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Texas Manufacturing Outlook Survey

Special Questions

October 30, 2017

Texas Business Outlook Surveys

Results below include responses from participants of all three surveys: Texas Manufacturing Outlook Survey (TMOS), Texas Service Sector Outlook Survey (TSSOS) and Texas Retail Outlook Survey (TROS).

Data were collected Oct. 17–25, and 377 Texas business executives responded to the surveys.

  1. How do borrowing conditions facing your firm compare to those six months ago?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Eased substantially 1.8 0.7 0.5 1.9
    Eased somewhat 11.8 7.0 7.8 7.2
    No change 48.0 47.4 46.5 47.2
    Tightened somewhat 5.5 12.3 9.1 5.8
    Tightened substantially 2.6 2.0 3.4 2.1
    Not applicable—haven’t sought credit 30.3 30.8 32.7 35.8
  2. How does the cost of credit compare to what it was six months ago?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Increased substantially 0.7 0.3 0.8 0.8
    Increased somewhat 12.1 13.6 16.6 26.3
    No change 48.5 48.7 44.3 32.6
    Decreased somewhat 7.0 5.6 6.2 3.7
    Decreased substantially 1.1 1.3 0.8 0.5
    Not applicable—haven’t sought credit 30.5 30.5 31.3 36.1
  3. To what extent is your business having difficulty obtaining financing for desired long-term uses such as capital expenditures?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    No difficulty 43.0 42.0 43.5 38.8
    Some difficulty 14.1 15.9 12.6 9.3
    Substantial difficulty 3.3 2.4 2.4 3.7
    Extreme difficulty 0.7 0.3 0.5 2.4
    Not applicable—haven’t sought credit 38.9 39.3 41.1 45.7
  4. To what extent is your business having difficulty obtaining financing for desired short-term uses such as paying workers and acquiring inventories of material or supplies?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    No difficulty 42.4 41.4 38.1 40.9
    Some difficulty 7.8 9.2 9.2 7.8
    Substantial difficulty 3.0 1.7 2.6 2.4
    Extreme difficulty 1.5 0.0 0.5 1.1
    Not applicable—haven’t sought credit 45.4 47.8 49.6 47.8
  5. Has your firm’s production and/or sales been adversely affected by difficulty obtaining credit?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Yes—significantly 2.9 0.7 1.6 1.1
    Yes—somewhat 8.5 8.1 7.9 9.2
    No 35.7 40.3 37.3 39.1
    Not applicable—haven’t had problems obtaining credit 15.8 13.8 13.6 8.4
    Not applicable—haven’t sought credit 37.1 37.2 39.6 42.3
  6. Has your firm reduced hiring and/or increased layoffs due to difficulty obtaining credit?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Yes—significantly 0.7 0.0 0.8 0.5
    Yes—somewhat 5.5 7.6 5.2 4.0
    No 44.1 42.4 44.8 44.5
    Not applicable—haven’t had problems obtaining credit 13.6 13.2 11.1 9.1
    Not applicable—haven’t sought credit 36.0 36.8 38.1 41.8

Texas Manufacturing Outlook Survey

Data were collected Oct. 17–25, and 109 Texas manufacturers responded to the surveys.

  1. How do borrowing conditions facing your firm compare to those six months ago?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Eased substantially 0.0 0.0 0.0 1.8
    Eased somewhat 13.5 6.3 8.8 11.0
    No change 53.9 47.9 50.9 43.1
    Tightened somewhat 4.5 9.4 9.6 3.7
    Tightened substantially 3.4 3.1 5.3 5.5
    Not applicable—haven’t sought credit 24.7 33.3 25.4 34.9
  2. How does the cost of credit compare to what it was six months ago?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Increased substantially 1.1 0.0 1.8 0.9
    Increased somewhat 15.7 17.7 10.5 24.8
    No change 48.3 44.8 53.5 33.9
    Decreased somewhat 6.7 3.1 7.9 4.6
    Decreased substantially 1.1 2.1 0.9 1.8
    Not applicable—haven’t sought credit 27.0 32.3 25.4 33.9
  3. To what extent is your business having difficulty obtaining financing for desired long-term uses such as capital expenditures?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    No difficulty 47.2 42.4 45.5 38.9
    Some difficulty 16.9 17.4 8.9 10.2
    Substantial difficulty 5.6 3.3 4.5 5.6
    Extreme difficulty 0.0 1.1 0.9 1.9
    Not applicable—haven’t sought credit 30.3 35.9 40.2 43.5
  4. To what extent is your business having difficulty obtaining financing for desired short-term uses such as paying workers and acquiring inventories of material or supplies?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    No difficulty 50.6 48.4 42.1 41.7
    Some difficulty 6.9 16.1 10.5 8.3
    Substantial difficulty 4.6 0.0 3.5 2.8
    Extreme difficulty 1.1 0.0 0.9 0.0
    Not applicable—haven’t sought credit 36.8 35.5 43.0 47.2
  5. Has your firm’s production and/or sales been adversely affected by difficulty obtaining credit?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Yes—significantly 1.1 0.0 2.7 0.9
    Yes—somewhat 11.2 10.6 8.9 10.2
    No 32.6 35.1 38.4 37.0
    Not applicable—haven’t had problems obtaining credit 23.6 20.2 16.1 11.1
    Not applicable—haven’t sought credit 31.5 34.0 33.9 40.7
  6. Has your firm reduced hiring and/or increased layoffs due to difficulty obtaining credit?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Yes—significantly 0.0 0.0 0.9 0.9
    Yes—somewhat 4.5 9.4 7.0 2.8
    No 43.8 36.5 43.0 42.6
    Not applicable—haven’t had problems obtaining credit 21.3 18.8 13.2 12.0
    Not applicable—haven’t sought credit 30.3 35.4 36.0 41.7

Special Questions Comments

These comments have been edited for publication.

Primary Metal Manufacturing

  • Credit is not the issue. Making a reasonable profit is. If a business is profitable, it can borrow.

Fabricated Metal Product Manufacturing

  • Our company is well-capitalized, with excess cash and no debt.

Machinery Manufacturing

  • We have not utilized much credit other than our revolving line of credit, and those terms have not changed. Our bank has anecdotally told us it is willing to provide capital loans if needed.

Computer and Electronic Product Manufacturing

  • Very low visibility from customers has impaired showing lenders our ability to maintain consistent order taking. Customers are struggling to get long-term commitment from clients all over the world due to a slow world economy and a high dollar.

Electrical Equipment, Appliance and Component Manufacturing

  • We have no debt and $100 million in cash.

Printing and Related Support Activities

  • The last two months, our company has improved on sales volume. We hope this trend continues. The market seems to have more money in budgets for printing. It could be an increase due to the time of year as well. We will not know for sure until we see January and February sales.

Apparel Manufacturing

  • Other than our typical line of credit, we have been able to finance all of our needs internally.

 

Texas Service Sector Outlook Survey

Data were collected Oct. 17–25, and 268 Texas business executives responded to the surveys.

  1. How do borrowing conditions facing your firm compare to those six months ago?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Eased substantially 2.7 1.0 0.7 1.9
    Eased somewhat 11.0 7.3 7.4 5.6
    No change 45.1 47.1 44.6 48.9
    Tightened somewhat 6.0 13.6 8.9 6.7
    Tightened substantially 2.2 1.5 2.6 0.7
    Not applicable—haven’t sought credit 33.0 29.6 35.8 36.2
  2. How does the cost of credit compare to what it was six months ago?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Increased substantially 0.5 0.5 0.4 0.7
    Increased somewhat 10.4 11.7 19.1 26.9
    No change 48.6 50.5 40.4 32.1
    Decreased somewhat 7.1 6.8 5.5 3.4
    Decreased substantially 1.1 1.0 0.7 0.0
    Not applicable—haven’t sought credit 32.2 29.6 33.8 36.9
  3. To what extent is your business having difficulty obtaining financing for desired long-term uses such as capital expenditures?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    No difficulty 40.9 41.9 42.6 38.8
    Some difficulty 12.7 15.3 14.1 9.0
    Substantial difficulty 2.2 2.0 1.5 3.0
    Extreme difficulty 1.1 0.0 0.4 2.6
    Not applicable—haven’t sought credit 43.1 40.9 41.5 46.6
  4. To what extent is your business having difficulty obtaining financing for desired short-term uses such as paying workers and acquiring inventories of material or supplies?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    No difficulty 38.5 38.1 36.3 40.5
    Some difficulty 8.2 5.9 8.6 7.6
    Substantial difficulty 2.2 2.5 2.2 2.3
    Extreme difficulty 1.6 0.0 0.4 1.5
    Not applicable—haven’t sought credit 49.5 53.5 52.4 48.1
  5. Has your firm’s production and/or sales been adversely affected by difficulty obtaining credit?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Yes—significantly 3.8 1.0 1.1 1.1
    Yes—somewhat 7.1 6.9 7.4 8.7
    No 37.2 42.6 36.8 39.9
    Not applicable—haven’t had problems obtaining credit 12.0 10.8 12.6 7.2
    Not applicable—haven’t sought credit 39.9 38.7 42.0 43.0
  6. Has your firm reduced hiring and/or increased layoffs due to difficulty obtaining credit?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Yes—significantly 1.1 0.0 0.7 0.4
    Yes—somewhat 6.0 6.8 4.4 4.5
    No 44.3 45.1 45.6 45.3
    Not applicable—haven’t had problems obtaining credit 9.8 10.7 10.2 7.9
    Not applicable—haven’t sought credit 38.8 37.4 39.1 41.9

Special Questions Comments

These comments have been edited for publication.

Data Processing, Hosting and Related Services

  • We planned to hire additional workers much more rapidly, but impactful amounts of credit and/or equity financing are hard to obtain. Therefore, our current workforce is working longer hours and we will hire as revenue increases permit.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities

  • Our company has sufficient resources for immediate needs. However, our customers and suppliers do not have resources and are experiencing some trouble financing their businesses. These are indirect factors in our situation.

Rental and Leasing Services

  • Where credit does impact our revenues and our business is acquiring customer credit and financing to purchase pieces of heavy equipment. That financing continues to be harder and harder to find and has more and more strings attached to it. If we can't get it financed for our customer, we cannot sell it.

Real Estate

  • Our biggest issue is finding labor, specifically experienced, qualified real estate agents.

Telecommunications

  • Our company currently has zero bank debt and collects approximately $40 million in revenue, with 120 employees, and is able to cover operating and capital expenditures. The recent flood damage will probably require our investors to increase their equity positions through an infusion of cash or require us to obtain a multimillion dollar loan from a bank. Flood damage and the oil economy together will require an infusion of cash for the next nine months.

Professional, Scientific and Technical Services

  • The pain of applying for credit through a bank is simply not worth it. Their goal seems to be to make it so arduous that the customer gives up and goes away. It is much easier to finance with credit cards.
  • Getting venture capital equity investment is still hard. That's what is needed to improve in the U.S. for small companies like ours. Bank borrowing is available, but the capital we are allowed to borrow is not enough. We need four times more capital than banks allow us to borrow. We are a software technology company, and capital limits us on how fast and how big we can grow.

Administrative and Support Services

  • Our company has a very strong balance sheet and substantial cash on hand. We have a credit line available that we don't use, so it’s easy to get credit if we want it.

Ambulatory Health Care Services

  • Banks and other lending companies have been more aggressive in reaching out to see if we need their credit/lending services. Current rates are still significantly less than they were when we last financed an acquisition in 2012.
  • We are fortunate in that our doctors can generate sufficient cash flow to meet needs of operations and capital improvements. We have no financing needs until we decide to expand or replace our surgery center.

 

Texas Retail Outlook Survey

Data were collected Oct. 17–25, and 57 Texas retailers responded to the surveys.

  1. How do borrowing conditions facing your firm compare to those six months ago?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Eased substantially 4.3 0.0 0.0 0.0
    Eased somewhat 10.9 6.7 5.4 5.3
    No change 52.2 51.1 57.1 59.6
    Tightened somewhat 6.5 20.0 3.6 1.8
    Tightened substantially 0.0 0.0 3.6 1.8
    Not applicable—haven’t sought credit 26.1 22.2 30.4 31.6
  2. How does the cost of credit compare to what it was six months ago?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Increased substantially 2.1 0.0 0.0 1.8
    Increased somewhat 14.9 13.3 19.3 33.3
    No change 55.3 55.6 45.6 31.6
    Decreased somewhat 6.4 4.4 5.3 0.0
    Decreased substantially 0.0 2.2 0.0 0.0
    Not applicable—haven’t sought credit 21.3 24.4 29.8 33.3
  3. To what extent is your business having difficulty obtaining financing for desired long-term uses such as capital expenditures?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    No difficulty 54.3 57.8 57.9 49.1
    Some difficulty 15.2 11.1 10.5 7.0
    Substantial difficulty 0.0 2.2 1.8 1.8
    Extreme difficulty 0.0 0.0 0.0 1.8
    Not applicable—haven’t sought credit 30.4 28.9 29.8 40.4
  4. To what extent is your business having difficulty obtaining financing for desired short-term uses such as paying workers and acquiring inventories of material or supplies?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    No difficulty 59.6 53.5 50.0 50.0
    Some difficulty 8.5 7.0 10.3 8.9
    Substantial difficulty 2.1 4.7 1.7 0.0
    Extreme difficulty 0.0 0.0 0.0 1.8
    Not applicable—haven’t sought credit 29.8 34.9 37.9 39.3
  5. Has your firm’s production and/or sales been adversely affected by difficulty obtaining credit?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Yes—significantly 2.1 0.0 0.0 0.0
    Yes—somewhat 6.4 6.8 5.4 8.9
    No 51.1 56.8 46.4 41.1
    Not applicable—haven’t had problems obtaining credit 19.1 11.4 17.9 10.7
    Not applicable—haven’t sought credit 21.3 25.0 30.4 39.3
  6. Has your firm reduced hiring and/or increased layoffs due to difficulty obtaining credit?
    Oct. '14
    (percent)
    Oct. '15
    (percent)
    Oct. '16
    (percent)
    Oct. '17
    (percent)
    Yes—significantly 0.0 0.0 0.0 0.0
    Yes—somewhat 8.5 8.9 3.4 3.5
    No 57.4 53.3 55.2 49.1
    Not applicable—haven’t had problems obtaining credit 12.8 13.3 12.1 8.8
    Not applicable—haven’t sought credit 21.3 24.4 29.3 38.6

Special Questions Comments

These comments have been edited for publication.

Motor Vehicle and Parts Dealers

  • We are disappointed that interest rates are increasing.

Building Material and Garden Equipment and Supplies Dealers

  • I have lots of equity, so I don’t have any credit problems.

Nonstore Retailers

  • Our business has been on a decline due to some internal management issues, and we lost our bank financing due to not meeting debt covenants. Fortunately, our owners are able to personally finance our company and have refocused their attention to improving business results. The current condition of our financial statements has not yet impacted our ability to obtain customers, but I expect this to be an issue when we next bid on request-for-proposal business and have to provide our financials.

Questions regarding the Texas Manufacturing Outlook Survey can be addressed to Emily Kerr at emily.kerr@dal.frb.org, and questions regarding the Texas Service Sector Outlook Survey or the Texas Retail Outlook Survey can be addressed to Amy Jordan at amy.jordan@dal.frb.org.

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