Texas energy sector drives state economy, Fed report says
Date: Thursday, September 8, 2011, 6:30am CDT
Texas’ energy sector continues to drive the state’s economy while other sectors experience flat growth, according to the latest report by the Federal Reserve Bank of Dallas
Known as the “Beige Book,” the report released Wednesday noted economic activity in the Dallas district — including Texas, northern Louisiana and southern New Mexico — grew at a “modest pace” since the last report in July. The energy sector continued its robust activity while other sectors like manufacturing, financial services, retail sales and employment were stable.
In addition, single-family housing was still weak, but the report found activity in the multifamily sector was strong and commercial real estate was seeing continued improvement.
Among the report highlights:
• Drilling activity was up since the last report with Texas adding 43 rigs over the past six weeks. Most of the demand was in land-based drilling, while activity in the Gulf of Mexico remained weak.
• Two large retailers said sales in Texas and the Southwest region was outpacing the rest of the country, though by a small margin.
• Contacts in the automotive sectors said sales were improving as demand for used cars remained high. They were optimistic that sales would increase through the end of the year, and felt Japanese manufacturers, still recovering after the March earthquake and tsunami, would resolve their issues by the end of the September.
• There was an overall lack of optimism in the financial services sector, though regional banks reported aggressive loan pricing. National bank contacts said they saw customers being more conservative about their borrowing decisions.
• Staffing services remained a high levels with one contact reporting that direct hiring was outpacing temporary placements.
Gregory Daco, principal U.S. economist for IHS Global Insight, said in a statement there was moderate improvement in economic activity.
“If no news is good news than this Beige Book was a positive one,” he said. “It highlighted the slow pace of economic activity while emphasizing that caution and uncertainty were major drags on growth.”
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