Texas economic outlook darkens

Sector data extending beyond oil and gas in Texas dropped to its lowest level in six years, an outlook report from the Dallas Federal Reserve found.

The Dallas bank said the production index for Texas, a measure of the health of state manufacturing, fell to a negative 13.5 for its lowest reading in six years. A state sentiment on hiring fell in May, with 12 percent of the reporting firms announcing net hiring against 21 percent reporting net layoffs.

Texas is the No. 2 producer of manufactured goods in the nation behind California.

Texas is the No. 1 oil producer in the nation. The so-called Beige Book published by the Dallas Federal Reserve earlier this year said the low price for crude oil is hurting the state's oil sector. While most firms surveyed by the bank said they'd be able to weather the storm, the slump should continue through the year.

Data from oil field services company Baker Hughes show rig activity, a barometer of exploration and production activity in Texas, was holding relatively steady as crude oil markets improved.

Last month, the Railroad Commission of Texas, the state's energy regulator, said preliminary data from February, the last full month for which data area available, show crude oil production averaged 2.34 million barrels per day. That's an increase of 5.2 percent, or 117,550 barrels, from January and 17 percent higher than February 2014.

The Dallas fed in its latest survey said, however, general business activity in the state was at its lowest level since June 2009 and the outlook remained downbeat.

"Perceptions of broader business conditions worsened further this month," the bank said in a statement.