A key measure of Texas manufacturing suggested productivity sharply accelerated in February as it notched one of its best scores since the start of pandemic.
The Federal Reserve Bank of Dallas’ latest survey of manufacturing executives across the state also found marked upticks in the number reporting increases in new orders, shipments and capacity usage after a brief dip in January that followed another uptick in December.
A measure of manufacturing jobs slipped some from January, but Emily Kerr, a senior business economist at the bank, noted in an analysis that it still indicated increased headcounts.
She also noted that 21% of firms responding to the survey said they’d added to their headcounts while 8 percent said the opposite.
It wasn’t all roses, though.
Reports of prices for raw materials hit a 10-year high amid supply chain disruptions, and executives continued to voice concerns about the pandemic.
“Consistency of the available workforce is hurt by the need to quarantine because of family exposure to COVID-19,” one executive in fabricated metal manufacturing told the bank. “Thank goodness for our early cross-training of personnel.”
Another boss in machinery manufacturing railed on new President Joe Biden’s proposal to increase the federal minimum wage to $15 an hour.
“A $15 minimum wage would kill our small business,” they said.
Others also expressed surprise at the collapse of Texas’ power grid last week and said they would need to think about preparing for similar events in the future.
Even so, more executives felt good about future growth than not, and a few comments indicated there are already some bright spots.
“We had a record year last year, and we should blow it away this year,” a machinery manufacturing executive said. “The electronics and medical sectors are booming.”
Things were decidedly less rosy in the service sector.
February’s score on the main index there was slightly better than it was in an unremarkable January, but remained well off pre-pandemic highs.
Like their counterparts in manufacturing, many executives responding to the survey took a dim view of the new Biden administration, COVID restrictions and the unexpected collapse of the power grid last week.
“Unless we get past the COVID partial shutdowns soon, small businesses will continue to fail, leaving a long-term effect on local economies,” one said.
A few found reason to be optimistic as more people get vaccinated against COVID-19, though.
“I am hopeful with the vaccine rollout and indications of lower hospitalizations that some normalcy may occur by midyear,” said one in the insurance business.
Such an uptick will be critical for the retail sector, which has proven especially vulnerable to the pandemic.
Like in many recent months, there were more retail executives reporting drops in sales than executives reporting increases in February, so the sector’s main index remained in the red.
There were also more executives with negative perceptions of the broader business climate and their companies’ outlook than those with positive views.
Still, Christopher Slijk, an associate economist at the Dallas Fed, wrote in an analysis that in the aggregate, the executives surveyed were optimistic about the future.
Expectations for future business activity hit a three-year high in February, Slijk noted, and retail executives were the most optimistic about their future sales prospects they’ve been since October.
Austin Huguelet and Katie Kull, Austin American-Statesman (TNS)
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