Texas Factory Activity Sees Solid Expansion but Supply Chain Woes Worsen The production index rose to a reading of 24.2 in September, up 3.4 percentage points from 20.8 in August.

By The Epoch Times

This story originally appeared on The Epoch Times

Overall factory activity in the Lone Star state continued to expand at a solid pace in September, though there was softening in some specific manufacturing gauges along with a rise in reports of supply-chain problems, according to a Dallas Fed survey.

Texas business executives responding to the monthly Dallas Fed Texas Manufacturing Outlook Survey, released Sept. 27, highlighted growth in shipments, employment, and capacity utilization in helping lift the headline production index—a key measure of manufacturing conditions in Texas. The production index rose to a reading of 24.2 in September, up 3.4 percentage points from 20.8 in August.

"The reading was well above average and indicative of solid output growth," the Dallas Fed said in a statement, which noted mixed movement for other measures of manufacturing activity.

The shipments index edged up 3.5 points to 18.7 in September, the employment index rose 4.4 points to 26.3, and the capacity utilization index rose 2.8 points, the survey showed.

The demand indexes slipped over the month, however. The new orders index came in at 9.5 in September, down from 15.6 in August but slightly above the series average of 6.5. The growth rate of orders index fell eight points to 2.5 in September.

"We are much busier this month than last, and incoming orders at the moment are surprisingly robust," said an executive from the printing and related support activities sector, according to the survey report.

Perceptions of broader business conditions were mixed in September, with the general business activity index falling 4.4 points in September, though it remained in positive territory at 4.6 percent. Readings above zero indicate expansion, while readings below that number show contraction. The company outlook index fell 14.3 points to a reading of negative 2.8 in September.

"We are seeing a slowdown in capital projects starting, and our requests for quotes have also slowed," said an executive in the fabricated metal manufacturing sector.

"The tax increases contemplated in Congress create uncertainties for our business," said another in the nonmetallic mineral product manufacturing sector.

The six months ahead manufacturing picture deteriorated from August to September, with the forward-looking headline production index falling 2.5 points to a still positive 41.8.

"I anticipate the economy to get even worse the next 18–20 months with taxes and inflation rising," said an executive in the machinery manufacturing sector.

The future outlook for general business activity fell 3.6 points to 11.5 in September and the company outlook dropped 4.9 points to 12.7.

"We are still cautious regarding the next six months; there are numerous threats that have not gone away," said an executive in the transportation equipment manufacturing sector.

"Inflation is here to stay," said an executive in the primary metal manufacturing sector.

The September survey included a supplemental section on supply chain disruptions.

Asked whether they were currently experiencing supply-chain disruptions or delays, 64.5 percent of responding executives replied in the affirmative, up from 61 percent in June and 35.5 percent in February.

"We are having problems with most all materials due to long delivery times," said a machinery manufacturing executive.

"We are experiencing severe increases in some raw-material prices and are unable to fill out some vacant positions, even at higher wages. This is putting tremendous strain both financially and operationally on the company," a food manufacturing executive said.

While six-month forward expectations for prices paid for raw materials inched down by 0.4 points to a still-high 55.3, the lookahead prices received index climbed 4.8 points to a reading of 44.6. The expectation for businesses to raise their selling prices six months down the road suggests more upward pressure on the rate of consumer price inflation.

By Tom Ozimek

Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'

The Epoch Times, founded in 2000, is headquartered in Manhattan, New York, with a mission to provide independent and accurate information free of political bias or corporate influence. The organization was established in response to censorship within China and a lack of global awareness regarding the Chinese regime's repression of the spiritual practice Falun Gong.

The Epoch Times is a widely read newspaper that is distributed in 33 countries and is available in 21 languages. The publication has been critical in providing balanced and detailed reporting on major global events such as the 2003 SARS pandemic and the 2008 financial crisis. Notably, the organization has played a key role in exposing corruption inside China.

Aside from its human rights coverage, The Epoch Times has made significant contributions in a variety of fields. It has received praise for its in-depth analysis and expert perspectives on business, the economy and U.S. politics. The newspaper has also received praise for its broad coverage of these topics.

A series of editorials titled "Nine Commentaries on the Communist Party" appeared in The Epoch Times in 2004. It asserts that freedom and prosperity in China can only be achieved by eliminating the Communist Party, which violated China's cultural and spiritual values. In addition, the organization led the Tuidang movement, which resulted in over 400 million Chinese citizens quitting the Communist Party. In spite of this, 90% of websites referring to the "Nine Commentaries" were blocked by the Chinese regime.

The Epoch Times has been at the forefront of investigating high-level corruption cases within the Chinese regime, with its reporters taking significant risks to uncover these stories. The organization has received several awards for its investigative journalism.

The organization has received several awards for its investigative journalism. For more, visit www.theepochtimes.com.

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