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 Dallas prepared the latest report. Information was collected on or before May 25.
Boston: “Economic activity in the First District continues to expand, with contacts in most sectors citing steady growth. Commercial real estate markets show slight improvement and residential real estate contacts are finally mentioning recovery, albeit fragile. Respondents in this round rarely mention prices or pricing. Except for software and IT services where growth continues to be relatively strong, few firms are doing substantial hiring. The outlook is generally for more of the same, although a couple of manufacturers mention making contingency plans for a potential slowdown.”
New York: “The Second District’s economy has continued to expand at a moderate pace since the last report. Labor market conditions have generally improved, and, on balance, contacts indicate they plan to add workers in the months ahead. Business contacts in a number of industries note a slowing pace of cost increases and mostly stable selling prices. Manufacturers report a pickup in business conditions. Tourism activity has been strong since the last report, while retailers and auto dealers indicate steady sales activity in April and May. Home sales activity has continued to increase gradually.”
Philadelphia: “Overall, business activity in the Third District continues to improve, but the pace has slowed slightly in most sectors since the previous Beige Book. Manufacturing activity has eased slightly, but most major manufacturing sectors continue to grow. After a strong first quarter, partially due to the unseasonably mild weather, retail sales slowed somewhat in April but appear to be gaining strength based on customer traffic in May.
“Although sales remain strong overall, motor vehicle dealers also reported softer sales in April. Third District banks report steadier growth in lending and continued strong credit quality since the last Beige Book. Demand for new home construction has eased off a bit, but brokers report stronger sales of existing homes. Several signs of improvement were cited by commercial real estate contacts. The outlook remains optimistic, but more firms readily noted the slow pace of the recovery relative to the sunnier views expressed in the last Beige Book.”
Cleveland: “Business activity in the Fourth District has grown at a moderate pace since the beginning of April. Manufacturers reported stable production, while residential and nonresidential construction showed moderate growth. Retail sales held steady, and auto dealers described April sales as generally good. Exploration and production in shale gas expanded, even as the demand for coal has slowed. Freight transport volume moved higher. And the market for business credit has strengthened.
“Hiring continued at a modest pace across most industry sectors, although staffing-firm representatives reported that the number of job openings had increased for information technology and healthcare workers. Wage pressures are contained. Input prices were stable, apart from increases in building materials.”
Richmond: “Economic activity in the Fifth District improved modestly since our last assessment. Retail sales were sluggish, held back in part by weak big-ticket sales. Growth at services firms slowed, although tourism businesses reported strong demand. Bankers said that lending grew slowly, and much of the activity was refinancing. Residential real estate agents noted encouraging signs of improvement in housing sales, while commercial Realtors described leasing and construction activity as mostly flat to moderately up. Manufacturing reports were mixed, with auto and other transportation equipment-related producers continuing to do well, while other producers faced unchanged or weakening demand. District hiring activity varied, with some businesses reluctant to hire or unable to find qualified workers. Recent rainfall aided newly planted fields, but excess moisture in some areas delayed planting.”
Atlanta: “Reports from Sixth District business contacts indicated that economic activity continued to expand at a moderate pace in April and May. Reports were somewhat more positive than the previous report, and expectations remained generally optimistic across most sectors. However, uncertainties surrounding the potential impact of developments in Europe weighed on the outlook. Most retailers noted a modest increase in sales activity, and auto sales remained strong. Manufacturers cited modest growth in new orders and production. Bankers asserted that the demand for refinancing mortgages continued to increase slowly. Hiring activity was positive, but muted. Firms continued to note difficulty filling specialized positions. Most businesses indicated having little pricing power.”
Chicago: “Economic activity in the Seventh District continued to expand at a moderate pace in April and May, although at a touch slower rate than during the prior reporting period. Many contacts remained cautiously optimistic in their outlook for the U.S. economy. Several, however, also noted an increase in economic uncertainty, pointing to weaker business conditions in Europe and Asia and the upcoming elections in the U.S. Growth in consumer spending slowed, while business spending continued to increase at a steady pace. Manufacturing production also rose at a steady pace, and construction activity increased as well. Credit conditions were little changed on balance. Commodity prices moved lower, and wage increases remained moderate. Planting of corn and soybeans was well ahead of the normal pace and that of a year ago.”
St. Louis: “The economy of the Eighth District has continued to grow at a modest pace since our previous survey. Residential real estate market conditions have improved moderately. Similarly, commercial real estate market conditions have also improved. Retail and auto sales in April and early May increased over year-earlier levels. In contrast, recent reports of plans from firms in the manufacturing and services sectors were mixed. Reports of lending activity at a sample of large District banks during the first quarter of 2012 were somewhat mixed.”
Minneapolis: “The Ninth District economy grew at a modest to firm pace since the last report. Strength was noted in consumer spending, tourism, professional services, real estate, construction, manufacturing, energy and mining, and agriculture. Firms reported difficulties hiring qualified candidates, although wage increases remained modest. Price increases were generally subdued.”
Kansas City: “The Tenth District economy improved moderately in late April and May. Retailers and restaurant contacts reported stronger sales, while auto sales declined. Both retailers and auto contacts expected increased activity in the months ahead. Manufacturing activity rose, and the high-tech services industry experienced modest growth. Transportation activity was flat and was expected to remain unchanged in the months ahead. Residential and commercial real estate activity increased solidly with higher sales and lower vacancy rates. Banking contacts reported slightly higher loan demand, improved loan quality and increased deposits. Agricultural growing conditions improved, and farmland values continued to climb. The energy sector expanded further, but the oversupply of natural gas was leading to a slower pace of expansion. Wage pressures increased, and firms reported some difficulty in filling positions.”
Dallas: “The Eleventh District economy expanded at a moderate pace over the past six weeks. Manufacturing activity was flat to up, demand for business services rose and transportation services activity was mixed. Energy activity remained strong, and the housing sector continued to improve. Retail sales rose moderately, and auto sales were strong. Loan demand picked up since the last report. Drought conditions improved. Most firms reported no change in selling prices. Employment levels were steady to slightly higher, and wage pressures remained minimal. Most firms’ outlooks are optimistic, although many respondents expressed concern about U.S. political uncertainty and the European debt situation.”
San Francisco: “Economic activity in the Twelfth District continued to grow at a moderate pace during the reporting period of April through late May. Price increases for final goods and services were very modest, and upward wage pressures were quite limited overall. Sales of retail items rose, as did demand for consumer and business services. District manufacturing activity picked up further. Sales remained robust for agricultural producers, while conditions were mixed for providers of energy resources. Demand rose modestly for residential real estate and also improved a bit for commercial real estate. District banking contacts reported that overall loan demand edged up, and they noted further slight improvements in credit quality.”
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