Dallas Fed: Regional economy expands on rising demand, energy recovery


Widespread increases in demand and the continued recovery of the Texas manufacturing and energy sectors fueled solid regional economic growth in recent weeks, according to a report Wednesday from the Federal Reserve Bank of Dallas.

In its chapter of the Beige Book, an anecdotal survey of the economy compiled every six weeks by the Federal Reserve banks, the Dallas Fed said the economic activity in its district “expanded moderately” since the last report.

The Dallas Fed’s district includes all of Texas and parts of New Mexico and Louisiana. Texas accounts for more than 95 percent of the region’s economic activity.

While many contacts expressed some lingering uncertainties—particularly around the impact of potential policy changes from the White House—outlooks on business conditions generally improved over the past six weeks, the report said.

Employment rose during the period, with relatively strong hiring by manufacturers helping offset some reticence to hire among retailers. Energy sector contacts said most layoffs are behind them, and some reported increased hiring.

Manufacturing and construction companies said they continued to have trouble finding skilled labor, and some restaurants also noted a shortage of qualified applicants. Wages continued to edge higher, as was noted in the previous report.

Demand for goods produced by factories in the district continued to rebound from weakness last year. Even some fabricated metal manufacturers, whose close ties to the oil and gas industry continue to put a damper on demand, have started to see some signs of increased activity.

However, the report said, a strong dollar and a softer economy in Mexico hurt exporters, who also expressed concerns about new federal policies.

“A few manufacturing contacts said their customers held a ‘wait and see’ approach and that there is considerable uncertainty,” the report said, “including over the potential impacts related to policy changes from the Trump administration.”

While new policy directions and the strong dollar helped slow retail demand along the border, retailers across the district reported a modest uptick in demand, despite some softness around the oil patches.

Most nonfinancial services firms saw rising business activity, as well. Demand for staffing services rose, especially in Dallas, but Houston also saw moderate gains, including from oil and gas companies, the report said.

Banks and other financial services firms reported rising loan activity during the past six weeks, fueled by strength in commercial real estate and mortgage lending. The Dallas Fed’s contacts reported higher interest rates on loans and deposits, alike.

Those rising rates provided cause for some mild concern in construction and real estate, but another rise home sales had 2017 off to a good start. Apartment demand remained solid across most of the district and occupancy rates remained high. Office demand was strong in Austin and Dallas but still fairly weak in Houston.

The greater Houston economy could draw momentum from the healthier energy sector. Rig counts rose again over the past six weeks and demand for oilfield services increased, mainly in the Permian Basin.

Things looked even sunnier for farmers and ranchers. Good weather had crops in good shape, and some farmers started planting earlier than usual. Cattle and cotton prices both rose over the past six weeks, as did beef and cotton exports, according to the report.



Reader Comments ...


Next Up in Business

Top Local Business Stories of the Week
Top Local Business Stories of the Week

GOOGLE’S GROWTH Google gobbles up more space in Austin high-rise: Google is growing its downtown Austin footprint, even before its first employees set foot in the company’s new space in the sleek new office tower called 500 West 2nd. The new space ultimately will house more than 450 Google employees, working on products and teams across...
Up the Ladder

Home products Artisan Group has named Sunil Palakodati executive director and Jon Lancto president. Nonprofits The Texas Cultural Trust has named Heidi Marquez Smith executive director. Transportation Fasten has named Joe Deshotel regional director of business development for the Austin market.
Austin jobless rate drops, tightening labor market’s grip on job growth
Austin jobless rate drops, tightening labor market’s grip on job growth

Austin has one of the tightest labor markets in the country, and some parts of the metro area’s economy appear to be bumping up against the hiring ceiling. While regional employers continue to expand payrolls, especially in industries tied to population growth, some key sectors of the economy have started to see job-creation rates decelerate...
Dozens of Joe's Crab Shack restaurants abruptly close
Dozens of Joe's Crab Shack restaurants abruptly close

Dozens of Joe’s Crab Shack locations across the United States abruptly closed without warning amidst its parent company’s bankruptcy proceedings. Calls to a location in Duluth, Georgia, went unanswered Thursday afternoon, and restaurant review site Yelp deemed it closed based on user feedback. The Gwinnett site is also not listed on...
Chase set to close some Central Texas bank branches
Chase set to close some Central Texas bank branches

Chase is continuing to pare down the number of branches it operates in the Austin area. The banking giant confirmed Friday that it plans to close four more Central Texas branches by year’s end. It has already closed three local branches so far this year, in addition to six locations inside H-E-B stores that were shuttered in 2016. The newly announced...
More Stories