A new report from the Federal Reserve Bank of Dallas showed that business activity in the southern region of the country firmed in August, as the headline index rose to its highest level since May. Under the hood, measures of shipments, hours worked, and capital expenditures all improved this month but production, new orders, and capacity utilization declined. Prices paid for raw materials continued to rise faster than prices received for finished goods, which along with a jump in wages and benefits suggests additional margin strain for manufacturers. Comments from surveyed managers in August were generally positive but there were a few signs of frustration:
- We are swamped. There are no employees worth hiring for entry-level manufacturing jobs.
- Our most critical issue is finding skilled workers to fill open positions within a tight labor market.
- We are experiencing labor shortages and increased turnover due to higher demand in the labor market.
- Orders are good at this time. We are trying to add employees but can't find qualified personnel at this time.
- The U.S. Congress must pass business tax reform and lower corporate tax rates.
- I am becoming much more bearish on the economy and am worried that all the chaos and inconsistent messages out of Washington are putting a big damper on our industry.
- We believe something needs to be done to address and contain the dollar manipulation by other countries. This is hurting our manufacturing sector.
**Note: This survey was conducted before hurricane Harvey.**
Sources: FRBDPost author: Charles Couch