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Dallas Fed Surges Near 10-Year Highs Despite Every Respondent Complaining About Hurricane Damage

Courtesy of ZeroHedge. View original post here.

If ever there was a reason to completely dismiss the farce that 'soft' survey data is of any use at all, this is it.

Having hovered around 17.0 for the last four months, The Dallas Fed Manufacturing Outlook survey spiked to 21.3 in September – just shy of its highest since 2010 – despite the total and utter devastation of Houston and much of the energy complex during this month thanks to Hurricane Harvey.

This print was 5 standard deviations above expectations as economists expected some pullback as Harvey impacted the state's economy…

New Orders surged, the number of employees surged, the average workweek surged, capacity utilization jumped, and shipments spiked…

Seven year highs!!!

All of that as ports were closed, infrastructure was crushed, people were unable to get to work, homes were devastated, and every respondent complained about the impact of Harvey!

  • Hurricane Harvey resulted in increased raw material costs and increased inventory. We expect raw material prices to stay elevated for about six months and then eventually settle back down, but not to the pre-hurricane level, possibly 50 percent of the difference.
  • Harvey did not impact our assets located in Louisiana but did materially slow logistics (rail, barge, truck) assets in Southwest Louisiana and Southeast Texas to service our plants in Louisiana. This slowed delivery of product to our customers. Lower production in Texas due to the storm coupled with solid demand caused product prices to rise. We also saw some energy-based feedstock prices rise in the same period.
  • Hurricane Harvey is affecting delivery and availability of raw materials. This may take a few more weeks to resolve.
  • We lost approximately seven days of production due to Hurricane Harvey. We are fully back online
  • We may see an increase in business in our building and construction products related to the recent weather in Texas and Florida.
  • The level of new starts in construction has already peaked and is on a slight decline. It is still good but declining from past months.
  • The storm caused the need for repairs in the refinery. This backlog of field and shop work repairs will last 30 to 60 days. We cannot hire enough qualified people to fill the need for this time period.
  • Hurricane destruction will slow growth for a short period, and then recovery will increase growth.
  • Harvey shut us down for a few days, but we did not sustain any damage. Business is good.
  • Harvey seriously impacted our facilities, employees and customers, shutting us down for two weeks. Turnaround maintenance work has been pushed into next year, leaving a hole for us to fill.
  • The hurricane impact in Houston and Louisiana has caused interruption of plastic packaging film supplies, causing short-term price increases due to supply/demand imbalances. Labor shortages continue to crop up, with the quality of the available workforce in the metroplex reaching levels (low) not seen since 1999–2000.
  • Hurricane Harvey seriously damaged the Southeast Texas business community. Already negatively affected by the general downturn of the oil business and, for us, the printing and USPS mail volume decline, the hurricanes hitting Houston (and shortly afterwards, Florida) have been an economic disaster for local small businesses. The situation is sadly reminiscent of the weeks following the 9/11 attack. Marketers and businesses locally are hesitant to gear back up.
  • Currently, the largest hindrance to continued construction growth is the availability of trained construction labor.
  • The bulk of our sales are centered around Houston, Austin and San Antonio. The hurricane directly affected our sales in these areas.

WTF!


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