Texas Manufacturing Production Contracts Most In 7 Years (Ex-COVID)
Texas factory activity declined in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell three points to -4.2, a reading indicative of a slight contraction in output. That is the largest contraction - outside of the COVID lockdowns - since June 2016...
Other measures of manufacturing activity also indicated contraction in July.
The new orders index has been in negative territory for more than a year and edged down to -18.1. The capacity utilization and shipments indexes remained negative but moved up to -2.4 and -2.2, respectively. The capital expenditures index continued to bounce around in the same low or slightly negative range since February; the July reading was -2.4.
Perceptions of broader business conditions continued to worsen in July. The general business activity index stayed negative but ticked up to -20.0, while the company outlook index pushed further negative to -16.9. The outlook uncertainty index moved up four points to 20.5.
Price pressures increased in July but remained subdued, and wage growth moderated.
However, as usual, the most insight is gleaned from respondents' comments...
Chemical manufacturing
- The chemical industry in general is in a slump currently.
Computer and electronic product manufacturing
Interest hikes obviously significantly affect industrial production. We are seeing it across the board in 12 different segments of our industry. I wish the Federal Reserve would look at the industrial side and start cutting interest rates slowly. How much does the industrial backbone of this country have to suffer to lower inflation? We know the effect of interest [actions] does have a lag in economic results—why not prevent a recession by starting to lower interest rates now, rather than creating havoc in manufacturing?
We continue to be concerned by all of the talk of a recession. We aren’t seeing that reflected in reduced customer demand yet. We intend to make significant capital investments over the next six months to expand capacity and reduce our unit costs, as we hope to gain market share in the event of a recession.
Fabricated metal product manufacturing
We have the biggest backlog of projects ever. We are not able to expand due to the difficulty in hiring workers for the plant.
Supply constraints are improving, but there are still some ongoing challenges.
Machinery manufacturing
The summer doldrums are real … at least they are this month. Order interest has declined significantly, and order entry has slowed to a crawl. We’re bidding smaller jobs now than we have in 24 months. Raw material prices have eased, but so have selling prices to the point of creating margin erosion.
We are seeing a slight increase in business; however, we will have to see if this trend will continue.
Paper manufacturing
- Our industry is down approximately 6 to 7 percent for four quarters in a row.
Primary metal manufacturing
- High interest rates are hurting some businesses like real estate and commercial construction. Other industries like transportation are still good. The Federal Reserve needs to stop rate increases to let businesses and consumers settle down.
Printing and related support activities
- We are very fortunate to have some nice large jobs in the plant right now that are keeping us busy when many in our industry, including our competitors, are slow right now. We see our activity staying pretty strong into the fall, so we are fortunate. We had hoped to not have to raise prices but are having pressure from others to hire away our workers, so we are implementing wage increases that need to be covered by raising prices again.
Textile product mills
- Our manufacturing of home goods, like mattress components, comforters and pillows, has decreased. Talking to suppliers and customers, the consensus of the bedding industry outlook continues to look bleak. High interest rates appear to be the main driver, as home sales are weak, and the associated new-mattress purchase that is known in our industry to go hand in hand is not happening. We have had to downsize the company three times in the past nine months—from three production sites to one.
Not exactly the 'glowing pictures of Bidenomics' that The White House is projecting.
