Texas Businesses Feel Impact of Hurricane Harvey on Revenue, Production; A Majority of Negatively Impacted Firms That Experienced Losses in Dallas Fed Survey Say Those Losses Not Covered by Insurance
Growth in Texas Manufacturing Activity Holds Steady in September
For Immediate Release: September 25, 2017
DALLAS—Hurricane Harvey had a negative effect on the revenue and/or production of 41 percent of firms responding to the Federal Reserve Bank of Dallas’ Texas Business Outlook Surveys series of special questions focused on the hurricane’s impact. That percentage jumped to 77 percent among Gulf Coast firms.
Nearly three-fourths of firms suffering revenue and/or production losses from the hurricane said those losses were not covered by insurance. For physical capital losses, more than half of such adversely affected firms said those losses were not covered by insurance.
The hurricane caused an average closure of 5.5 days among firms who had to shut down and 9.2 days of reduced revenue and/or production for firms noting that impact. In addition, 59 percent of adversely affected firms indicated the reduction in business is ongoing.
Looking ahead over the next six months, 33 percent of firms expect a decrease in their revenue and/or production as a result of the hurricane. Among firms that expect to continue to be negatively impacted by the hurricane over the next six months, loss of customer base, personnel disruptions and transportation and/or supply chain disruptions were noted as the most significant impediments to getting back to business as usual.
When asked about the impact of Hurricane Harvey on the labor market, 27 percent of firms responding to the special questions survey expected their ability to find and hire workers to become more difficult over the next six months.
Texas Factory Activity Continues to Increase
Texas factory activity continued to increase in September, according to the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey.
The production index—a key measure of state manufacturing conditions—edged down to 19.5 from 20.3 in August, indicating output grew at about the same pace as last month.
Positive readings in the survey generally indicate expansion of factory activity, while readings below zero generally indicate contraction.
Other measures of current manufacturing activity also indicated continued growth. The new orders index increased and the growth rate of orders index ticked down but stayed positive, coming in at 18.6 and 9.7, respectively. The capacity utilization index edged up four points to 15.8, while the shipments index jumped nine points to 27.4.
Perceptions of broader business conditions improved in September. The general business activity index increased to 21.3, its highest reading in seven months. The company outlook index posted its 13th consecutive positive reading, jumping nine points to 25.6.
Labor market measures suggested faster employment growth and longer workweeks this month. The employment index came in at 16.3, its highest level since April 2014. The hours worked index rose four points to 18.4.
Upward pressure on prices increased in September. The raw materials prices index pushed up eight points to 34.5, its highest reading since July 2011. The finished goods prices index climbed seven points to 17.5.
Expectations regarding future business conditions continued to improve. The indexes of future general business activity and future company outlook remained elevated at 34.5 and 39.9, respectively. Other indexes for future manufacturing activity showed mixed movements but remained solidly in positive territory.
Texas produces more than 11 percent of total manufactured goods in the United States, ranking second behind California in factory production.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity.
Federal Reserve Bank of Dallas
Phone: (214) 922-6748