Dallas Fed: Texas Feb. Manufacturing Up Amid Tariff Woes


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Texas manufacturing extended its growth in February 
even as tariff uncertainty and tightening cash flows created headwinds for many 
firms.

   The production index in the second largest U.S. state advanced to 12.5 this 
month from January's 11.2, while manufacturers reported persistent trade 
barriers and declining consumer spending.

   One metal producer announced the closure of a family business active since 
1958, citing customers who weren't buying or paying on time.

   The general business activity index edged into positive territory at 0.2 
from a prior -1.2, indicating broader conditions had stabilized despite growing 
structural challenges.

   Capacity utilization climbed five points to 11.8, while new orders remained 
essentially unchanged at 11.1.

   Input cost pressures eased slightly to 31.7, but the wages and benefits 
index surged nearly 15 points to 31.9 as labor costs accelerated.

   The employment index moderated to 7.5, yet the hours worked index rose more 
than five points to 6.1, signifying longer workweeks for existing staff.

   Future production expectations grew more optimistic, with the six-month 
outlook index rising five points to 34.3 as some firms anticipate continued 
demand strength.

   "Tariffs still have an impact on our business and remain a big unknown," 
noted one manufacturer regarding the ongoing burden of trade policy.

   Another respondent highlighted that consumers were being negatively impacted 
by the economy, observing that direct-to-customer spending has declined 
considerably in recent months.

   "The federal and state policy issues have frozen us," added a food 
manufacturing representative, echoing the sentiment of widespread regulatory 
and geopolitical unease.

   A machinery manufacturer remained an outlier in optimism, stating that new 
large opportunities have finally allowed the firm to reach full production 
capacity.




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