Texas Manufacturing Outlook Survey

July 29, 2019

Results Summary

Historical data are available from June 2004 to the most current release month.

*Shown is the number of consecutive months of expansion or contraction in the underlying indicator. Expansion is indicated by a positive index reading and denoted by a (+) in the table. Contraction is indicated by a negative index reading and denoted by a (–) in the table.

**Shown is the number of consecutive months of improvement or worsening in the underlying indicator. Improvement is indicated by a positive index reading and denoted by a (+) in the table. Worsening is indicated by a negative index reading and denoted by a (–) in the table.

†Added to survey in January 2019.

Data have been seasonally adjusted as necessary, with the exception of the outlook uncertainty index, which does not yet have a sufficiently long time series to test for seasonality.

July 29, 2019

Production Index

Downloadable chart

July 29, 2019

Comments from Survey Respondents

These comments are from respondents’ completed surveys and have been edited for publication.

Fabricated Metal Product Manufacturing

• Our backlog and response to open requests-for-quotation have decreased substantially.
• Lowering the interest rate really does not make sense for my business or other small businesses. Wage inflation at small businesses is still moving higher, while skills in the available labor force are decreasing dramatically. Inflation from the trade talk is constantly pushing material increases across the spectrum. Capital expenditures show signs of increasing equipment costs (2019 vs. 2018). The housing sector is robust in multifamily, where new construction and replacement markets appear to be stagnant. But in my honest opinion, anything that creates a tighter labor market is going to increase troubles for small businesses.

Nonmetallic Mineral Product Manufacturing

• The main issue affecting our business is the increased costs associated with the new Dallas sick leave ordinance. This will raise our manufacturing costs by about 5 percent.

Machinery Manufacturing

• We’re either dead in the water or overloaded—such is oilfield work.
• The general business environment has generally slowed from prior months. We hope that this is just the summer doldrums, but I fear it may be much worse. Managers and engineers are all busy but are not willing to sign purchase orders and are not providing much visibility as to what the future looks like.
• Just when we think it might slow down, it gets busy again. Our order backlog is building and activity with customers is increasing. We think this increased activity will last the rest of the year.

Computer and Electronic Product Manufacturing

• We feel like some of the tariffs on finished goods from China will not be put in place.
• We expect to see a sub-seasonal third quarter as we work through the third consecutive quarter of a weak industry cycle. We would expect revenues to inflect starting in the fourth quarter or the first quarter of next year. Uncertainty around trade tensions and slowing automotive demand make recovery less predictable.
• We had a very good growth year in 2018, so this year doesn’t look as good relative to 2018. We have had a good year so far, but we foresee slowing down in the last six months of the year compared to 2018. The international pressures we are facing at the moment have an impact, but I am thinking the election year will be more uncertain and risky. Some politicians would benefit greatly if the economy becomes distressed, so I worry it will be self-fulfilling.

Transportation Equipment Manufacturing

• We are a defense contractor. The U.S. Department of Defense procurement awards have dropped precipitously in the past 60 days. We speculate that this is a result of diverting Department of Defense budget lines to fund the border wall.
• The biggest risk is the Trump administration’s tariffs on European Union imports. If implemented, and depending on scope and values, the tariffs could have from a manageable to a dramatic impact.

Food Manufacturing

• Order volumes continue to increase due to new capital expenditures (new machinery and plant expansion). Employee turnover has stabilized, and the rate of new employee applications has increased to meet our needs for expansion.

Textile Product Mills

• We are building inventory for holiday orders, so we have increased expenses to include raw goods that have new tariffs. Business remains steady and healthy—no great increases, decreases or changes.

Paper Manufacturing

• The slowdown has now gone on long enough to affect our outlook, and we are starting to make plans for reductions. We are holding out hope for the next two to four weeks to avoid reductions (which would be small at first).

Printing and Related Support Activities

• The sustainability of the same or increased level of business activity is in jeopardy due to lack of available semiskilled labor.
• It is very tough and stupid slow. We had the worst incoming-order month in June that we have had in over 15 years, and June billing was very anemic. We don’t know what is going on, but it has been very slow. We are probably looking to rightsize in both the plant floor and office to better fit activity levels. Then our city council passed a paid-sick-leave ordinance that hopefully will be ruled unconstitutional. It would be a cost we couldn’t absorb and would require additional layoffs and cuts.

Historical Data

Historical data can be downloaded dating back to June 2004.

Indexes

Download indexes for all indicators. For the definitions of all variables, see Data Definitions.

All Data

Download indexes and components of the indexes (percentage of respondents reporting increase, decrease, or no change). For the definitions of all variables, see Data Definitions.