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.

    




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