Wednesday, June 5, 2013

Federal Reserve Beige Book: District-by-District Summary (marked-up for stuff that should be of interest to Reprographers)

Blog Publisher’s comment:
I’ve highlighted (using bold green type) comments in the report that relate to residential and non-residential development activity.)

Federal Reserve Beige Book: District-by-District Summary

The Federal Reserve’s latest “beige book” (June 5th, 2013) report Wednesday said overall economic activity increased at a “modest to moderate pace” in most of the nation. The Federal Reserve Bank of Dallas “reported strong economic growth” in its district, the Fed said. The following is a district-by-district summary of economic conditions for early April through May 24:
National summary: Overall economic activity increased at a modest to moderate pace since the previous report across all Federal Reserve Districts except the Dallas District, which reported strong economic growth. The manufacturing sector expanded in most Districts since the previous Beige Book. Most Districts noted slight to moderate gains in consumer spending and a moderate increase in vehicle sales. Tourism showed signs of strength in several Districts. A wide variety of business services expanded, and transportation traffic increased for producer, consumer, and trade goods. Residential real estate and construction activity increased at a moderate to strong pace in all Districts. Commercial real estate and construction activity grew at a modest to moderate pace in most Districts. Overall bank lending increased since the previous report. Credit quality and deposits increased, while credit standards were largely unchanged. Agricultural conditions remained mixed across Districts, as weather patterns varied. Overall activity in the energy sector was flat, and mining was down.
Hiring increased at a measured pace in several Districts, with some contacts noting difficulty finding qualified workers. Wage pressures remained contained overall, although several Districts reported a modest or moderate rise for selected occupations. Districts reported level prices to mild price increases; some manufacturers raised prices and some increases for input prices were noted.
Boston: First District business contacts generally report year-over-year increases in economic activity, although some—notably in software and information technology services and staffing —indicate the pace of growth is slowing. Retailers mostly say demand is recovering well after weather-related softness during the winter; manufacturing contacts’ sales are also ahead of last year. With only a few exceptions, businesses are not hiring much beyond replacement. Aside from food, input prices are generally said to be unchanged, although a few manufacturers have raised their own prices. The outlook is fairly positive, with most respondents expecting the current pace to continue or pick up.
New York: Economic activity in the Second District has continued to expand at a moderate pace since the last report. Price pressures have abated somewhat among manufacturers, though they remain more widespread in the service sector; contacts continue to report that selling prices are steady to up modestly. Labor market conditions continue to improve, and businesses increasingly report difficulty finding well-qualified workers. Retailers report that sales were tepid in April but picked up in early May, and new automobile sales have remained strong. Tourism activity has been mixed but generally robust. Commercial and residential real estate markets have strengthened further since the last report. Finally, credit conditions improved across the board, with bankers reporting increased loan demand, widespread narrowing in loan spreads, and declining delinquency rates across all loan categories.
Philadelphia: After many months at a generally more modest pace of growth, aggregate business activity in the Third District has accelerated somewhat to a moderate pace of growth during this current Beige Book period. In particular, the growth rate of residential construction, general retail sales, general services, staffing services, and tourism appears to have accelerated somewhat from a more modest rate of growth to join auto sales and existing home sales at a moderate growth rate. Commercial real estate leasing continued to expand at modest rates, while commercial real estate construction continued to expand only slightly. Manufacturing appears to have declined somewhat after expanding slightly last period. Loan volumes at Third District banks resumed growing slightly across most categories, while credit quality continued to improve. General price levels, as well as wages and home prices, were reported to have increased slightly overall – similar to the last Beige Book period.
The overall outlook for growth has improved slightly since the last Beige Book to anticipate a continuation of the current moderate pace of growth. Despite lingering uncertainties, contacts expressed greater confidence in the underlying strength of the economy, especially as the housing market recovery begins to gain strength. Firms are more comfortable reinvesting where necessary; however, many continue to hold off on major expansion plans of capital and labor until the recovery gains more momentum.
Cleveland: The economy in the Fourth District grew at a moderate pace since our last report. Manufacturing orders and production were steady or higher. The momentum seen in residential construction since the beginning of the year, including multifamily, has been maintained. In nonresidential construction, projects are moving very slowly from the development to the construction phase. Retail sales were below our contacts’ expectations during April, while new motor vehicle sales posted moderate gains on a year-over-year basis. Conventional and unconventional natural gas and oil production was flat, and drilling has declined during the past few months. Output at coal mines trended lower. Freight transport volume exceeded projections made at the beginning of the year. Demand for business credit increased more slowly, whereas large numbers of consumers continue to apply for auto loans.
Hiring picked up in the manufacturing and freight transport sectors. Reports by staffing-firm representatives on the number of job openings and placements, primarily in the service industries, were mixed. Wage pressures are contained. Input and finished goods prices were stable, apart from increases in construction materials and natural gas.
Richmond: Economic activity strengthened modestly across the District, however growth was constrained by softness in manufacturing, federal spending limits, and unusual weather conditions. Retail sales flattened, although auto sales generally remained strong. Business was also strong at most non-retail services firms, but tourism in some areas fell below expectations as a result of an unseasonably cool spring. Banking conditions were mixed; residential mortgage demand increased, commercial lending varied, and competition for business was sharp. Residential real estate prices strengthened. Commercial real estate construction also improved, with positive reports across the District. Heavy rainfall and fluctuating temperatures delayed spring plantings, but forage crops were developing well. In the energy sector, demand continued to shift from coal to natural gas. Labor markets were uneven, although many employers plan to increase hiring in the months ahead. Reports on prices and wages were mixed.
Atlanta: On balance, Sixth District business conditions improved modestly in April and May. The outlook for most sectors remained positive as contacts anticipate further improvement in activity for the remainder of the year.
Most retailers noted an increase in sales activity since our previous report. The hospitality sector continued to be a bright spot for the District as occupancy and room rates and revenues remained solid. District real estate activity continued to strengthen from positive but uneven sales growth, rising home prices, and declining home inventories. Commercial real estate contacts have seen improvements in construction since the beginning of the year. Manufacturers cited growth in new orders and production. Bankers asserted that the demand for new loans remained weak. Hiring activity was positive, but muted. Prices continued to remain stable and most firms indicated having little pricing power.
Chicago: Economic activity in the Seventh District again expanded at a modest pace in April and May. While most contacts remained optimistic about growth prospects in the second half of the year, many also expressed a greater sense of caution due to elevated uncertainty over the economic outlook. Growth in consumer spending increased slightly, while growth in business spending slowed. The decline in manufacturing production growth flattened out. In contrast, construction picked up, led by continued improvement in the residential sector. Credit conditions eased somewhat. Cost pressures were steady, and wage pressures remained moderate. Corn, soybean, milk, and hog prices increased, while cattle prices were stable.
St. Louis: Economic activity in the Eighth District has expanded at a moderate pace since the previous report. Recent reports of planned activity in manufacturing and services have been positive, on net. Reports of retail and auto sales over the past three months have also been positive. Residential real estate market conditions have continued to improve, and commercial real estate markets have also improved. Lending activity at a sample of large District banks was little changed during the first quarter of 2013. Prices, wages, and employment levels over the past three months have stayed the same or increased for a majority of contacts across the District.
Minneapolis: The Ninth District economy posted moderate growth. Increased activity was noted in consumer spending, tourism, commercial construction and real estate, professional services and manufacturing. Residential construction and real estate grew at a fast pace, the energy and agriculture sectors were steady and mining decreased. Labor markets tightened since the last report, particularly in the western part of the district. Wage increases were generally modest, and overall prices were stable, with some exceptions noted.
Kansas City: The Tenth District economy grew at a modest pace in late April and early May, while expectations for activity over the summer months strengthened further. Retail sales and tourism activity increased since the last survey, but automobile and restaurant sales declined. District manufacturers reported modest growth with an increase in production, shipments and new orders in May. Robust growth continued in the residential real estate sector, while commercial real estate activity improved modestly. Slightly higher loan demand and improving loan quality led to improvements in the District banking sector. Falling crop prices and rising production costs limited farm income growth, while the brisk pace of farmland price appreciation moderated slightly. District drilling and mining activity held steady, though energy contacts expected oil and natural gas drilling to accelerate over the next few months. District contacts from most sectors reported moderate price increases, particularly for food, building supplies and raw materials. Wage pressures and labor shortages picked up slightly, but were limited to skilled positions.
Dallas: The Eleventh District economy expanded at a stronger pace over the past six weeks than in the previous reporting period. Manufacturing activity increased overall, and many contacts were more optimistic in their outlooks. Retail sales activity improved during the reporting period, and auto sales held steady. In the nonfinancial services sector, demand for accounting services was strong, legal firms reported modest growth, and most transportation services firms noted improvement. Staffing services contacts said demand was steady. The housing sector continued to improve, with further gains in sales and construction. Office and warehouse leasing activity remained steady. Financial institutions noted modest growth in loan demand, and energy activity improved during the reporting period. Drought conditions worsened across the Eleventh District. Prices remained stable at most firms, and employment levels were steady.
San Francisco: Economic activity in the Twelfth District expanded at a modest pace during the reporting period of early April through late May. Price inflation was subdued for most final goods and services, and upward wage pressures were limited overall. Retail sales were a bit soft, while demand for business and consumer services was mixed. District manufacturing activity rose on net. Production and sales of agricultural items increased modestly. Residential real estate activity expanded robustly, and commercial real estate activity trended up, although somewhat unevenly across geographic areas. Contacts from financial institutions reported slight increases in overall loan demand.

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