Overall business conditions for Texas producers were not expected to worsen in September despite higher production, according to data from the Federal Reserve Bank of Dallas released Monday.
The Texas Manufacturing Survey’s general business conditions index fell to minus 17.2 from minus 12.9 in August. This is the fifth consecutive negative value of the index.
It was worse than expected. Economists had predicted minus 5.5 in the general business conditions index.
A deeper entry into negative territory indicates that the activity of the region weakened more rapidly in September than at the beginning of the month.
The production index, an important measure of the government’s production conditions, fell from 1.2 to 9.3. This shows that output increases faster even as conditions worsen.
Labor market indicators show that producers are still experiencing a very tight labor market. The employment index remained largely unchanged at 15.0, above its average of 7.8. Twenty-four percent of companies said they increased their payroll and 9% said they had cut their payroll. The hours worked index rose slightly, but dropped six points to 8.0. Prices and wages continued to rise faster over the summer with a few signs of slowing inflation. The commodity price index rose from 34.4 to 37.1, breaking the trend of easing quarterly price pressures. However, the finished product price index continued its downward trend and fell nine points to 18.1, above the average. The wage and benefits index also fell. Expectations for future manufacturing activity in September were mixed. The Future Manufacturing Index advanced into positive territory at 28.3, while the Future General Business Index remained negative and dropped 14 points to -22.4. Other indicators of future manufacturing activity such as new orders and employment continued to rise in September. Prospects for future manufacturing activity are mixed. The Future Production Index moved further into positive territory, but the overall business activity index went deeper going forward.
“We live in Alice in Wonderland … it’s getting worse,” the automaker told the Federal Reserve Bank of Dallas.
“We see the overall economic situation deteriorating, but our customers continue to buy as the oil industry remains profitable, and they see a bright future even if they don’t talk about it. That’s why we’ve hired some new people to support the work that will come out in the next two months,” said another hardware manufacturer.
A food manufacturer told the Federal Reserve Bank of Dallas that food inflation has changed shopping habits.
“We are seeing dramatic changes in consumer behavior and it is affecting our volumes. Beginning in May, demand for our premium products began to decline as consumers turned to cheaper brands. It accelerated as fuel and other costs increased. We are taking proactive steps to recover lost volumes and reduce costs to meet our financial targets for the year. “We are not sure how long this change in producer, consumer behavior will last.”
Source: Breitbart
