The Dallas Fed Manufacturing Index came in at -12.7 for October.
Economists had estimated that the index strengthened to -6.5 in October from -9.5 in the prior period.
The report showed that Texas factory activity increased for the first time in nine months. However, its demand component remained negative.
There were no headcount changes after five months of declines, as the employment index rose to zero.
The report is based on a survey of business leaders that takes the pulse of factory activity, employment, and compensation, as well as the outlook.
In the survey, a number of respondents noted a general air of uncertainty.
“Business has fallen off a cliff with the uncertainty of oil pricing,” said one respondent in the fabricated metal business.
“For the first time in a long time, we have a huge amount of uncertainty about the direction things are headed,” said another in machinery manufacturing. “Our quotes remain strong, and our order quantity is solid (the new, lower solid), but we have no feel for what 2016 will hold.”
The prior release noted that manufacturing activity in Texas was “essentially flat”. Regional manufacturing surveys were generally weak across America in September.