Dallas Fed production May 2023
- Prior was 23.4
- Output -1.3 vs +0.9 prior
The Texas Manufacturing Outlook Survey reported stagnant factory activity in May with the production index revealing minimal change in output. Other key indicators, including the new orders and growth rate of orders indices, declined further, hitting their lowest values since mid-2020. This downturn extended to broader business conditions, with the general business activity index and the company outlook index both reaching a three-year low.
Despite these conditions, labor market data suggested steady employment growth. Pricing pressures, including those for raw materials and finished goods, fell further below average levels, indicating flattening prices and a decrease in wage pressures. Although future manufacturing activity outlooks were mixed, the future production index did show some rebound, a potential positive sign amidst the broader negative trends.
Comments in the report:
Chemical manufacturing
- Volumes have not rebounded at a level we would expect this time of year. Orders seem to be more erratic, which is in line with automotive and building construction markets trending downward as interest rates have deeply impacted both of these key, basic-materials consumer sectors.
Computer and electronic product manufacturing
- It is easier to find qualified employees over the last few weeks.
Fabricated metal product manufacturing
- Our only problem is our inability to hire enough hourly employees at the plant.
- We have had orders canceled when owners have decided not to proceed with projects.
- We have a continued focus on clearing the backlog of orders as supply constraints clear.
Food manufacturing
- Order volume has stalled recently.
- We have different dynamics and drivers in our business. We clearly are moving into a period of stagflation.
Machinery manufacturing
- We are seeing a massive slowdown in business activity.
Paper manufacturing
- We are seeing all indications of a continued slide in demand (three quarters now). Prices are coming down some, but labor costs are still going up. This offsets any reduction in material costs, so margins are down as a result.
Primary metal manufacturing
- Business is slowing down. That is certain.
- The building and construction industry remains significantly off, primarily residential. Another very negative factor is the influx of foreign material used in our industry.
Printing and related support activities
- We are fortunate to have been busy with seasonal work the last few months; otherwise, we would have been hurting just living off commercial finishing work. We have a large seasonal job starting in two weeks that will keep a lot of people busy through Labor Day. General activity is definitely slower than it has been.
Textile product mills
- We feel better now than we did a month ago about sales and the general environment. We have seen an increase in sales, particularly in our direct-to-consumer segment, although retail stores are down (retail stores are not a key strategic growth area for us; we’ve seen the writing on the wall for a while with this group). I also think uncertainty has reduced. I feel that we have a better grasp on the “new normal” cost structure and don’t anticipate any new major shocks to the system.
Transportation equipment manufacturing
- There is nothing encouraging on the horizon. The war on fossil fuels and higher interest rates continue to make things worse. Doesn’t the Federal Reserve understand a higher interest rate is crushing banks?