Dallas Fed: Texas manufacturing output declines in June, selling prices edge down
June 26, 2023
DALLAS—Texas factory activity declined in June, according to business executives responding to the Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey.
“The Texas manufacturing sector contracted in June, which is not a surprise after a year of declining new orders,” said Emily Kerr, senior business economist at the Dallas Fed. “Production, shipments and capacity utilization all fell this month, and employment growth decelerated. Materials price increases faded and selling prices edged down. Looking ahead, manufacturing outlooks remain weak, though pessimism waned to some extent.”
Key takeaways from this month’s survey:
- The production index fell three points to -4.2, a reading indicative of a slight contraction in output.
- The new orders index has been in negative territory for more than a year and held steady this month at -16.6.
- Labor market measures suggest weaker employment growth and declining work hours.
- Price pressures evaporated, while wage pressures remained elevated.
- The general business activity and company outlook indexes remained negative, though both moved up.
The Dallas Fed asked a series of special questions on outlook concerns, employment and capital expenditures in the June Texas Business Outlook Surveys and heard back from 363 business executives (services and manufacturing) June 13–21.
Key takeaways from the special questions:
- Higher labor costs are a mounting outlook concern among Texas businesses and hold the No. 2 spot behind weakening demand.
- The share of firms citing higher interest rates as a top outlook concern continues to grow, now holding the No. 3 spot, up from No. 7 last September.
- Supply-chain disruptions, inflation and labor shortages are retreating outlook concerns.
- The share of firms reporting they are understaffed edged down from 61 percent in January to now 56 percent, and the share overstaffed edged up from 11 percent to 13 percent.
- In a new question about capital expenditures plans, more firms expect higher spending this year compared with last year than lower (38 percent versus 25 percent).
For more information visit DallasFed.org
Federal Reserve Bank of Dallas