WASHINGTON (MNI) – The following is the text of the Federal
Reserve’s Beige Book survey Eleventh District summary, published
Wednesday:
Continued:
ELEVENTH DISTRICT-DALLAS
Services
Staffing firms say demand remains strong and widespread across
sectors. Orders are mostly for contract work but assignments are
becoming longer in length and temp-to-hire placements continue to pick
up pace. Sustained growth in demand has led contacts to expand staff
levels and has boosted the near-term outlook. Accounting firms note
demand remains flat and the outlook continues to be cautiously
optimistic. Law firms report weak demand for most types of legal
services, with the exception of a slight pickup in foreclosure-related
activity. Contacts say that they will have fewer summer clerkships than
normal due to sluggish demand.
Demand for transportation services was positive suggesting further
improvement in overall economic conditions. Intermodal cargo volumes
were flat over the past month but are slightly up from three months and
year-ago levels. Shipping firms say large freight volumes continued to
grow strongly but small parcel shipping volumes were flat over the
reporting period. Railroads reported a significant and broad-based
increase in shipments, and noted that the outlook is more upbeat than
last time. Airlines cited further improvement in demand, with leisure
travel seeing continued growth and business travel recovering. Contacts
say domestic travel is rebounding but is not as strong as international
demand. The outlook is positive as revenues have improved due to fare
increases and advance bookings are holding up well.
Construction and Real Estate
Housing demand continued to improve. Realtors reported positive
gains in home sales as the homebuyer tax credit contributed greatly to a
wave of buying. Builders increased starts due to tight new home
inventories and improved sales activity. Prices were steady to slightly
higher, according to respondents. Still outlooks reflect uncertainty
about the remainder of the year and many contacts expect flat demand in
the second half.
Apartment markets continue to fare better than expected, with
occupancy and rents improving in most Texas metros. While concessions
are ongoing, contacts noted they are not as widespread as earlier in the
year.
Commercial real estate contacts said that although conditions
remain weak, there are signs that the sector is firming. Leases and
property sales have picked up as rents and prices have come down. Some
contacts said there were a few instances of property prices being “bid
up” due to the large amount of interested buyers versus the low amount
of quality properties for sale. Despite the improvement, the large
amount of space available is expected to keep commercial construction
subdued for the remainder of this year.
Financial Services
Overall loan demand softened during the reporting period. There is
more commercial and industrial loan activity in the pipeline but
consumer loan demand outside of credit cards remains sluggish. Contacts
report that they are turning down many potential mortgage borrowers due
to poor credit. Credit standards remain tight and loan pricing is
unchanged. Some contacts reported an increased inflow of deposits, which
they attributed to the unease arising from recent stock market
volatility. Although contacts are relieved that the Federal Reserve will
retain regulatory oversight over state member banks, there continues to
be concern regarding other impending regulation changes. The outlook is
slightly optimistic with some concern about the impact of the Greek
credit crisis.
Energy The rig count rose further over the reporting period and
most of the increase was in oildirected drilling. Even with the drop in
oil prices from $85 to $70 per barrel, oil-directed projects remain
profitable. In contrast, at $4 per mmbtu prices do not justify unhedged
shale gas drilling. Hence, as current hedges expire, contacts say that
there will likely be a slowdown in gas-directed drilling.
Agriculture Lack of rainfall and high winds dried out the topsoil
in some areas but recent rains have restored much of the lost moisture.
Spring planting is moving ahead of its normal pace, and crop conditions
are significantly better than last year. Demand for several agricultural
products has improved and exports of cotton, rice and grains are up from
last year. Cattle and cotton prices have risen and remain strong, while
grain prices have weakened slightly.
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** Market News International Washington Bureau: 202-371-2121 **
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