Following is a summary of U.S. economic conditions as reported by the 12 Federal Reserve district banks in the central bank’s latest regional survey, also known as the Beige Book.
The Federal Reserve Bank of Richmond prepared the latest report. Information was collected on or before Nov. 14.
Boston: “Reports from business contacts in the First District reflect a growing economy, although the pace of growth appears to be somewhat slower than in the last round. Retailers cite mixed sales results, manufacturers note slow growth, and software and IT services firms report disappointing results. By contrast, staffing firms are seeing a pick-up in growth. Commercial real estate contacts indicate that fundamentals remain flat, and sentiment has soured somewhat in recent weeks; residential real estate respondents say growth in home sales has slowed but home prices are rising modestly in some areas. Hurricane Sandy reportedly had very modest effects on economic activity in New England. Prices are said to be level in general, with minimal inflationary pressures. While some firms cite shortages of specialized workers, few are hiring, none extensively, and no one mentions upward wage pressures.”
New York: “ Economic activity in the Second District has weakened since the last report, largely reflecting widespread disruptions from Sandy. Prices of finished goods and services have generally been stable. The labor market is difficult to gauge at this point -- while hiring activity tapered off noticeably due to the storm, relatively few business contacts indicate that they plan to reduce headcounts in the months ahead. Retailers report fairly strong sales for October but indicate that business in the last two weeks has been severely hampered by storm disruptions; auto dealers in upstate New York report some softening in auto sales in October. Tourism activity in New York City was fairly strong prior to the storm; hotel business tapered off only modestly in early November, as the adverse effects of travel cancellations were partly offset by increased demand from local residents without power or access to their homes. Residential real estate markets were generally firm through the latter part of October, though the storm has caused a substantial slowing in sales activity in and around New York City. Finally, bankers report some weakening in loan demand and increased delinquency rates in the consumer and commercial & industrial loan segments; for residential and commercial mortgages, both loan demand and delinquency rates are little changed.”
Philadelphia: “Aggregate business activity in the Third District continued to grow modestly -- comparable to the previous Beige Book -- until the end of October. Most individual sectors, abetted by Hurricane Sandy, declined a little further or slowed their pace slightly. Manufacturing activity declined a bit. Retail sales slowed to a slight pace of growth, while auto sales slowed to a modest pace. The overall outlook appears less optimistic relative to the views expressed in the last Beige Book. Recovery from Hurricane Sandy and a renewed focus on the looming fiscal cliff contribute to greater uncertainty than before. Expectations over the next six months among manufacturers declined for overall activity as well as for capital spending and hiring.”
Cleveland: “The economy in the Fourth District grew at a modest pace since our last report. On balance, manufacturing orders and production rose. Residential and nonresidential construction activity increased, with particular strength noted in the multifamily segment. Realtors reported a rise in purchases of existing homes. Retailers and auto dealers saw higher sales during October relative to year-ago levels. Conventional oil and gas well output held steady, while coal production trended lower. Freight transport volume slowed. And the demand for business credit moved slightly higher. Hiring was sluggish across industry sectors. Exceptions were found in the auto industry, where hiring continued at a more robust pace, and construction, where payrolls began to grow. Staffing-firm representatives said that the number of job openings has picked up slightly during the past six weeks. Vacancies were found primarily in manufacturing, information technology, and healthcare.”
Richmond: “Fifth District economic activity strengthened at a tempered pace since our last report. Manufacturing activity improved, retail sales increased moderately, and customer demand rose modestly at non-retail services firms. Reports on banking conditions were mixed, and mortgage refinancing bolstered consumer lending. Real estate markets also strengthened, with both residential and commercial contacts reporting an uptick in activity. In contrast, labor market activity slowed since our last report. Also, tourism contacts noted a seasonal decline in reservations. Agricultural conditions were favorable before Hurricane Sandy arrived, although some farmers in the District were affected by the storm. Manufacturers’ input prices and finished goods prices rose at a slower rate, while wages rose more quickly. The pace of service providers’ price increases edged up and non-retail wage growth slowed.”
Atlanta: “ Most businesses across the Sixth District described economic activity as increasing marginally in October, and most contacts expect little change in the near term. Retailers cited mild sales growth, while automobile dealers continued to experience strong results. Overall, tourism activity remained robust. Residential brokers indicated an increase in existing home sales and prices, while homebuilders signaled sales were flat to slightly up. Multifamily development continued to dominate the commercial real estate market. Manufacturing activity softened as new orders, production, and employment levels decelerated. Bankers noted that overall loan demand had picked up slightly. On net, payrolls continued to expand at a modest pace, and price pressures remained in check for most businesses in the region.”
Chicago: “Economic activity in the Seventh District continued to expand at a slow pace in October and early November. Contacts noted heightened uncertainty over the near- term economic outlook as the deadline for the fiscal cliff approaches, but remained cautiously optimistic that growth would pick up to a moderate pace in 2013. By sector, gains in consumer spending were up slightly from the previous reporting period, while growth in business spending moderated further. Manufacturing production decelerated, while construction increased at a slow but steady pace. Credit conditions continued to improve gradually. Cost pressures were little changed, although food prices eased. Corn and soybean production in the District did not suffer as much from the drought as previously had been expected.”
St. Louis: “The economy of the Eighth District has continued to expand at a moderate pace since our previous survey. Retail and auto sales in October and early November increased over year-earlier levels. Recent reports of planned activity from manufacturing firms have been positive. In contrast, reports from services contacts have been negative on net. Residential real estate market conditions have continued to improve, while commercial and industrial real estate conditions have remained mixed. Reports of lending activity at a sample of large District banks indicated little change during the third quarter of 2012. Prices wages, and employment levels have remained generally stable.”
Minneapolis: “The Ninth District economy experienced moderate growth since the last report. Increased activity was noted in consumer spending, tourism and professional services. Some significant parts of construction and real estate are growing at a double-digit clip. Activity in the energy and mining sectors continued at a rapid pace. District crop producers remained in mostly good shape, despite this year’s drought. Meanwhile, activity slowed slightly in the manufacturing sector. While labor markets continued to show signs of tightening in several areas, some layoff notices were reported. Overall wage increases were moderate, although stronger increases were reported in some areas. Price increases were generally modest.”
Kansas City: “The Tenth District economy expanded modestly in October. Stronger retail sales underpinned a rebound in consumer spending that was expected to continue during the upcoming holidays. Commercial and residential construction remained solid, and real estate agents expected real estate prices to rise further with stronger sales. Bankers reported stronger commercial lending activity and additional demand for residential real estate loans. District manufacturing activity slowed, but factory managers expected a moderate rebound in orders, production, and shipments. High feed and fuel costs drove agricultural loan demand higher, and dry conditions hindered winter crop development. District contacts expected natural gas drilling activity to strengthen seasonally with prices during the winter heating months. The prices of raw materials for manufacturing and construction rose, and some finished goods prices edged higher. Wage pressures were subdued except for specialized positions at transportation, high-tech and energy firms. Several business contacts commented that uncertainty regarding political, economic, and tax policies was inhibiting growth, limiting business investment, and delaying hiring plans.”
Dallas: “The Eleventh District economy expanded at a modest pace over the past six weeks. Reports on manufacturing and transportation services activity were mixed. Demand for staffing services declined, while that for other business services held steady or increased slightly. Retailers’ reports on demand were mixed, while automobiles sales were flat. Residential sales and construction increased, and energy activity remained steady at high levels. Financial firms reported mixed demand. Agricultural conditions remained mostly dry. Most respondents said prices held steady, and employment levels were steady to up. Many firms’ outlooks remain uncertain, given regulatory and fiscal concerns and short-term disruptions caused by Hurricane Sandy.”
San Francisco: “Economic activity in the Twelfth District expanded at a modest pace during the reporting period of October through mid-November. Price inflation for final goods and services was subdued overall, and upward wage pressures were quite limited. Sales of retail items and most business and consumer services rose further on net, and contacts noted expectations for sales growth during the holiday retail season. District manufacturing activity was uneven but appeared to expand on balance. Agricultural output and sales increased, and extraction activity rose for providers of energy resources. Housing demand continued to firm, and conditions were largely stable for commercial real estate. Contacts from financial institutions reported that overall loan demand was largely unchanged, while credit quality improved.”
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