Poll shows Texas manufacturing activity down to 2020 low

Feb. 27 (UPI) — A manufacturing survey released Monday by the Federal Reserve Bank of Dallas showed the state’s manufacturing activity contracted for the first time since May 2020.

The 100 Texas manufacturing executives were clearly downbeat for February. The Federal Reserve Bank of Dallas uses these survey results to create an index that compares positive responses to negative responses, with a reading above zero representing optimism.

“The manufacturing index, a key indicator of manufacturing conditions in the state, fell from 0.2 to -2.8, indicating a slight contraction in manufacturing,” the bank said.

The Federal Reserve Bank of Dallas said it was the first decline since May 2020, when the COVID-19 outbreak turned into a pandemic in the US.

Better known for its oil and gas wealth, the Texas manufacturing sector is one of the largest in the country. The Texas Comptroller of Public Accounts, the state agency responsible for collecting tax revenue, estimates that manufacturing accounts for 13% of total manufacturing in the state. In 2019, the manufacturing sector was worth $241 billion. was more than the entire economy of Portugal.

For executives working in the transportation equipment sector, the outlook is definitely dire.

“There is nothing positive about the economy,” said one respondent.

Commerce Department data showed that so-called core consumer inflation, which excludes more volatile energy and food prices, rose 0.1% from December levels to 6.5% last month, disappointing Federal Reserve officials. trying to stop inflation. by raising interest rates on loans.

Loretta Mester, president of the Federal Reserve Bank of Cleveland, said on Friday that the latest data shows some of the Fed’s policies are working – inflation was closer to 9% last summer – but it’s still “too high.”

“We’re not sure if this is due to the Federal Reserve’s interest rate hike or some sort of cyclical slowdown, but it looks like business has ground to a halt,” an executive told the Dallas Federal Reserve Bank.

Ataman Ozyldyrym, senior director of economics at The Conference Board, said new orders in the US manufacturing sector have declined, consumer sentiment is deteriorating and business conditions are deteriorating.

In mid-February, the Conference Board reported that its leading economic index was down 0.3% in January after falling 0.8% in December. Between July and January, the index was down 3.6% compared to a 2.4% decline from January 2022 to July.

“While the LEI continues to signal a recession in the near term, labor market-related indicators, including employment and personal income, remain robust for now,” Oziildirim said. “However, The Conference Board continues to expect high inflation, rising interest rates and shrinking consumer spending to push the US economy into recession in 2023.”

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