Texas Manufacturing Outlook

Service Steels Houston revenue historically lagged the Texas Leading Index by 2-3 months. We can
look to the manufacturing outlook to get hints on sales for the next few months.

Texas factory activity, capacity utilization and production index were flat for August showing near
zero growth after several months of decline. But demand side continues to show decline. New
orders index declined to financial crisis levels, or a new low since May 2009. Unfilled orders are
seeing a new low since October 2012. Shipments are seeing a new low since January 2012. Prices
paid for raw materials are seeing a new low since May 2009 signifying deflation dangers.
Employment has turned negative for the first time since January 2013. Company outlook is hitting
a new low since October 2009.
Business sentiment continues to hit new lows on the demand side.
Survey Responses
Outlook survey respondents in metals & machinery manufacturing are saying the following:
Overall business is slowing.
The strength of the dollar is impacting us through an inability to export and high volume of imports.
Price of finished product dropped dramatically.
We had our first layoff in 15 years.
The growth we expect is due to our efforts to grow our non-oil and gas business.
The current sequential increases of some 40 percent in volume are result of low single-digit growth in lowrise nonresidential construction volumes.
August will be our worst production and delivery month since March 2014.
The quantitative easing hangover is starting.