Previous: Dallas Fed Manufacturing Survey July -17.5 vs. -15.1

Details:

• General business activity -17.5 versus -15.1 previously
• Company outlook -18.4 vs. -6.9 previously
• Prices paid +23.1 versus +21.5 previously
• New orders -12.8 vs. -1.3 previously
• Shipments -16.3 vs. +2.8 previously
• Employment +7.1 against -2.9 previously

Overall, the details and comments are significantly worse than the title.

I wonder if Hurricane Beryl had an impact on some of these numbers because they’re not very good. At the same time, for this week’s nonfarm payrolls report, we could also see the effects of the hurricane.

Comments in the report:

Food manufacturing

• Over the past six months, we have seen greater market stability for our products (primarily sausages). Nielsen data for our category shows low to moderate growth over the past 52 weeks, and our market share is increasing in our key markets. This is leading to a more predictable environment for our business. Salaries increased this month due to the merit increases we gave our team at the beginning of our fiscal year, which is in July.
• The trading environment appears stable, but beef prices continue to rise beyond usual seasonality due to supply constraints.
• The destabilization of our country and the politicization of things continue to impact our activities.

Paper manufacturing

• Activity has slowed, but we expect it to pick up soon.

Printing and related support activities

• We’ve slowed down a little bit from our very hectic pace of activity from late spring through June. We hear a lot about a slowdown in our industry, but we continue to be very busy, mostly with large projects, but also with some smaller ones. We have a very large capital purchase machine coming in early October. We’re hoping that the Federal Reserve will lower rates and that general economic activity will pick up. We’re actually seeing some price declines and hope that we won’t need to raise them next year.

Manufacture of fabricated metal products

• Hurricane damage and power outages reduced production.
• Customer demand is the main concern. The decrease in availability and accessibility of credit in the markets we sell to has virtually stopped demand. I estimate that we are operating at 30-40% of our capacity.
• Order volumes continue to experience modest declines. Short-term inefficiencies will require staffing adjustments over the coming months to align with the new lower baseline. There is no major change in our long-term outlook; we continue to view the current decline as temporary and maintain a positive outlook beyond the next 12 to 24 months.

Machinery manufacturing

• Elections (are an issue that affects our business).
• Business activity is horrible and we see no signs of improvement.
• Inquiry and order activity appears to have been interrupted. The brakes are on. This is quite common in presidential election years, but it comes at a time when the situation is already unstable due to price pressures and massive inflationary pressures.
• At this point, we are simply hoping for a favourable outcome to the elections and looking ahead to 2025. The summer slump has hit hard and seems inexorable compared to what we see in our crystal ball. We have a few small jobs to finish and we are looking for new larger and more distant projects, but we have not yet found the rare pearl.

Manufacturing of computer and electronic products

• Many customers are delaying spending and factoring in cost-of-living price adjustments. The market remains soft, and with the uncertainty of an election year, even our federal business is somewhat flat.
• We need lower interest rates to get end customers to start buying capital goods again.
• We typically see weakness in presidential election years as businesses try to navigate uncertainty or slow down during these times. With the recent events involving the two presumptive candidates, this uncertainty has increased, making it very difficult to predict what might happen. Our business is likely to be negatively impacted by tariff policies as some projects could disappear entirely. For the companies we serve that ship to other countries, we have already lost sales because it is more affordable to manufacture these products outside the United States for consumption outside the United States. This was not the case prior to the tariffs. We were able to manufacture products to be shipped to other parts of the globe. Both (political) parties have shown their willingness to maintain and increase tariffs, which could have a negative impact on our sales.
• We expect to see stronger signs of cyclical recovery in industrial and automotive markets, which have not yet materialized. This increases uncertainty about a possible delay or attenuation of the recovery.

Manufacturing of transport equipment

• Although we still have a large backlog of orders, New orders are significantly lower than we had expected this yearThis will reduce lead times and should allow us to take additional orders next year.

Various manufacturing

• Customer demand weakensWe are also facing increasing unfair competition coming directly from China.
• Due to the hurricane and the lack of electricity for over a week, we lost significant production hours.