The Texas economy is showing signs of slowing, especially in manufacturing and retail.
That’s the gist of two new reports from the Federal Reserve Bank of Dallas, showing declines in manufacturing, services and retail across the state in August.
The report points to ongoing supply chain problems, rising prices, and employment challenges across these sectors of the economy.
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However, all sectors expressed optimism for a turnaround.
For manufacturing, the August index of general business activity, which measures broader business conditions, improved 10 points from its July reading, but — It remained in negative territory at 12.9.
“Demand continued to decline as the new orders index turned negative for the third consecutive time and perceptions of general business activity deteriorated,” said Emily Carr, senior economist at the Dallas Fed. “Upward pressure on prices has eased further as many manufacturers noted improved supply chain disruptions.”
Manufacturers said they are continuing to hire and that the needed supplies are improving.
“It is still difficult to get raw metals of certain sizes and types,” one respondent told an anonymous survey. “Fortunately, following suggestions from our customers, we were able to substitute other materials. Certain chemicals for elastomer production are becoming an issue. We are unable to accept orders and say we have won, we will not be able to supply anything until the first quarter of 2023.”
Austin’s unemployment rate remained steady at 3.1% in July, according to the Texas Workforce Commission. The Austin metropolitan area’s unemployment rate is below his 4.3% in Texas, and the national unemployment rate remains at his 3.8%.
Melanie Flowers, President of the Workforce Solutions Capital Area, said: “From 2016 to 2021, Austin Metro’s employment increased by her 16%, a change well above her national employment growth of 1.8%.”
Central Texas is currently experiencing a manufacturing boom, led by Austin-based electric car maker Tesla. The company opened his $1.1 billion manufacturing facility in southeastern Travis County to begin production of the Model Y electric SUV.
Additionally, technology giant Samsung chose a location near Taylor to build a $17 billion semiconductor manufacturing facility. According to documents filed with the state, Samsung is considering building 11 new chip manufacturing facilities in the Austin area over the next 20 years, a move that could lead to about $200 billion in new investment. It could create more than 10,000 jobs for tech giants.
“Employment remains a bright spot and many manufacturers point to improvement in supply chain disruptions, further easing upward pressure on prices,” Carr said. Remains exalted. “
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Struggling in the retail and service industries
Meanwhile, Texas’ services sector (which includes retail, hospitality-related businesses, and technology services) expanded at a moderate pace in August, according to the Texas Services Sector Outlook.
“Revenue growth has slowed and labor market data point to a slowdown in the pace of hiring,” said Christopher Slyke, associate economist at the Dallas Fed. Perceptions of business activity have deteriorated amid heightened uncertainty in the outlook.”
According to the Dallas Fed, the services sector accounts for about 70% of the state’s economy and employs about 8.6 million workers.
“Texas’ services sector expanded at a slow pace in August as revenue growth slowed and labor market indicators suggested a slowdown in the pace of hiring,” Slijk said. “Pressions on prices and wages have eased further from highs at the start of the year. Perceptions of business activity have deteriorated amid growing uncertainty about the outlook.”
The Dallas Fed survey on the services sector includes a retail sector focused on information from retail and wholesale respondents. A retail survey found sales worsened in August.
“Retail sentiment remains pessimistic, with business outlook and a general business activity index in highly negative territory,” the report said.
Retailers are feeling pressure from both hiring and surging operating costs.
One respondent said, “I can’t raise prices as fast as my company raises them.” “If I did, it would hurt my business. Now we are reducing our profits.”