HomeMy WebLinkAboutFederal Reserve District informationFrom: Tom Brymer
Sent: Wednesday, September 29, 2010 12:33 PM
To. Tom Brymer
Subject: Emailing: FRB Beige Book--Dallas--June 9, 2010
"A
ederal Res-erve Bt, ard
Summary
Districts
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicano
St. Louis
'
Minneapolis
Kansas City.
Dallas
San Francisco
Business conditions continued to improve in the Eleventh District.
Activity in manufacturing, staffing services, transportation services,
Prices
Most contacts said prices were holding steady, although some paper,
fabricated metals, and aircraft and parts manufacturers reported slight
increases in selling prices. Contacts at department stores said less
discounting was taking place. Input and raw material costs were
generally stable, but there were reports of an uptick in the cost of
lumber, food, engineered metal products, linerboard, steel and some
industrial metals. Firms' ability to pass on these cost increases remained
limited.
I., g 811
1
in late May. Natural gas prices were flat during the reporting period.
Sharp increases in the price of petrochemicals such as ethylene and
propylene seen earlier are reversing as ethylene plants come back online
and refineries increase utilization rates. Declining prices have spurred
export demand for U.S. petrochemicals and related products.
Labor Market
Employment levels held steady at several respondent firms and there
were a few reports of hiring activity. Staffing firms continued to cite
increased demand for their services, and some contacts in transportation
services, automotive sales, transportation and construction-related
manufacturing said they had either added a few employees or planned
on hiring additional workers. Wage pressures remained subdued, with
the exception of the airline industry. Many firms are continuing with
salary or 401(k) contribution freezes, although a few noted that they
planned on giving small pay increases this year. In addition, staffing
firms reported that pay rates were stable.
Manufacturing
Most construction-related manufacturers said demand ticked up from
low levels. Orders from the public sector and homebuildina industry
remains weak. A few contacts said they were slowly increasing work
hours or capacity utilization rates. Although there is still caution among
contacts, outlooks were slightly more optimistic than the last report.
Fabricated metals producers cited continued increases in demand, and
reported that large government-related projects have boosted the sales
outlook for the next three months.
at a consistently strong pace. Inventories were reported to be under
control and one semiconductor respondent said they were able to
increase inventories to desired levels. Most respondents remain
optimistic that demand will be strong over the next six months but noted
that the outlook has become more uncertain due to fiscal problems in
Europe.
Producers of trailers said continued strength in demand has boosted the
outlook over the next three months. Manufacturers of aircrafts and cart:
weak. An aircraft repair and maintenance firm said demand strengthened
over the past month, and is expected to rise further over the next three
months.
Reports from paper manufacturers were mixed. Most respondents
reported strong demand while one corrugated box manufacturer noted a
decline in orders. Food producers noted an increase in orders.
Inventories are at desired levels but some food manufacturers said
stocking up for certain items has been an issue due to the recent
acceleration in demand.
Petrochemical producers cited improved domestic demand for most
products except for polyvinyl chloride, which is tied to commercial and
residential construction. Demand for oil products is above year -aa
percent range in early .April to the high 80s in late May. Refinery
margins have improved and are at their highest levels for the year.
Retail Sales
Retail activity was flat to slightly down but in line with contacts'
expectations during the reporting period. Contacts say the decline in
sales was largely due to Easter pulling sales forward into March.
Department store sales were flat despite strong demand for apparel and
accessories. Most contacts sav Texas sales are farin2 slightly better tha
remain lean. Prices have been inching upwards due to some pullback in
incentives introduced earlier. Contacts expect demand will gradually
improve through the end of the year.
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,
improvement in overall economic conditions. lntermodal 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.
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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 resnondents. Still outlooks reflect uncertainty about the
Apartment markets continue to fare better than expected, with
occupancy and rents improving in most Texas metros. WUle
concessions are ongoing, contacts noted they are not as widespread as
earlier in the year.
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
DrODerties for sale. Dewite the imDrovement, the large amount Of Mace
Financial Services
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 oil-directed 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
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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Last update: June 9, 2010