Dallas Fed manufacturing business index -20.0 vs -23.2 prior

<ul><li>Production -4.8 vs -4.8 prior</li><li>New orders -18.1 vs -16.6 prior</li><li>Shipments -2.2 vs -17.0 prior</li><li>Employment +10.0 vs +2.2</li><li>Company outlook -16.9 vs -10.7</li></ul><p>I have been looking for green shoots in manufacturing after a tough year and there are some emerging but not in this report. The forward looking metrics largely worsened.</p><p>The comments in the report are often insightful:</p><p>Chemical manufacturing</p><ul><li>The chemical industry in general is in a slump currently.</li></ul><p>Computer and electronic product manufacturing</p><ul><li>Interest hikes obviously significantly affect industrial
production. We are seeing it across the board in 12 different segments
of our industry. I wish the Federal Reserve would look at the
industrial side and start cutting interest rates slowly. How much does
the industrial backbone of this country have to suffer to lower
inflation? We know the effect of interest [actions] does have a lag in
economic results—why not prevent a recession by starting to lower
interest rates now, rather than creating havoc in manufacturing?</li></ul><ul><li>We continue to be concerned by all of the talk of a recession. We
aren’t seeing that reflected in reduced customer demand yet. We intend
to make significant capital investments over the next six months to
expand capacity and reduce our unit costs, as we hope to gain market
share in the event of a recession.</li></ul><p>Fabricated metal product manufacturing</p><ul><li>We have the biggest backlog of projects ever. We are not able to expand due to the difficulty in hiring workers for the plant.</li><li>Supply constraints are improving, but there are still some ongoing challenges.</li></ul><p>Machinery manufacturing</p><ul><li>The summer doldrums are real … at least they are this month.
Order interest has declined significantly, and order entry has slowed
to a crawl. We’re bidding smaller jobs now than we have in 24 months.
Raw material prices have eased, but so have selling prices to the point
of creating margin erosion.</li><li>We are seeing a slight increase in business; however, we will have to see if this trend will continue.</li></ul><p>Paper manufacturing</p><ul><li>Our industry is down approximately 6 to 7 percent for four quarters in a row.</li></ul><p>Primary metal manufacturing</p><ul><li>High interest rates are hurting some businesses like real estate
and commercial construction. Other industries like transportation are
still good. The Federal Reserve needs to stop rate increases to let
businesses and consumers settle down.</li></ul><p>Printing and related support activities</p><ul><li>We are very fortunate to have some nice large jobs in the plant
right now that are keeping us busy when many in our industry, including
our competitors, are slow right now. We see our activity staying
pretty strong into the fall, so we are fortunate. We had hoped to not
have to raise prices but are having pressure from others to hire away
our workers, so we are implementing wage increases that need to be
covered by raising prices again.</li></ul><p>Textile product mills</p><ul><li>Our manufacturing of home goods, like mattress components,
comforters and pillows, has decreased. Talking to suppliers and
customers, the consensus of the bedding industry outlook continues to
look bleak. High interest rates appear to be the main driver, as home
sales are weak, and the associated new-mattress purchase that is known
in our industry to go hand in hand is not happening. We have had to
downsize the company three times in the past nine months—from three
production sites to one.</li></ul>

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