The Texas economy grew at “moderate” pace from mid-August through early October, according to an economic snapshot released today by the Federal Reserve.
1. Energy: Oil drilling declined and demand for oilfield services remained depressed. Firms were considering further but smaller cuts to 2016 capital spending plans. The financial positions of many firms continue to deteriorate amid current price and demand levels. Contacts are concerned that the last three months of the year will bring a “substantial increase” in defaults, bankruptcies, mergers, and acquisitions.
2. Manufacturing: Most manufacturers, including those in primary and fabricated metals, machinery and food products, reported increased demand. Some energy-related manufacturing and many chemicals products have been hurt by the high dollar and lower oil prices.
3. Transportation: There were steep declines in rail shipments of petroleum products and nonmetallic metals, including sand used in drilling. Steel shipments were down notably, mainly due to oil and gas projects being halted. Motor vehicle shipments was a bright spot, with volumes up markedly.