Dallas Fed August manufacturing index -17.2 vs -20.0 prior

<ul><li>Prior was -20.0</li><li>Output (production) -11.2 vs -4.8 prior</li><li>New orders -15.8 vs -18.1 prior</li><li>Employment +4.3 vs +10.0 prior</li><li>Outlook -18.4 vs -16.9 prior</li><li>Prices paid for raw materials +17.4 vs +10.5 prior</li><li>Prices received +1.8 vs +2.3 prior</li><li>Wages +34.9 vs+19.1</li></ul><p>The wages number is worrisome but these are volatile indicators.</p><p>Comments in the report:</p><p>Chemical manufacturing</p><ul><li>The chemical industry remains slow.</li></ul><p>Computer and electronic product manufacturing</p><ul><li>High interest rates are affecting industrial production like
never before. In addition to reshoring heavy activity, supply-chain
issues, lack of qualified labor and interest rates have placed an
inverted incentive to grow due to a major slowdown in capital equipment
expenditures. This is the time to stop raising interest rates and give
confidence to the industrial segments to plan growth. Rehiring after
major layoffs in this industry is not like in the consumer industry. It
is costly, laborious and a long-term expedition. And with the lack of
reforms in immigration and education, we are encountering major
difficulties in running industrial operations. Never mind the
demographics issue the U.S. is about to encounter in the short run. I
think it is time for the Federal Reserve to take a creative approach
when it comes to interest rate management.</li><li>We have seen broader markets weaken with the exception of
automotive. We have seen pull-ins from auto, likely due to preparation
for the potential UAW [United Auto Workers union] strikes. Revenues in
China are especially weak.</li><li>We are seeing increased issues with aluminum, especially casted products.</li><li>[Our business is] performing as planned.</li><li>For the first time in a long time, we are seeing customers reduce
or cancel orders due to softening end-use demand. We expect this trend
to continue over the next few months. We continue to make capital
investments, focusing on buying high-quality used manufacturing
equipment at a discount when other people are pulling back because of
uncertainty.</li><li>Customer orders came to a sudden halt. The overall volume dropped 51 percent year over year.</li></ul><p>Fabricated metal product manufacturing</p><ul><li>For a lot of businesses, production is sold out until February 2024.</li><li>Many RFQs [requests for quotation] are out with existing
customers who have not been given the go ahead to start
projects/improvements.</li><li>Supply constraints are improving, but there are still ongoing challenges with some suppliers.</li></ul><p>Food manufacturing</p><ul><li>It has been business as usual. We are working on new
opportunities and satisfying existing customers. We are still in the
“new normal” from a margins perspective.</li><li>We have seen a contraction in government contracts. Customer discretionary spending capability has decreased.</li></ul><p>Machinery manufacturing</p><ul><li>Slow and steady is the current environment. Hopefully, this is not the new normal.</li><li>The phone is not ringing. Our sales team is working harder with
less results. Projects are being postponed and, perhaps even more
telling, payments are increasingly protracted.</li><li>Business is slowing down, but we are adding new products to produce. This should be positive for our business long term.</li></ul><p>Paper manufacturing</p><ul><li>We have seen a very slight increase in orders for August and September.</li></ul><p>Primary metal manufacturing</p><ul><li>Our industry is in a technical recession. In addition to that,
foreign imports are at a very high percentage if not the highest in our
history. Mexico is a leading exporter to the U.S. now. They have a raw
material advantage of not having Section 232 tariffs on their aluminum.
Domestic companies in our industry are affected by the 10 percent
duty, which Mexico is not, giving our competitors in Mexico a
significant cost advantage.</li></ul><p>Printing and related support activities</p><ul><li>We have been very fortunate to have a large job that has
sustained us for most of the summer and will continue into September.
Without this large job, we would have been stupid slow like a lot of
our competitors are. There seems to be a softness in our industry right
now, and because of that, we are worried about what six months from now
looks like.</li></ul><p>Textile product mills</p><ul><li>[There were] no major changes this month in terms of pricing,
staffing or outlook. Things have not deteriorated nor have they
materially improved (still status quo, which is good and profitable). We
are hoping to see an uptick in consumer spending and order volumes in
the fourth quarter, similar to what we've seen in prior years.</li></ul><p>Transportation equipment manufacturing</p><ul><li>Vendor price increases have slowed but have not been rolled back. Interest rates are killing our industry.</li></ul>

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