The Federal Reserve released its Beige Book for October, and 24/7 Wall St. broke down the general economic views of business leaders in just 14 simple points. What stands out is that the terms modest, moderate and mixed were used a combined 171 times in the entire 16,000 word tome. We wanted to look at the energy rich 11th District report, which mostly covers Texas and some of the neighboring energy rich states.

These are comments made by business leaders and other contacts rather than comments made by Federal Reserve officials themselves. The cut-off date was from data collected before October 7.

Manufacturing was up and nonfinancial services demand was up. Retail sales held steady and automobile sales were shown to have remained strong. Real estate activity was flat to up in most markets. The Fed showed that loan demand was mixed. The Beige Book showed that demand for oilfield services stayed depressed, but drilling activity has ticked higher. Agricultural growing conditions were shown to have remained favorable, but prices for agriculture products fell further. Overall employment growth picked up slightly, while prices held steady. Outlooks remained generally positive but cautious.

24/7 Wall St. wanted to take the 8 summary points from the Texas regional Federal Reserve commentary. The general description showed that economic activity in the Texas region expanded moderately over the past six weeks. We took a look specifically at the energy, oil and gas comments from each sector review here. Also included were comments around the Houston and Dallas-Fort Worth area due to the energy dominance there.

Again, this a view of the six weeks prior to October 7. Also worth noting, oil prices just hit a 52-week high and above $51.50. Here are the 8 broken down points specific to oil and gas (energy) and for Houston and Dallas-Fort Worth.

Prices — Prices held fairly stable, but here was the commentary on oil and gas: Oil and natural gas prices held fairly steady despite recent volatility, and prices were generally supportive of very modest increases in activity in the oil and gas sector. Energy contacts noted that an oil price above $50 per barrel is needed to materially accelerate the recovery in the industry. Exploration and production contacts noted that the prices from services companies are still generally trending down and that they believe they will be able to hold on to most of the cost concessions gained thus far.

Employment — Employment reports were more positive, and the commentary on energy said: Energy firms noted that layoffs were mostly done, and that the industry was holding on to as much of its talent as it could.

Manufacturing — The manufacturing sector in general expanded and outlooks were more positive. Energy-specific commentary as follows: some continued weakness was seen in energy-related manufacturing (such as fabricated metals and machinery)… Refinery utilization rates continued to be healthy, although large inventories and soft global demand were still keeping a lid on margins. Gulf Coast chemical producers saw mixed demand, in line with the headwinds of a strong dollar and moderating international demand.

Retail Sales — Retail demand was flat overall. The energy-specific commentary noted: one contact noted continued sales declines at stores in the oil patch… weakness persisted in the Houston auto market.

Nonfinancial Services — Demand for nonfinancial services generally increased, with staffing services firms showing that demand strengthened in the Dallas-Fort Worth area and a few contacts noted a pickup in staffing demand in Houston. Transportation services firms continued to report weaker cargo volumes. The energy commentary said: A rail contact noted petroleum shipments over the reporting period were down versus last year, but shipments of frac sand were up… Outlooks among services firms were positive overall, but tempered by concern for continued low oil prices, weakness in the global economy, and uncertainty surrounding the presidential election.

Construction and Real Estate — Home sales were flat to up slightly during the reporting period. Sales of lower-priced homes remained solid (slowing demand and competition in mid to higher price points). In the energy rich markets of Dallas and Houston: New home sales in Dallas-Fort Worth as choppy, and respondents in Houston reported continued softness. Home prices were elevated, but some incentives were being offered by builders, according to contacts.

Apartment demand continued to be healthy and occupancy remained high. Dallas-Fort Worth had the fastest annual growth among the major metros, but increasing supply in the Houston apartment market has put pressure on rents and occupancy.

Office leasing activity remained solid in Dallas-Fort Worth, and rents were up from year-ago levels. In contrast, demand was weak in Houston, causing the office vacancy rate to rise further. Office construction was elevated in Dallas-Fort Worth but slowed in Houston. Industrial demand was strong, particularly in Dallas-Fort Worth, and vacancy rates remained low in both Houston and Dallas-Fort Worth.

Financial Services — Loan demand was mixed over the reporting period. This did not specify energy, but you know they meant it: Loan quality generally remained strong, partially due to lenders’ continued caution in issuing loans. The energy commentary did say: Credit standards stayed fairly conservative, especially for energy-related loans.

Energy — This was its own sector, so it said in general (verbatim): Demand for oilfield services remained depressed in most of the Eleventh District, even as drilling ticked up (especially in the Permian Basin). Most contacts remained cautiously optimistic for the fourth quarter, but optimism for 2017 slipped. While the majority of contacts still believe 2017 will be a better year than 2016, expectations for next year have moderated in light of recent revisions to the oil demand outlook from the International Energy Agency.

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