Skip to main content
Reports on Regional Economic Activity

Eleventh District Beige Book

Summary of economic activity

Growth in the Eleventh District economy continued at a modest pace, though job growth was quite robust. Manufacturing and service sector activity continued to slow, growing at a diminished clip from earlier this year. Retail sales were flat to down, and homes sales remained relatively subdued. Loan demand continued to increase but at a markedly slower pace. Local nonprofits reported increased demand for rent and food assistance amid rising costs. The energy sector expanded further while ongoing drought resulted in significantly lower crop production and culling of livestock herds. Wage growth remained highly elevated due to a tight labor market. Supply chain bottlenecks have begun easing and prices were not rising as fast, though inflation is still high. Outlooks were mixed as uncertainty remained elevated, and contacts voiced concern about slowing demand and the risk of a recession stemming from high prices, weakening consumer sentiment, and rising interest rates.

Labor markets

Robust employment growth continued, though the supply of workers remained tight. Among 367 Texas business executives responding to a Dallas Fed July survey, 62 percent were trying to hire and a vast majority cited lack of applicants as an impediment. Workforce shortages were particularly acute in manufacturing, where one contact said they have the highest unfilled job rates in recent history and another noted the labor pool was more like "a labor puddle." Transportation services firms are experiencing shortages of drivers and pilots. Oil and gas firms noted widespread hiring but also significant challenges getting qualified applicants.

Wage growth remained high as firms tried to attract and retain employees amid the dearth of labor. Among Texas business trying to hire, more than half said workers looking for more pay than offered was an impediment. Staffing agencies in particular described a large gap between what employers were willing to pay and the wages job hunters were expecting. Contacts noted high turnover at low-skill positions and openings filling at higher pay rates. Others said they were having to pay sizable bonuses to attract talent.


While input costs and selling prices continued to climb, the pace has slowed slightly, especially for manufacturing raw materials. Price decreases have been seen for some metals like aluminum and copper. Overall, supply chain shortages remained a primary driver of input cost increases, though there was some easing over the past six weeks. High fuel prices have also pushed up costs for a majority of firms. Most contacts report passing at least some of their higher costs on to customers through higher prices, though only about 10 percent were able to pass along all. Airline ticket prices have risen, and contacts expect them to remain elevated amid persistent labor shortages and high input costs. Looking ahead, price increases are expected to moderate over the next six months but remain historically elevated.


Texas manufacturing activity increased modestly during the reporting period. Output growth was led by durable goods manufacturing such as computers and autos. Overall manufacturing demand has waned, however, with slightly more firms noting a decrease in new order volumes in August than an increase. While a majority of manufacturers continued to experience supply chain disruptions, some say the severity has lessened. The pullback in orders coupled with unwinding supply issues has allowed firms to work through backlogs and reduce delivery times. Petrochemical companies reported strong business despite some logistics challenges, and refineries were running at near full utilization with very healthy margins. Overall manufacturing outlooks were mixed, with some contacts losing confidence amid weakening demand.

Retail sales

Retail sales were flat to down over the past six weeks, with some contacts citing pushback from customers on higher pricing. Broad improvement in supply chain disruptions was noted, and inventories have started to rebuild. An auto dealer expects a slow increase in new vehicle availability over the next year, which will put downward pressure on prices. Overall outlooks were for increased sales six months from now, though expectations for general business activity were less optimistic.

Nonfinancial services

The service sector continued to expand moderately during the reporting period. Revenue growth was mostly broad-based, with continued solid increases seen in the transportation sector. Airlines reported elevated demand despite high ticket prices and said leisure travel has mostly recovered to prepandemic levels while business travel has lagged behind. Cargo volumes through Texas seaports experienced record-breaking growth. Staffing firms continued to report very strong demand, including for permanent placements for professionals. Service-sector outlooks were fairly neutral amid increased uncertainty about future business conditions.

Construction and real estate

Housing market activity remained weak, particularly at the entry level. Sales were off notably in July but improved in August partly due to a dip in mortgage rates. Home prices were flat to down, and incentives were becoming more widespread. Outlooks were uncertain, with contacts expecting further weakness ahead. Apartment leasing was solid and in line with pre-COVID levels, though momentum has slowed from its 2021 highs. Occupancy was flat to down and rent growth remained elevated but was declining from its earlier feverish pace. Demand for office space was mixed and construction subdued, while industrial leasing and construction remained high.

Financial services

Loan demand continued to increase but at a markedly slower pace than what has been seen over the last 18 months. Total loan volume growth also declined, with mixed movements by lending type. Residential real estate loan volumes decreased over the past six weeks after flattening out earlier this year amid higher mortgage rates. Consumer, commercial, and industrial loan volumes largely held steady, while commercial real estate loan volumes continued to increase. Loan nonperformance increased for consumer loans but continued to decrease for other loan types, leading to little change in nonperforming loans overall. Looking six months ahead, contacts continue to expect that loan demand and general business activity will decrease, and loan delinquency will increase, though outlooks were somewhat less pessimistic than six weeks ago.


Oil and gas activity increased, with the Eleventh District rig count ticking up and contacts noting strong demand for oilfield services. Labor and supply chain challenges continued to restrain the pace of increases in drilling and well completions. Lead times for new oilfield equipment have extended further. Outlooks were quite strong, as firms seem confident that prices will remain high enough to support continued growth in oil and gas activity.


Overall drought conditions improved slightly over the past six weeks, as some areas received significant rainfall in late August. Many row crops were experiencing high abandonment and low yields resulting in significantly lowered production this year, particularly for cotton. High input costs and low production will financially strain many producers. Severe drought and higher feed costs have prompted significant culling of cattle herds.

Community perspectives

Nonprofits reported increased demand for services among the communities they serve over the past six weeks. Inquiries regarding rent and food assistance picked up, and contacts noted high inflation was straining household budgets. Housing costs have become a primary concern for low-income residents, driven by an insufficient stock of affordable housing, rapid rent hikes, and the winding down of state and federal assistance programs. Evictions have increased, and a rise in first-time homelessness has been seen. Community colleges reported enrollment increases, though matriculation among female students has not rebounded as fast as among males.

Find the full Beige Book report at

For more information about District economic conditions visit: