Manufacturing Mixed: Richmond Fed Surges to 2021 Highs While Dallas Contracts

Richmond Fed Shows Strong Momentum

The Richmond Fed also showed strength by jumping 10 points moving to the highest point since 2021. New orders are surging and shipments jumped during May. The growth here was also related to consumer spending. The comments in the report were very optimistic about the future.

Persistent Dallas Contraction Signals Regional Stress

The Dallas Fed numbers were less favorable. For eight of the last nine months Dallas has shown declines in manufacturing activity. The contraction in May was 7.7%. The two issues relate to energy production as well as prices.

Midwest Stability as Consumer Spending Sustains Growth

The Kansas Fed Manufacturing Index was essentially the same from April to May reflecting a nice stable growth level. The mid-section of the country seems to be doing well as the Kansas index has been reliably positive since June of 2025. The primary driver here has been non-durable activity. As long as the consumer continues to purchase, the center section of the country should be in good shape.

Durable Goods Show Consumer Shifting to Essentials

The hard number came in at a strong 7.9%. Behind the numbers, it was still ok, but not the over-the-top level indicated. Boeing had a huge order which skewed the number significantly. When you pull that single item out of the durable goods, growth came in at 1.1%. While the consumer is spending, the items they are purchasing appear to be more staples in nature. This could be an early sign of economic weakness likely related to inflation. For now, the consumer is buying what they need to keep their buying powder dry in case things worsen.

Housing Market Tightening

Keep an eye on the residential real estate market. First off, 30-year interest rates continue to climb, moving above 6.5%. That makes mortgage payments more expensive, boxing out more marginal buyers.