FRB Dallas Home » Research & Data »Beige » 2013 »Dallas Beige Book

Research Publications

Dallas Beige Book

December 4, 2013 · Dallas Beige Book Reports

The Eleventh District economy expanded at a moderate pace over the past six weeks. Manufacturing activity increased overall, with demand weakening in only a few industries. Retail sales picked up over the period, but automobiles sales were slightly down. Nonfinancial services firms reported steady to somewhat improved demand. The housing sector softened due to seasonal factors and rising home prices, and apartment, office and industrial leasing activity remained strong. Loan demand softened at financial institutions. Energy activity remained strong, and drought conditions in the agricultural sector continued to ease. Prices were unchanged or increased mildly at most responding firms, and employment held steady or rose modestly. There were scattered reports of pay increases and wage pressures. Industry outlooks were generally more positive during the reporting period.


Responding firms said prices were stable to up slightly over the reporting period. Some manufacturers noted price increases in primary and fabricated metal and food products. Price reports from retailers were mixed. One retail contact increased prices very modestly. Another firm reduced selling prices somewhat in an effort to bring holiday demand forward due to the short season this year. Automobile prices were stable. Home prices remained elevated and contacts in the apartment industry said rents continued to rise at a strong pace. Airline contacts noted moderately lower fuel prices, but said fees continued to increase. One airline respondent said ticket prices were trending up. Agricultural contacts reported that cattle prices hit record highs.

Changes in energy prices were mixed; the price of West Texas Intermediate crude oil declined somewhat, while natural gas prices moved up slightly from the last reporting period. Gasoline and diesel prices fell modestly. The price of natural gas liquids, a feedstock for many chemicals, increased over the past six weeks.

Labor Market

Employment levels were steady to up slightly at responding firms. Retailers said employment was up since the previous report. One retail firm was hiring in line with expanding operations, and another said payrolls were rising due to holiday hiring, which was stronger than last year's hiring. Fabricated metals producers added employees, and contacts noted some pressure on wages. Food producers were hiring, partly due to turnover. Refining and petrochemical contacts reported extreme difficulty finding engineers and construction laborers for current and proposed facility expansions, and noted a continued rise in wages. Homebuilders also noted a shortage of construction workers and said labor costs were rising.

There were additional scattered reports of wage pressures. High-tech producers noted wage pressures for workers with certain high-demand skills such as electrical engineering. Accounting firms were actively seeking high-skilled workers, with some higher wages being offered.


Producers of construction-related products said demand was mostly stable to up slightly. A lumber producer said that while demand increased in October, it had weakened in the past two weeks. Firms noted this year did not meet expectations but were positive in their outlooks for 2014. Fabricated metals producers said demand continued to rise at a strong pace and the outlook for sales was highly positive. Most primary metals contacts said demand was steady, ignoring seasonal effects, and outlooks for 2014 were somewhat more optimistic. Demand increased for food producers, while paper industry responses were mixed, with some contacts noting better than expected sales and some not meeting demand expectations.

High-tech manufacturers said demand was flat to modestly weaker over the past six weeks. Industrial sector orders for semiconductors weakened, although overall the sector remained one of the largest drivers of growth. Demand for memory chips continued to improve while orders for logic devices continued to soften. Respondents expect a gradual increase in demand over the next three to six months.

Chemical production in the Gulf Coast grew in aggregate over the past six weeks, but at a slower pace than earlier in the year. Refinery utilization rates softened seasonally with the onset of the fall maintenance season. The change to winter fuel standards is pulling down prices, but refiner's margins remain healthy.

Retail Sales

Retail sales were up during the reporting period, and year-over-year demand growth remained in the low-to mid-single digits. One national retailer reported that Texas continued to outperform the nation. Strength was noted in luxury goods, and inventories were at desired levels. Outlooks for the rest of the year were positive.

Automobile sales were down slightly this reporting period, which contacts attributed to lack of consumer confidence and continued uncertainty. Inventory reports varied by manufacturer, with a few contacts noting inventories were higher than desired. Contacts' outlooks for the remainder of the year were optimistic, and they expect 2014 to be better than 2013.

Nonfinancial Services

Staffing firms said demand was generally flat. One firm noted better retail demand than usual this time of year and another noted shortages in nursing and aerospace engineers. Demand was down more than expected for call center hires and for workers at warehousing and distribution companies. Most contacts noted improved 2014 outlooks. Accounting firms said demand remained strong with seasonal increases over the past six weeks. Business relocations to Texas fueled demand, and outlooks remained positive. Legal firms noted a slight improvement in demand during the reporting period, in part due to seasonal factors. Intellectual property litigation continued to increase and real estate transactions were slightly higher. Outlooks were somewhat more optimistic.

Transportation service firms said cargo demand was mixed. Intermodal transportation firms and small parcel shipping firms noted flat cargo volume over the past six weeks, although retail trade and e-commerce remained drivers of growth. Railroad contacts said U.S. cargo volumes grew strongly during the reporting period and noted chemicals shipments were robust. Air cargo volumes decreased somewhat and were down from a year ago.

Airline reports were mixed. One contact noted that demand increased slightly in the past six weeks, somewhat due to seasonal factors but also to the end of the partial government shutdown. Another respondent said demand was softer since the shutdown. With the exception of concerns about the impact of a pending second round of sequestration in early 2014, outlooks were positive.

Construction and Real Estate

The Eleventh District housing sector softened during the reporting period. Contacts said the slowdown was partly due to seasonal factors. However, last year at this time there was no seasonal slowdown, thus contacts were somewhat cautious. Some of the weakening in sales and traffic was attributed to recent large increases in new and existing home prices. One homebuilding contact said the lull will give builders a chance to catch their breath. There is still very little inventory of new homes and most are already sold, and the forecast for single-family construction activity is positive. Despite the slowdown, contacts were optimistic in their outlooks.

Apartment demand was mostly unchanged from the last report. Most major Texas markets were seeing sizable demand that is outpacing completions, yielding occupancy and rent growth well above the long-term norm.

Commercial real estate respondents said tenant demand remained at a steady pace for industrial and office space. A Dallas contact said construction of office, industrial and retail space was picking up. A contact noted Houston may be close to having too much office development in the works. Overall, the outlook remained generally positive.

Financial Services

Loan demand softened across most lines of business in the past six weeks, according to financial contacts. Mortgages and auto lending remained relatively level, and refinancing continued to decline. Loan quality continued to modestly improve, and loan pricing remained very aggressive amid increasing loan supply. Deposit volumes increased moderately with no change in deposit rates. Most contacts were hopeful that loan demand will improve, but no changes are expected for the remainder of the year.


Demand for oil-field services was steady despite the slight decline in the rig count as the number of wells drilled per rig continued to improve. Activity in Texas was particularly strong, both inland and offshore, according to respondents. Oil and gas extraction firms expect further growth in 2014.


Drought conditions continued to ease, although the Texas panhandle area remained particularly dry. Corn and sorghum production was higher, while cotton production was down. The livestock sector continued to benefit from improved pasture conditions, lower feed costs, and high selling prices for cattle.

Find the full Beige Book report at


Federal Reserve Bank of Dallas Seal
Federal Reserve Bank of Dallas

2200 N. Pearl St., Dallas, Texas 75201 | 214.922.6000 or 800.333.4460
Disclaimer / Privacy Policy