WASHINGTON (MNI) – The following is the first part of the text of
the Federal Reserve’s Beige Book survey Eleventh District summary,
published Wednesday:

Continued:

ELEVENTH DISTRICT-DALLAS

Real Estate and Construction

The housing market remained weak since the last report. Sales were
sluggish at low levels, according to contacts. Homebuilding activity
continues to bounce along the bottom.

Contacts are cautious in their outlooks but are hopeful that job
growth will translate into increased sales this year.

Office and industrial leasing activity is spotty but appears to be
moving in a positive direction, according to respondents. Commercial
construction activity overall remained weak, despite increases in
multifamily and hospital construction activity.

Financial Services

Financial firms reported soft loan demand overall. National
institutions noted some pickup in consumer and industrial loan demand,
but regional banks reported no change. Commercial real estate lending
was weak, with the exception of multifamily. The residential mortgage
market was reported as spotty across the state, but unchanged overall.
Contacts said loan pricing is increasingly competitive. Outlooks remain
cautious though more optimistic, and contacts expect to see an uptick in
mergers and acquisitions of small banks this year due to the increased
cost of regulatory compliance.

Energy Drilling activity remains high. Crude pricing is strong, and
margins are good. Growth in the rig count has slowed due to the
continued shift away from dry gas toward more oil-directed drilling,
natural gas formations rich in associated oil or natural-gas liquids.
The liquid-rich Permian basin and Eagle Ford shale areas in South Texas
are booming.

Agriculture

Drought conditions became prevalent in the District in December,
with more than 85 percent of Texas classified as abnormally dry or
worse. Ranchers felt the immediate impact of the drought, as poor
pasture and range conditions necessitated costly supplemental feeding
for livestock. Dry land winter wheat was in need of rainfall, and 2011
crops could be adversely affected if soil moisture levels remain low
going into spring planting. Demand for agricultural commodities remained
above average, and export activity continued to rise for cotton, beef
and grains. Prices were strong for most crops, with cotton, wheat and
corn prices increasing further. The overall outlook for demand and
prices for agricultural commodities is very optimistic.

End:
(2 of 2)

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$$CR$,M$U$$$,MMUFE$,MGU$$$,MFU$$$]