Texas Manufacturing Activity Gains this Month, Outlook Dim
9/27 11:06 AM
Texas Manufacturing Activity Gains this Month, Outlook Dims CRANBURY, N.J. (DTN) -- Manufacturing activity in Texas expanded by three points to 24.2 in September, with the reading the 16th consecutive month above trend "indicative of solid output growth," said the Federal Reserve Bank of Dallas today in releasing findings from their latest Texas Manufacturing Outlook Survey. Categories within the index were mixed, with shipments and capacity utilization expanding in September while the new orders index fell, although remaining above trend. Readings for both company and general business activities turned down this month and outlook uncertainty increased. Costs for raw material and labor increased, with both cost components trending higher for the 17th consecutive month in September. Inflation, raw material shortages and delays, workforce challenges, and uncertainty over future tax regime were highlighted by manufacturers in Texas. "The tax increases contemplated in Congress create uncertainties for our business. The supply-chain bottlenecks continue to be problematic, and inflation in raw materials is putting pressure on profit margins," said a nonmetallic mineral product manufacturer. "American iron and steel requirements in the Clean Water Act and the recent Infrastructure Investment and Jobs Act are causing extreme shortages and price escalations of required steel for water and wastewater projects. Many projects are being delayed or canceled altogether. We expect this to escalate through 2022 if not addressed," said a fabricated metal manufacturer. "We are experiencing severe increases in some raw-material prices and are unable to fill out some vacant positions, even at higher wages," said a food manufacturer. "This is putting tremendous strain both financially and operationally on the company." "We are seeing price increases on ingredients. We are seeing domestic and international freight costs increase," said another food manufacturer. "Generally, the catastrophic decisions and ongoing policy and legislative blunders by Biden et al., plus the looming tax increases, have virtually every businessperson I know deeply concerned about the near-term impact and the future of our country. The detached reality is incredible. The inadequate labor pool and nonwork incentives have compounded the problem." "It is really difficult to make an accurate assessment of the future," said a fabricated metal manufacturer. "I anticipate the economy to get even worse the next 18--20 months with taxes and inflation rising," said a machinery manufacturer. (c) Copyright 2021 DTN, LLC. All rights reserved.