Texas Manufacturing Index +14.6 vs +4.6 prior, Focus on Raw Material Availability

The Dallas Fed Manufacturing index for October rose 14.6 vs 4.6 expected, the index is a key measure of Texas state manufacturing conditions. New orders +14.9 vs 9.5 prior. Future index flipped positive +2.4 vs -2.8 prior.

The Dallas Fed Manufacturing index for October rose 14.6 vs 4.6 expected, the index is a key measure of Texas state manufacturing conditions. New orders +14.9 vs 9.5 prior. Future index flipped positive +2.4 vs -2.8 prior.

Wild West

Dallas Fed October 2021 Manufacturing Index

  • Dallas Fed October Manufacturing Index +14.6 vs +4.6 prior
  • Production index at +18.3 vs 24.2 prior
  • New orders +14.9 vs 9.5 prior
  • Prices paid +76.3 vs 80.4 prior
  • Wages and benefits +44.1 vs 42.7 prior
  • Future index +2.4 vs -2.8 prior

Texas Manufacturing Outlook 10 25 21

 April 26, 2021 Comments from Survey Respondents

We are unable to secure enough raw materials to meet our growth demand from customers. Prices for raw materials have increased over the last six months. The rate of increase has slowed. The uncertainty over being able to purchase steel and cement is making our decisions more difficult. Problems continue to increase. We can’t hire enough people. We can’t get raw materials. Shipping times are increasing, and the cost of materials goes up every week. We just keep having price increases, but this is not driving down demand. I don’t think homebuilders care about costs anymore; they just want supply, and in as short a lead time as possible.

It is beginning to feel like we are headed to a slowdown in a few months with inflation kicking in. Even though Biden terminated some of the incentives to promote folks not to work, there still seems little interest in working.

We are anticipating a surge in business toward the end of the year and the beginning of 2022. Business has been like a roller-coaster, with sharp ups and downs. Incoming freight costs have skyrocketed, and the lead time for supplies is extremely long. The only answer is to anticipate future business and overstock raw materials to avoid production disruptions, which is risky but unavoidable.

Although the level of uncertainty remains unchanged, there is still a tremendous amount of uncertainty generally with component availability and continued rising prices. Demand is high in some areas, but not all areas, as some customers have overordered and are now pulling back

Raw materials domestically, such as steel bar and tubing, have been pushed from a normal eight weeks out to nine to 12 months. We are being forced to resort to European and Asian steel purchases.

Inflationary pressures had caused us to raise the price on our production. We routinely pass on raw material costs based on a price index widely used in the industry. This is the first non-raw-material price increase we have had in the 15 years that I have owned this company. This increase and the inflationary implication have added to the customers’ belief that they must order against future price increases. Our customers are deluged with price increases. It doesn’t take long for the inflationary concept to take hold. Labor is unavailable at virtually any level; $13- to $15-per-hour jobseekers (if you can find any) now want $18. No experience. It is chaotic.

We have implemented a price increase to cover increased wages that we will soon be paying, plus covering increased overhead items.

Source: Dallas Fed Surveys Texas Manufacturing Outlook Survey

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