Despite rebounding oil prices, manufacturing in Texas in on a downward slide. A report from the Dallas Fed stated that manufacturing fell further than expected, reaching the lowest level since June 2009. Heavy rains and flooding are also impacting Texas manufacturing.
The composite index reported a -20.8 decline in May, nearly double the expected drop of -11.5, according to the survey reported by Business Insider. The drop follows an April decline of -16. The Dallas Fed report is attached at the bottom of this article.
One machinery manufacturer who responded to the survey wrote, “We’ve maintained the position that we need to give the oil market time to settle, so our goal has been to survive until the third quarter. At that point, production and inventories will have stabilized and maybe our customers will be more comfortable entering the market. We have numerous customers who have delayed purchasing product, and we are optimistic that they will begin ordering again in the third quarter.”
The onslaught of rain across the Lone Star State is also making an impact in the home building industry. “We sell to new single-family home builders,” a wood manufacturing company wrote. “Wet weather has slowed down the development of raw land into ready lots and the home construction process as well. It has affected our shipments for the last two months and will continue to moderate the construction pace for several more.”
The negative effect of the oil crash is still being felt despite slightly rising current prices. “We don’t feel confidence anywhere, but we are feeling cost pressures,” another respondent wrote.
Despite the downturn in manufacturing, businesses are still in a hiring mode. The “quit rate” is still climbing in Texas. This is the rate of employees quitting their jobs to pursue better pay or opportunities with another employer.
One respondent confirmed this encouraging labor market activity by stating, “Our headcount is down as we’ve lost employees to competitors and other opportunities. We actually need to hire several employees in the next couple of months to hit staffing goals, hopefully tapering off by the end of the year. The labor market has become very competitive in Dallas–Fort Worth.”