Texas Manufacturing Looking Up as New Orders, Prices Received for Finished Goods, Wages and Benefits All Hit Record Highs

The Dallas Fed Manufacturing index for April rose 37.3 vs 30 expected, the index is a key measure of Texas state manufacturing conditions. New orders 38.5 hit a record high vs 30.5 prior. Prices received for finished goods and Wages and benefits both hit record highs.

The Dallas Fed Manufacturing index for April rose 37.3 vs 30 expected, the index is a key measure of Texas state manufacturing conditions. New orders 38.5 hit a record high vs 30.5 prior. Prices received for finished goods and Wages and benefits both hit record highs.

Wild West

Dallas Fed April 2021 Manufacturing Index

  • Dallas Fed April manufacturing index 37.3 vs 30 expected  was 28.9
  • Output 34.0 vs 48.0 prior
  • New orders 38.5 vs 30.5 prior (record high – since 2004)
  • Prices paid for raw materials 71.4 vs 66.0 prior
  • Prices received for finished goods 39.1 vs 32.2 prior — record high
  • Wages and benefits 37.1 vs 28.0 prior — record high

Texas Manufacturing April 2021

 April 26, 2021 Comments from Survey Respondents

These comments are from respondents’ completed surveys and have been edited for publication.

 Chemical Manufacturing Shipping is restricting business activity—there’s a shortage of intermodal containers, space on ships, and truck availability. The aftereffects of the [February] ice storm are hitting now. Our inventory has now expired, and raw material supply and pricing out of the Gulf region are restricting business activities. We had major supply-chain issues from COVID-19 and then the ice storm. We are under a significant amount of price pressure due to rapidly rising raw material pricing.

 Nonmetallic Mineral Product Manufacturing It is very difficult to find employees to handle the significantly increased demand. We have never had this problem before in our 44-year history. Our human resources department reports that even at a starting pay for non-skilled-level workers of $14 per hour, we cannot fill our 20-plus open positions. People don’t want to go to work when they can stay home and collect $400 or more per week in unemployment. We are experiencing rapid increases in the price of steel, lumber and cement. This is increasing costs of production and will lead to higher prices eventually. We are also having shortages at various times in getting these materials.

Primary Metal Manufacturing Office rents are down. This will make it difficult for banks to lend on new office buildings. Commercial construction should decline in 2022. We are having raw material supply constraints and rapidly increasing costs occurring, leading to concern regarding inflation.

Fabricated Metal Manufacturing We are providing a lot of quotes, but there still seems to be a lot of reluctance to actually start projects. As a precision machine shop, we saw our sales decrease in 2020 by 30 percent. We are finally starting to see purchase orders and activity return to 2019 levels. We actually received an order from a customer in the power generation field for the first time in 18 months. We serve the power generation, automotive, medical, satellite communication, oil/gas/mining, and packaging industries. Market demand is outstripping our ability to fulfill orders in the time requested. Production capacity is the limiting factor. Steel and labor supply are also factors. At the current time, there is no way to know how long this market will last. With lead times on equipment being extended (up to over a year), we are hesitant to invest in the additional capacities to meet current demand. The supply chain and the reliability and availability of shipping are concerning. We need employees! It is hard to find anybody willing to work.

Plastics and Rubber Products Manufacturing The challenge now is finding enough new employees. Our recovery came quicker than anticipated, and we need more people as quickly as possible

Machinery Manufacturing Our second-wave PPP [Paycheck Protection Program] money is about to run out; I’m not sure if things will improve. We need to hire people, but it’s difficult when people are making $15 per hour to stay at home on unemployment. We are seeing material inflation—prices for raw goods (steel) are rising dramatically. We are seeing purchase activities increase substantially. Therefore, we are trying to hire to keep up with demand. But as usual, the government is getting in the way of our success with the unemployment benefits that turn employees into lazy Americans looking for handouts instead of depending on their efforts to improve their lives. Activity is up; the size of orders is not. I see a good second half of 2021 and a continued slow ramp-up in the second quarter. We are currently running at near-capacity and building more production machinery. Computer and Electronic Product Manufacturing Year-over-year comparisons for April and May are expected to show great improvement, but business is about the same as it has been since third quarter 2020. I expect business to improve during the latter half of 2021.

Transportation Equipment Manufacturing Material shortages are crippling. Government payments are damaging the job market. Unchecked government spending is a time bomb. Unfulfilled demand is the only positive, and it will dissipate.

Furniture and Related Product Manufacturing The winter storm contributed to a great deal of repair work and new projects. Wood prices and skilled labor continue to be challenging.

Wood Product Manufacturing The increase in business, both organically and from new business, is putting a huge strain on the supply chain in building products across the whole spectrum.

Paper Manufacturing We have seen a measurable uptick in orders and production (albeit from a low bar) that seems to be representing the next six months. The cost of raw materials is in a demand-pull inflation time period.

Printing and Related Support Activities We have gotten much busier in April than we were in March, but some of this is work we already knew about. Government stimulus money has been very helpful and allows us to make sure our employees get 40 hours a week. We actually have four temporary workers in here for the first time in over a year. Inflation is real; raw material prices are going goofy, and everyone is blaming it on COVID-19 and the freeze. It sounds like a good time to raise my prices then as well.

Food Manufacturing The timing and arrival of what has to now be imbedded inflation is concerning. Freight costs have risen dramatically, having a dramatic impact on the cost of moving goods both in and out. Ocean freight has gone up four to five times in cost. Trucking supply is increasingly tight. Government stimulus money given to individuals has drastically reduced the number of people seeking a job and reduced the incentive to show up and do their job. Labor is becoming a real problem as a direct result of the handouts. We began cycling against the spike in sales in March 2020 for our products and are encouraged that the demand has stayed very strong. This is the reason for the improved outlook month over month.

Apparel Manufacturing More military uniform orders have been received.

Source: Dallas Fed Surveys Texas Manufacturing Outlook Survey

From The TradersCommunity News Desk

Leave a Reply

Your email address will not be published. Required fields are marked *