The Boock Report

By

Dallas Manufacturing Miss

The Dallas manufacturing index in March fell to 16.9 from 24.5 and that was below the estimate of 22.0. After a multi yr stretch of negative prints coincident with the collapse in oil prices, the index though is in positive territory for the 6th straight month. It also compares with .6 in October and of course reflects both the rising rig count and the victory of DJT as seen in many other confidence indices. New orders fell slightly while backlogs rose a touch. Employment was positive but down a touch m/o/m. Prices paid was down by 6 pts but still high at 19.7 while 80% of firms saw “no change in compensation costs.” The future outlook remained pretty positive but fell from February. The national ISM report out next week is expected to be at a still good level of 57 but of course the Trump agenda discussion is now changed and it’s been in the sentiment indicators as we know that have mostly reflected the initial optimism.

Here are some important quotes from the business community in Texas and this first one in particular stood out in the context of the very high reads in confidence versus the still mediocre level of actual economic data:

  • “There is still optimism in the manufacturing business community for a better business environment, but we have not seen that translate into revenues yet.” This came from a business in fabricated metal product manufacturing.

In Transportation Equipment Manufacturing:

  • “Stronger expectations are a function of President Trump being successful with his plans.”

In Paper Manufacturing:

  • “Our outlook remains the same, which is positive. We are still trying to add employees (hard to find) to reduce overtime in production. A raw material price increase is coming this spring.”
  • “Business continues to be strong.”

In Wood Product Manufacturing:

  • “We sell to single-family homebuilders and their demand is very strong. We are very close to maximum capacity.”

Misc Manufacturing

  • “Brexit and tumult in Europe will have a significant impact on our export sales. The proposed border adjustment tax is going to clobber our cost of goods sold. It is not looking good for medical devices.”