For immediate release: October 27, 2008
Dallas Fed Survey: Texas Manufacturing Still Declining; Wage and Price Pressures Ease
DALLAS—Texas manufacturing continued to decline in October, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.
Texas produces more than 8 percent of the total manufactured goods in the United States, ranking second behind California in factory production.
Most indicators of current production and general business conditions remained weak, and nearly all indexes for future activity dipped considerably. Several manufacturers noted that the credit crisis had dampened their outlook.
Indexes for production, capacity utilization, volume of shipments, volume of new orders and growth rate of orders remained negative due to continued sluggish demand.
Wage and price pressures, which had been prevalent earlier in the year, eased noticeably this month.
Respondents were mostly pessimistic about general business conditions, pushing the index down from –39.6 in September to –59.4 in October. The general business conditions index has been negative for 16 consecutive months.
Additionally, as part of the October survey, participants responded to supplemental questions about impact of recent financial market developments on their businesses.
The percentage of firms indicating that credit availability had affected their company’s outlook or operations doubled from 20 percent in June to 42 percent in October. In response to the credit crunch, 37 percent have reduced capital spending, an increase from June’s 26 percent.
Nearly 39 percent are either laying off workers or cutting back on hiring, up from 33 percent in June.The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity.
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