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Dallas Fed: Texas manufacturing activity rebounds, though outlooks wane

DALLAS—Growth in Texas factory activity resumed in September, according to business executives responding to the Texas Manufacturing Outlook Survey.

“There were hopeful signs in this month’s manufacturing report,” said Emily Kerr, senior business economist at the Dallas Fed. “The production index rebounded into positive territory and job growth picked up. But some pessimism persists, as outlooks deteriorated and general business conditions continued to worsen.”

Key takeaways from this month’s survey: 

  • The production index rebounded nearly 20 points to 7.9—its highest reading of the year.
  • The new orders index pushed up 11 points to -5.2, a reading still indicative of falling demand though not at the pace seen in the past several months.
  • Labor market measures suggest stronger employment growth and longer workweeks in September.
  • Price and wage pressures were mixed.
  • The general business activity and company outlook indexes remained largely unchanged at -18.1 and -17.5, respectively.

The Dallas Fed asked a series of special questions on remote work and the impact of recent federal government legislation in the September Texas Business Outlook Surveys and heard back from 362 business executives (services and manufacturing) Sept. 12–20.

“Texas firms report that 32 percent of their employees work remotely to at least some extent, on average, which is notably higher than prior to the pandemic but lower than the share reported over the last few years,” Kerr said. “While most firms say that the increase in remote employees since prior to the pandemic has not affected productivity, nearly a quarter note a productivity decline. When asked whether recent federal government legislation is affecting their firm, 19 percent of firms said yes, with more saying the impact is positive than negative.”
Key takeaways from the special questions:

  • At Texas firms surveyed, 14 percent of employees are fully remote and 18 percent are hybrid (a combination of on-site and remote work), on average.
  • Forty-five percent of firms said they are not impacted by recent federal legislation like the Inflation Reduction Act, 19 percent said they are impacted, and 35 percent don’t know.
  • Among those impacted, 59 percent say the impact is positive while 41 percent say the impact is negative.

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