Survey: Texas manufacturers worried about oil price slide

Texas manufacturers are worried about what plummeting oil prices could mean for business in 2015, according to the Federal Reserve Bank of Dallas’ monthly survey.

Dallas Fed data showed that manufacturing activity increased in December even as demand moderated.

The Texas production index, a measure of the state’s manufacturing climate, increased from six to 15.6 since November, the Dallas Fed said.

But other measures showed that demand slowed: the new orders index fell from 5.6 to 1.3; and the survey’s composite index, expected to come in at 9, missed the mark at 4.1.

Several manufacturing executives expressed pessimism over how falling oil would affect business next year.

“The drop in crude oil prices is going to make things ugly…quickly,” said an executive in metal product manufacturing.

A chemical manufacturing executive noted that “energy volatility will cause our customers to keep inventories tight,” and that falling oil prices would put pressure on margins.

Other executives were less negative, but were still receiving mixed signals from their customers.

“We have received comments on both sides of the issue ranging from ‘equipment purchases will be delayed’ to ‘we are using this period to ramp up for next year,’ ” said one respondent.

According to Business Insider, the new survey showed that while U.S. manufacturing has benefited overall from the cheap fuel costs the shale boom created, Texas manufacturers serving customers in the oil patch will likely feel a greater share of the pain as plummeting oil prices decimate drilling activity.

The number of operating oil and gas rigs fell again for the week ended Dec. 26, according to Baker Hughes.

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