How We Doing?

So how's the economy doing? Well, it depends on whom you choose to believe. Here's a report from the state that produces more than 11% of U.S. manufacturing.

Texas manufacturers in May posted their weakest month of production in a year at the tail end of a spring season that previously showed some signs of optimism.

The production index, a key measure of state manufacturing conditions, fell from 5.8 all the way down to minus-13.1. An index below zero indicates a decline in activity, according to a monthly survey data from the Dallas Federal Reserve.

The state’s manufacturing sector has in part felt the ripple effects of the ongoing oil bust, although crude prices have begun to rebound since possibly bottoming out in February.

The index is calculated by the Dallas Fed after receiving survey responses from 111 Texas manufacturing firms. May represented the fifth straight month that both employee counts and work hours declined.

The price of oil could stabilize in the second half of the year, giving some reason for optimism, said one fabricated metal product manufacturing executive whose survey responses were highlighted. “However, rapidly escalating raw material (hot rolled coil steel) prices are very difficult to pass through to the end user, thus further compressing our gross margins,” the executive added.

Several respondents complained about business uncertainty during a crazy election season, as well as the Labor Department’s new rule to expand overtime protections to workers making less than $47,476 per year.he

A machinery manufacturing executive said, “Things are pretty bleak in the oil patch …  I’ve cut payroll, suspended 401(k) matches, etc. trying to hold on, but I’m not optimistic about the options moving forward.”

The survey’s “company outlook” and “general business activity” outlooks also are continuing to see further worsening conditions, according to the Dallas Fed. Those indices measure the perceptions of broader business conditions that are becoming increasingly pessimistic.

Texas produces more than 11 percent of the total manufactured goods in the U.S., behind only California. Many of those goods support the energy industry. The Dallas Fed conducts the Texas Manufacturing Outlook Survey each month.

 fuelfix.com/blog/2016/05/31/texas-manufacturers-post-weakest-month-in-a-year/