Dallas Fed: Tepid Texas manufacturing recovery continues

DALLAS—Growth in Texas factory activity continued in October, according to business executives responding to the Texas Manufacturing Outlook Survey.

“Signs of recovery continued in this month’s manufacturing report, with the production index staying in positive territory after its rebound last month,” said Emily Kerr, senior business economist at the Dallas Fed. “Job growth continued, albeit at a slower pace. Some pessimism persists, though, as firms’ outlooks and assessments of general business conditions continued to worsen on net.”

Key takeaways from this month’s survey:

• The production index edged down to 5.2, a reading that signals a modest pace of output expansion.
• The new orders index remained negative and slipped four points to -8.8.
• Labor market measures suggest slower employment growth and shorter workweeks in October.
• Upward pressure on input costs—both labor and materials—retreated this month, and selling prices fell modestly.
• The general business activity and company outlook indexes remained largely unchanged at -19.2 and -17.1, respectively, having now spent a year and a half in negative territory.

The Dallas Fed asked a series of special questions on credit conditions in our October Texas Business Outlook Surveys and heard back from 370 business executives (services and manufacturing) Oct. 17–25.

“Fewer Texas firms are seeking credit now than in April, and among those that are, slightly more are having at least some difficulty obtaining financing,” Kerr said. “Fifteen percent of all firms surveyed say their production and/or sales have been adversely affected by difficulty obtaining credit, and 12 percent say they have reduced hiring and/or increased layoffs due to the difficulty. These shares increased only slightly when firms were asked about an expected impact over the next six months.”

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Media contact:
Jon Prior
Federal Reserve Bank of Dallas
Phone: 214-922-6857
Email: jon.prior@dal.frb.org