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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. Ll��Mlz=z 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. AM Return to top Kansas City San Francisco Horne I Monetary Policy 2010 calendar Accessibility I Contact his Last update: June 9, 2010