A rise in retail sales, the ongoing bloom of construction projects and the strength of the energy sector helped boost the regional economy in July and August, the Federal Reserve Bank of Dallas said Wednesday.
In its latest Beige Book report, issued every six weeks, the Dallas Fed said the economy across its district “expanded at a moderate pace” since its report in mid-July.
The Dallas Fed’s district includes Texas, which accounts for the vast majority of its economic activity, and parts of New Mexico and Louisiana.
The continued expansion of the regional economy helped keep employment levels steady or slightly higher over the past six weeks, with few reports of layoffs, the report said. Staffing firms reported mixed results, with strength reported in engineering and health care but weakness in manufacturing and logistics.
Back-to-school shoppers provided a boost for the district’s retailers, the bank said. Consumer confidence has picked up across the nation in recent months, and two national retailers told the Dallas Fed that stores in Texas were outperforming the national average.
Sales of single-family homes again underpinned another strong six weeks for the real estate and construction sectors across the region, the bank said. Residential housing prices in Texas’ major metro areas rose at a moderate to fast pace, and construction of single-family homes continued to pick up in response to robust sales in Austin, Houston and Dallas, the report said.
Real estate lending remained strong, particularly in Austin and San Antonio, despite a modest decline in overall demand for loans, the report said.
Manufacturers reported mixed results since the last report in July. High-tech manufacturers noted stable activity and cautiously optimistic outlooks, with growth in tablets and cloud-related products offsetting weak demand for personal computers.
In some locations, including Austin, “competition for skills such as electrical engineering was driving wages higher and causing employees to change jobs more frequently,” the report said.
Service-providing firms noted generally higher levels of demand in July and August. Intellectual-property litigation helped boost legal services, and accounting firms noted strong demand across the board, the report said.
The region continued to reap the economic benefits of a robust energy sector. Drilling activity stayed at high levels, and firms expected improvement over the rest of the year. The recent rise in oil prices helped boost the cost advantage for domestic producers, the report said.
Despite some rainfall in July, the drought conditions continued to plague the agricultural sector. Harvesting conditions were mostly good, the report said, but the cotton crop is expected to be smaller than anticipated.