US Dallas Fed manufacturing index -9.7 vs -17.5 prior

• General business activity: -9.7 vs -17.5 prior
• Company outlook: -9.6 vs -18.4 prior
• Prices paid: +28.2 vs +23.1 prior
• New orders: -4.2 vs -12.8 prior
• Shipments: +0.8 vs -16.3 prior
• Employment: -0.7 vs +7.1 prior

These are decently-hot numbers. This isn’t a market mover but it speaks to the steady state of the economy rather than a looming recession. Note though that other regional manufacturing numbers have been softer whereas Texas is highly dependent on energy.

Comments in the report:

Food manufacturing

• Suppliers are demanding longer lead times. Some commodity prices
  have declined, but value-added items (packaging film) are seeing price
  increases. We’ll have an annual wage increase in October in the range
  of 3 to 8 percent. Wages for positions requiring physical work are
  increasing more than desk jobs.
• Agriculture is hurting. No farm bill, weather and falling prices
  for our commodities while input costs increase are putting a big
  squeeze on our industry.
• We are preparing for the recession.
• As the economy weakens, we are seeing modest growth in our
  category of dinner sausage. This category tends to grow when the
  economy weakens, as sausage is a good protein substitute for
  higher-priced proteins and can “stretch” consumers’ food budgets.
  Additionally, we are expanding our presence in other sales channels,
  such as food service, which we believe will help our sales in 2025.

Textile product mills

• Uncertainty is high, and we are very unsure how the next quarter will go.

Paper manufacturing

• Things are soft but steady.

Printing and related support activities

• We have a new large-machinery line arriving at the end of
  September that will complement our current line that is getting long in
  the tooth. It’s a huge investment for us, and I’m worried that with
  business activity slowing down, we may be in for some rough waters for a
  while. It should generate some healthy activity, and we know it will
  be much more efficient than our current line.

Chemical manufacturing

• Difficulties in ship travel to the Red Sea area have made it difficult to secure ships for bimonthly/quarterly shipments.
• Turbulence in the market, increased global instability and
  further concerns over U.S. political instability in the current
  administration have all fueled further weakening in the market.

Plastics and rubber products manufacturing

• Heading into the holiday season with an election in the near
  future, our customers are beefing up supplies from China for the near
  term but hitting pause beyond that.

Primary metal manufacturing

• Incoming orders continue their downward trend. Most of our
  customers are reporting few orders on their end, especially our building
  and construction customers, as well as the ones in the transportation
  segment (trailers). We continue to be negatively affected by foreign
  competition at much lower price offerings than we can meet.
• Our company is spending significant capital dollars to bring a
  new product line to our manufacturing operations. This will allow us to
  enter markets we currently do not service.

Fabricated metal product manufacturing

• The hurricane interruption caused us to miss two weeks of production.

Machinery manufacturing

• The slowdown is settling in with business activity at a very low level.
• Things are just plain bad all over. There is no skilled labor available.
• Our business usually has seasonal decreases in the summer months,
  but the decrease this summer is more significant than usual. We are now
  not so sure about the future.
• November cannot come soon enough! We’ve stagnated as has our
  competition along with our customer base. It’s like we all know the
  world will continue regardless of who wins, but we’re all sitting on
  our hands until a winner is announced.

Computer and electronic product manufacturing

• It appears the industry is approaching a cyclical bottom; we see
  signs of several markets beginning to correct. Regionally, China was
  strong, U.S. was OK, Europe was weak, and Japan was very weak.
• We are getting more resistance to higher prices from our
  customers. We are also seeing orders reduced or delayed from a few of
  the more price-sensitive ones. The biggest uncertainty is about the
  election; a lot of our customers are taking a “wait and see” approach.
  All small business owners that I talk to are very concerned about the
  high-tax, anti-growth and anti-small business policies that [we think]
  are certain to come from a [Kamala] Harris presidency.

Furniture and related product manufacturing

• We are experiencing slower pay on accounts receivable. There is a
  continued shortage of skilled carpenters and saw operators. Project
  size has increased from general contractors. Inexperienced architects
  and construction project managers cause significant construction
  timeline delays.

Miscellaneous manufacturing

• It is increasingly looking like the U.S. has lost its position of
  strength in geopolitics, and the vacuum is encouraging war and
  violence, which pose significant risk to international trade and reduce
  opportunities for U.S. companies. Anti-business, tax and spend rhetoric
  is not conducive for long-term investments and is going to further
  reduce U.S. business competitiveness especially against China’s
  government-supported industries and firms.

This article was written by Adam Button at www.forexlive.com.