, highest in 4 months. New orders picked up 11.3 points to -8.7, which apart from March's 29-month low would have still been the weakest since November 2024. Employment rose 7 points to 3.5.
• From an inflation perspective, prices paid pulled back 7.7 points to 40.7, with prices received up 0.2 to 15.1 - both still elevated. There was a bit more of a deceleration in 6-month ahead expectations, with prices paid down 7.8 points (39.8, 5-month low) and received ticking 1.4 points lower (28.2).
• The majority of anecdotal comments in the Dallas report mentioned "tariffs", mostly in a negative way though a couple respondents noted that confidence would improve if and when deals were struck. Indeed there was scarce mention of the May 12 US-China tariff climbdown (survey data were collected May 13–21) and even then the confidence seemed tentative (a firm in Computer and electronic product manufacturing: "I would say the uncertainty has decreased in the very short term (up to 90 days) based on the U.S.–China tariff rollback").
• The most tangible impact on the survey was in the 34.4 point drop in the Outlook Uncertainty index, to 12.7.
• We get the Richmond Fed's manufacturing survey Wednesday, which will help shore up the degree to which confidence improved after the May 12 tentative "deal". Improvements so far have been seen in Philadelphia, Dallas, and Kansas, with Chicago activity and NY Fed's Empire State current conditions indices lower vs April.

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