NEW YORK - “Texas manufacturing weakened further in September. Most indicators of current production and general business conditions recorded their lowest readings since the survey’s inception in 2004,” according to the monthly business activity survey conducted by the Federal Reserve Bank of Dallas, released today.
“Respondents largely attributed the weakness to Hurricane Ike hitting the Texas Gulf Coast on Sept. 13 and leading to widespread factory closures in the area. Some indexes for activity six months from now remained positive and improved notably, suggesting producers expected growth to recover in the near future,” the Fed said
The general business conditions index widened to negative 39.6 in September from negative 18.8 in August.
The production index slumped to negative 21.4 from zero, while capacity use dropped to negative 18.5 from positive 0.9, the Fed reported. Volume of new orders slid to negative 27.1 from negative 14.6, while growth rate of orders index declined to negative 35.9 from negative 18.4.
Unfilled orders improved to negative 11.8 from negative 14.7 in the prior survey, while the volume of shipments sank to negative 21.6 from negative 3.9, and delivery times recouped to negative 2.0 from negative 16.5. The materials inventory index fell to negative 9.8 from positive 1.0, the finished goods inventory slipped to negative 4.9 from negative 3.9. Prices paid for raw materials slid to 27.2 from 51.5, while prices received for finished goods dipped to 8.7 from 21.6. Wages and benefits dropped to 13.6 from 17.5, while the number of employees index widened to negative 8.8 from negative 6.9, and the average workweek index declined to negative 20.8 from negative 6.9, and the capital expenditures index widened to negative 13.7 from negative 0.9.
As for future outlook (six months from now), the general business conditions index widened to negative 16.8 from negative 6.1 last month, the production index increased to 25.5 from 14.8, while capacity use rose to 21.5 from 10.8, the Fed reported. Volume of new orders grew to 23.6 from 10.8, while growth rate of orders index increased to 16.9 from 7.8.
Unfilled orders improved to negative 6.8 from negative 7.8, while the volume of shipments climbed to 22.8 from 15.7 and delivery times sank to negative 14.0 from negative 12.8. Materials inventories reversed to negative 3.0 from positive 3.0, and the finished goods inventory declined to negative 9.9 from negative 3.9.
Prices paid for raw materials fell to 31.6 from 45.1, while prices received for finished goods dropped to 25.5 from 37.6. Wages and benefits remained 35.3, the number of employees index gained to 3.9 from 2.9, while the average workweek index rebounded to zero from negative 11.8, and the capital expenditures index dropped to zero from positive 3.9.
The Texas Manufacturing Outlook Survey is a monthly anecdotal survey of manufacturers in Texas. Roughly 80 manufacturers regularly participate in the Dallas Fed survey, which began collecting data in May 2004.