Dallas Fed’s Manufacturing Survey Shows Quick Contraction and Poor Outlook Due to COVID-19

On March 30, 2020, the Federal Reserve Bank of Dallas released its monthly Texas Manufacturing Outlook Survey. This report revealed a dramatic contraction over the past with the production index falling from 16.4 in February to -35.3 in March.

Many of the survey’s other measures were at lows not seen since March 2009, at the beginning of the Great Recession. Every measure within the survey dropped markedly over the past month.

The outlook for future business conditions also turned drastically negative. The primary readings in the outlook survey are the general business activity index and the company outlook index, both of which are at record lows, surpassing results from the Great Recession.

Given these results, as well as jobless claim numbers over the past few weeks, it is not surprising that report’s labor market measures were also negative.

COVID-19 Special Questions

The March survey included special questions related to COVID-19 impacts to Texas business respondents to the Manufacturing, Service, and Retail sector surveys. Notable results by percentage of responses include:

• An increase in general uncertainty (84%)
• Increases in input prices (23%)
• Decreased selling prices (33%)

Some 60% reported negative effects to their business from availability of materials or inputs, production, and demand for products or services. Nearly 75% reported that they expect demand for products or services to be negatively impacted going forward in 2020.

In response to the question of how long Texas businesses expect the coronavirus impact to last:

• Less than three months (19%)
• Three to six months (46%)
• Six to nine months (16%)

The April Texas Manufacturing Survey report is due April 27, 2020. For questions about the Texas Manufacturing Outlook Survey or for assistance navigating the impacts of COVID-19 on the manufacturing industry, contact a Weaver professional today. We’re here to help.

© 2020