Texas manufacturing up in October

The Texas manufacturing industry picked up steam in October, according to the Federal Reserve Bank of Dallas' Texas Manufacturing Outlook Survey.

Thirty percent of manufacturers reported an increase in production, compared to only 16.7 percent who experienced a decrease. Dallas Fed calculated a production index of 13.3, which is an improvement from September's value of 11.5. Based on monthly survey responses from Texas manufacturers, values above zero signify an increasing trend. This means that factory output was generally higher throughout the state.

New orders were up, as was capacity utilization, with both indices increasing 1.2 points from September to 10.7 and 5, respectively. The boost may have put an extra strain on some employees, as the number of hours worked also grew. During October, 20.8 percent of companies increased the number of hours worked, while only 16.9 percent experienced a cut.

Future growth anticipated
Manufacturers widely anticipate growth in the next six months. The percentage expecting an increase in production, 38.8 percent, was significantly higher than the 12.7 percent expecting a decrease. Even so, the October index, which came out to 26.1, was a 7-point decrease from September.

Despite production growth, manufacturers were slightly less optimistic about their future output. Some were affected by the partial government shutdown that occurred in October. One fabricated metal manufacturer told the Fed how the halting of government contracts affected their output:

"The government budget mess is dramatically affecting our business. Our primary clients include the federal government, government contractors, public schools, public hospitals and large commercial businesses. All have put new orders on hold, and some existing orders are not being processed properly."

Another cited fears of a government default as a cause of concern.

"The government shutdown and possible default of the U.S. on its debt and the ramifications of that have us stopped dead on capital spending. We had planned on over $2 million over the next 12 months. All of that is on hold now."

Work on their plates
But despite the setbacks, future outlook indices mostly remained positive. Hours worked and employment both registered strong positive values. Due to the current shortages of skilled workers, however, hiring managers may have a tough time filling positions.

Many could be turning to manufacturing recruiters to assist their search. Manufacturers often require candidates with particular sets of skills, education and certifications and locating these individuals can be challenge. Recruiters, however, can streamline the process, providing firms with a host of qualified candidates.