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We’re about a day late to this but reckon that can be forgiven — Bank Holiday and all that.
From the Dallas Fed’s latest Texas Manufacturing Outlook Survey, released yesterday (our emphasis):
These comments are from respondents’ completed surveys and have been edited for publication.
Food manufacturing
— Suppliers are demanding longer lead times. Some commodity prices have declined, but value-added items (packaging film) are seeing price increases. We’ll have an annual wage increase in October in the range of 3 to 8 percent. Wages for positions requiring physical work are increasing more than desk jobs.
— Agriculture is hurting. No farm bill, weather and falling prices for our commodities while input costs increase are putting a big squeeze on our industry.
— We are preparing for the recession.
— As the economy weakens, we are seeing modest growth in our category of dinner sausage. This category tends to grow when the economy weakens, as sausage is a good protein substitute for higher-priced proteins and can “stretch” consumers’ food budgets. Additionally, we are expanding our presence in other sales channels, such as food service, which we believe will help our sales in 2025.
US recession indicators are two a penny (1.5 per US penny) at the moment, but this is a new one for us.
The justification is reasonable, and grim: when times are tough, shoppers have a tendency to trade down. In the case of protein, that might well mean ditching the pork chops and instead opting for a ground-up log of various pig (and, occasionally, other animal) pieces encased in a sub mucosa casing, also possibly derived from a pig.
Sausages: appetising AND economically informative!
Further reading
— Simple indicators of whether the US is in recession are flawed (MainFT)
Read the full article here