According to a Federal Reserve Bank of Dallas report released this week, factory activity in Texas decreased once more in August, and production reached the lowest point since the pandemic’s deadliest days.
The Texas Manufacturing Forecast Survey showed that the measure for general business activity went from -20.0 to -17.2. This was a surprising gain, but the number is still very low and in the negative range. This is the 16th time in a row that the general activity measure has been negative.
The Dallas Fed does the poll every month to find out how business is going in Texas and how well the industry sector is doing. Any number below zero means the sector has shrunk.
According to the most current figures coming from the National Association of Manufacturers, production will make up about 11.9% of all output within the state in 2021, down from 13.0% in 2019. In 2021, the sector’s contribution to the state’s GDP was about $219 billion, a decrease from $241 billion in the year 2019. In Texas, there was an average of 897,000 industrial jobs in December 2021, which was less than the 909,000 jobs there had been in December 2019.
The company outlook measure didn’t change much, staying at -18.4. This shows that Texas manufactures don’t have high hopes.
The production measure dropped six points to -11.2, which is the lowest reading since May 2020, when a significant portion of the country was still recovering from lockdowns put into effect at the beginning of the pandemic throughout the U.S.
Other measurements show slowness. The new sales index, which has remained in the negative for over a year now, came in at -15.8, which is a little bit higher than in July. The capacity usage measure went down a little bit, to -3.7. The exports index fell by 14 points, making it -15.8. The capital spending measure fell to -8.6, which is the lowest level in three years.
Measures of the labor market point to slower job growth and shorter workweeks in August, which could mean that the demand for workers is slowing down. The job measure dropped six points to 4.3, which is lower than the average of 7.8 for the series. 18% of firms said they hired more people, while 14% said they let people go. The hours worked measure went back into the negative, coming in at -3.8, which means that people are working less.
There were different measures of inflation. The Dallas Fed said that price increases stayed “rather subdued.” The measure of the prices of raw materials went up, but it is still below its long-term average. The measure of prices of finished goods stayed at the same level in August, which shows that prices didn’t go up much. But the growth of wages sped up. The wages and benefits measure “shot up” 16 points, going from 21.1 to 34.9. This was higher than its normal of 21.1.
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