U.S. manufacturers secured more orders in September, but Texas factory executives reported slower growth in October and continued pressure from raw-material costs, according to newly released federal figures and a Dallas Federal Reserve survey.
New orders for manufactured goods rose 1.8% to $677.2 billion in September, the U.S. Census Bureau announced Tuesday. The $12.2 billion increase marked the third consecutive monthly gain, following a revised 0.3% increase in August.
The strongest contribution among durable-goods categories came from transportation equipment, where new orders increased 4.6% to $119.9 billion. Manufacturers shipped $668.5 billion in goods overall, up 1.3%, while the backlog of unfilled durable-goods orders climbed 0.9% to $1.62 trillion. The Census figures account for seasonal changes but not inflation. They describe September orders nationwide, not October production in Texas.
Texas Factories Grew More Slowly In October
Texas manufacturing output continued to expand in October, although momentum eased, the Federal Reserve Bank of Dallas found in its survey released October 26. Its production index declined from 29.5 in September to 15.8 in October, while the new-orders index fell from 30.7 to 9.3 and the shipments index dropped from 24.8 to 8.4.
These figures are diffusion indexes, not percentage changes.
Positive readings mean a larger share of responding manufacturers reported increases than decreases. The Dallas Fed received responses from 64 of 114 surveyed manufacturers between October 13 and October 21.
Cost pressures persisted. The index tracking prices paid for raw materials increased to 55.3 from 52.2, well above its historical average of 28.1. The finished-goods prices index rose to 29.9 from 27.6, suggesting more manufacturers reported price increases than decreases.
Dallas Railcar Maker Illustrates The Mixed Picture
Dallas-based Trinity Industries offers a company example of demand and profit moving in different directions. Trinity disclosed 2,190 new railcar orders in the third quarter, up from 350 a year earlier. Yet consolidated operating profit fell from $118.6 million to $95.6 million, a decline of approximately 19%.
The company attributed the weaker operating result partly to lower gains on lease-portfolio sales and higher corporate expenses. The Dallas Express examined those results on October 29, including a backlog that remained below its year-earlier level despite the quarterly jump in new orders.
Borrowing costs add another constraint for some Texas businesses. In a separate October Dallas Fed survey, 44% of 25 manufacturing respondents who answered a follow-up question about higher credit costs said they had delayed or reduced capital spending or expansion, as The Dallas Express previously covered.
What The Latest Numbers Mean
The new Census report points to stronger national order activity entering the fourth quarter, while the October Texas survey suggests factory growth was becoming less broad-based.
The Dallas Fed plans to publish its next Texas Manufacturing Outlook Survey on November 30. The Census Bureau has scheduled its October advance durable-goods report for November 25.
