A new report from the Federal Reserve Bank of Dallas showed that business activity in the southern region of the country firmed in September, as the headline index rose to its highest level since February. Under the hood, measures of capacity utilization, new orders, shipments, employment, and hours worked all improved this month but gauges of production, worker compensation, and capital expenditure plans deteriorated. Any weakness this month was likely exacerbated by hurricane Harvey, which occurred after the August survey was conducted. Moreover, comments from managers were generally positive this month but several respondents did complain about the storm's near-term impact:
- Hurricane Harvey resulted in increased raw material costs and increased inventory.
- Hurricane Harvey is affecting delivery and availability of raw materials. This may take a few more weeks to resolve.
- We lost approximately seven days of production due to Hurricane Harvey. We are fully back online.
- The storm caused the need for repairs in the refinery. This backlog of field and shop work repairs will last 30 to 60 days. We cannot hire enough qualified people to fill the need for this time period.
- There is a labor shortage in Central Texas. We are unable to find qualified candidates. This is a factor among most Austin manufacturers I speak with.
Sources: Econoday, FRBD, FRBSLPost author: Charles Couch