This week, much of the economic data will focus on manufacturing production, with the Institute for Supply Management (ISM) numbers due out on Friday and surveys from the Dallas, Kansas City, and Richmond Federal Reserve Banks. The first of these is the Texas Manufacturing Outlook Survey from the Dallas Fed, which reports slower growth in manufacturing output in June.
Its production index fell from 12.7 to 5.6, while still positive it reflects a slower pace than in April. The indices for shipments, capacity utilization, capital expenditures, and employment dropped. However, the number of new orders rose, perhaps boding well for the coming month. Pricing pressures moderated from previous months, but they remain elevated.
The broader perception of business conditions reflects weakness, with the index for general business conditions declining from -7.4 to -17.5. With that said, respondents reported a slight improvement in their company’s output, with the index rising from 3.2 to 7.2. Expectations of future growth are positive, but less so than in prior surveys.
In a series of special questions, government regulations and an uncertain business outlook were “relatively major problems,” with both garnering over 50 percent of responses. Other top concerns were weak sales, tax, and input costs. More than 60 percent suggested that employee benefits per employee were up at least 2.5 percent in 2011, with respondents evenly split on whether or not these increases were anticipated and budgeted for.
Access to credit was not a problem for 57.1 percent of those taking this survey. It is notable, though, that 14.3 percent of businesses said that it was a major problem.
Chad Moutray is chief economist, National Association of Manufacturers.