WASHINGTON (MNI) – The following is the second part of the latest
Beige Book survey of economic conditions in the Federal Reserve’s
Eleventh District, published Wednesday:
ELEVENTH DISTRICT-DALLAS
Services
Staffing services said activity picked up over the past six weeks,
following a slight softening in demand seen during the prior reporting
period. Shortages of skilled IT professionals continued, and several
contacts reported an increase in demand for construction workers. Legal
firms reported steady demand, with continued strength in corporate,
intellectual property and energy services. Contacts also noted a slight
uptick in estate planning, lobbying and real estate related services.
Accounting firms noted a modest pickup in demand largely due to growth
in mergers and acquisitions related activity.
Reports from transportation service firms were mixed. Small parcel
and air cargo volumes increased, while railroad shipments and shipping
container volumes declined during the reporting period. Intermodal firms
reported an increase in cargo volumes largely due to strong demand for
oil field supplies.
Airlines said passenger demand improved over the past six weeks.
Domestic demand increased, while demand for international travel was
flat. Contacts said business travelers continued to be price sensitive
and were purchasing restricted discount fares. Responding firms expect
passenger demand to remain steady over the next three months.
Construction and Real Estate
Contacts in the single-family housing industry noted consistent
indications of recovery in Texas markets. Respondents said sales are up
year-to-date, and some builders were beating sales expectations. Agents
noted solid sales for existing homes, and outlooks are more positive.
Apartment market respondents said that after first quarter softness,
demand came back stronger in recent months, as expected. Texas apartment
markets continued to outperform other parts of the U.S., according to
contacts. Rental rate increases slowed, but remain relatively healthy.
Apartment construction activity is still at low levels, but is expected
to pick up in the second half of the year. Commercial real estate
leasing activity remained strong across Texas metros. Houston, in
particular, saw robust office and industrial demand growth thanks to
strong energy sector expansion. Construction activity is expected to
improve modestly in Texas markets in the second half of 2012. Some
contacts noted a recent trepidation in the capital market/lending
environment due to heightened worries about European debt problems.
Financial Services
Financial firms reported a modest uptick in loan demand. National
banks reported strength in middle-market lending, auto loans and
corporate merger and acquisition activity. Regional banks also noted
improved sentiments. Several banks suggested energy-related activity
remains robust. Some smaller business and middle-market deals have begun
to crop up. Outlooks are generally less pessimistic, and some outright
optimistic, with an overall theme that loan demand is slightly
stronger. Loan pricing remains competitive. Outstanding loan quality
continues to improve and contacts note fewer problem loans.
Energy
Respondents at energy-related firms said drilling activity remained
strong, and the District rig count grew modestly over the past six
weeks. The shift from dry-gas drilling to wet-gas or oildirected
drilling continued, and some firms noted logistical problems as they try
to move crews and equipment. Overall, contacts say that outside of
pressure pumping and fracturing used in dry-gas drilling, the market for
oil field machinery and services remains very strong.
Agriculture
Drought conditions improved over the reporting period, particularly
in West Texas thanks to recent rains. Better soil moisture continued to
improve prospects for the 2012 crop year, and pastures greened up for
livestock producers. The wheat harvest began and yields so far were
above average.
(2 of 2)
** MNI Washington Bureau: 202-371-2121 **
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