Dallas
The October Dallas manufacturing index rose to 27.6 from 21.3 and that is the best since March 2006. While shipments fell, the forward looking new orders index rose 6 pts. The outlook held at a high 25.8. The employment index was unchanged while hours worked fell. On inflation, “the raw materials prices and finished goods prices edged down but remained elevated at 32.3 and 15.3 respectively. The wages and benefits index also moved down but remained relatively high at 22.5.” Looking to the next 6 months, “The index of future general business activity moved up 4 pts to 38.5, while the index of future company outlook remained unchanged at 39.”
Bottom line, while there was plenty of commentary about the impact of the hurricanes and the aftermath, the rise in confidence is a sign that businesses are confident issues will be dealt with. That said, there remain challenges that businesses have and not all is related to the hurricanes. Here are some comments:
Chemical Manufacturing: “Our input for October is impacted by hurricane effects on the Gulf Coast—month/month improvements were driven by industrial shutdowns and a prolonged recovery effort… We are having huge problems getting raw materials following Hurricane Harvey. We could not get deliveries due to a lack of drivers when the material was available. These problems are continuing.”
Fabricated Metal Product Manufacturing: “The shutdowns and damage as a result of Hurricane Harvey and to a lesser extent Hurricane Irma have caused refinery operators to reschedule a lot of their planned work into 2018. This delay is having an increased effect on pricing pressure for what work is available, and the small amount of project work is almost entirely being sourced offshore. We are planning on an extended period of extremely poor market conditions and are adjusting our capacity accordingly… Our facilities were severely flooded in Hurricane Harvey, so we had little production in September and are still in the process of repairing major production equipment… We saw a lull in orders in the third quarter and some into the fourth due to hurricane activity along the Southwest and Southeast. However, this short-term lull is due only to weather and will pick up in the fourth quarter and first quarter of 2018.”
Nonmetallic Mineral Product Manufacturing: “We are seeing the effects of Hurricane Harvey on the activities of our customers.”
Machinery Manufacturing: “We remain optimistic about the future, although things have slowed down significantly.”
Computer and Electronic Product Manufacturing: “The world economy and high dollar have been a problem for our customers in the capital equipment industry.”
Electrical Equipment, Appliance and Component Manufacturing: “Things are generally good—not great. Hurricanes slowed down September and October, which are usually two of our best months. Competitors are pricing erratically, which is hurting profits.”
Printing and Related Support Activities: “The rebound from Hurricane Harvey’s impact on Houston business is still dragging. Some clients did not make it through and closed. Insurance companies are dragging out compensation on claims and slowing the recovery. Our mail volume from hundreds of customers is still down, and we are hoping that they will finally get their businesses repaired and begin to market their services again because the holiday season is upon us, and everyone knows they have to make it now or things will implode… We keep waiting for it to get busier, although we are very busy now, which is normal for this time of year. I see November and December possibly being slower than normal, which is concerning as we use the fat from these months to carry us through the lean winter months.”
Paper Manufacturing: “September and October were good months.”
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.