Expansion Continues in Texas Manufacturing

TEXAS – Texas factory activity continued to increase, albeit at a slower pace, according to business executives responding to the Texas Manufacturing Outlook Survey.

“There were widespread reports of difficulty sourcing needed materials, and 72% of firms said supply-chain disruptions were restraining revenues. Price and wage indexes continue to indicate notable increases. Outlooks remain optimistic, though uncertainty is rising amid surging COVID-19 infections and persistent material and labor shortages,” said Emily Kerr, Dallas Fed senior business economist.

The survey showed the production index slipped 10 points to 20.8, still well above average and indicative of robust output growth. Also, the new orders index came in at 15.6, down from 26.8 but more than double the series average of 6.5.

Moreover, labor market measures indicate continued growth in employment and work hours.

“Nearly 70% of responding Texas businesses are currently trying to hire or recall workers, up from 60% in April,” Kerr said. “But businesses still aren’t seeing any relief from persistent hiring difficulties, with a lack of applicants remaining the most widespread impediment to hiring.”

Kerr explained applicants looking for higher pay than what was being offered is an increasing hiring impediment, and fear of COVID-19 infection was cited by more than 20% of firms in August, up sharply from 6.5% last month.