They say everything is bigger in Texas and inflation is no exception.
Prices of raw materials and inflation expectations among Texas manufacturers moved sharply higher, according to data from the Federal Reserve Bank of Dallas released Monday.
The measure of prices for raw material in the Texas Manufacturing Outlook Survey, a key measure of state manufacturing conditions, rose to 82.1, with 83.6 percent of manufacturers saying materials cost more than a month earlier, 14.9 percent reporting no change, and just 1.5 percent reporting that prices had fallen.
That is a new high for the gauge. The finished goods prices metric slipped from its high last month, falling eight points to 42.2 but still far exceeding its historical average of 7.6. The wages and benefits index came in near its own series high, edging up from 44.1 to 47.6.
The six-month expectations index for raw materials prices moved up to 56.4, with 62.1 percent of manufacturers expecting higher costs. The finished goods price expectations index moved to 49.5, an 8.9 point jump, with 55.2 percent of manufactures expecting to raise their prices.
The production index of the survey rose to 27.4 in November from 18.3 in October, a reading which signals solid growth. The index for general business activity—which assesses broader business conditions in the manufacturing sector—declined to 11.8 from 14.6 the prior month. The indicator came in below economists’ forecasts of 19.5.
“Higher-than-historical raw materials costs, continued supply-chain shortages, and the continued war on talent with limited labor availability have impacted near-term to 12-month business forecasts negatively,” a survey respondent in the chemicals manufacturing sector said.
“Democrats are in control, so our buying power is declining. Spend, spend, spend, spend, spend is all they know, and what they spend it on hurts the working-class American,” said a Texas executive in machinery manufacturing. “I hope we can survive.”
One machinery manufacturer said the vaccine mandate is hurting their ability to hire.
“The vaccine mandate makes our employee outlook grim. We have many employees who are not willing (or not able) to be vaccinated and do not want to drive 30 minutes out of town for a weekly test. We are already having a difficult time finding people who want to work; now it is that much more difficult,” the person said.
Another said that the pandemic had wiped out competition, limited production, and allowed for price hikes.
“COVID-19 wiped out my competition. Another guy tried to compete with my company, and he just went bankrupt. Between the government rules and the oil companies demanding more insurance and driving up costs, barriers to entry are such that we are the only supplier left in my business with inventory and an ability to take care of the customer,” the manufacturer said. “Therefore, we’ve raised prices and increased our response time to service our customers’ needs.”