Summary of Economic Reports by Federal Reserve District Banks

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 Atlanta prepared the latest report. Information was collected on or before Aug. 20.

Boston: “Reports from business contacts in the First District are somewhat mixed. Tourism contacts and some retailers cite strong results, but other merchants are more downbeat. Manufacturers mostly report solid performance, but a couple have seen sales fall compared with a year earlier. Software and IT services firms indicate business is good, but somewhat slower than three months ago, while staffing firms say recent results are below expectations. Commercial real estate conditions are not much changed, with the Boston market said to be stronger than the rest of New England; gradual recovery continues in most residential real estate markets around the region. Business contacts say they are hiring only modestly; prices are generally reported to be stable. Outlooks remain uncertain.”

New York: “The Second District’s economy has continued to expand at a modest pace since the last report. Despite some pickup in commodity price pressures, prices of finished goods and services have generally been stable. There have been scattered signs of softening in the labor market: while manufacturers continue to add workers, firms in other industries have scaled back hiring. A growing number of contacts in both manufacturing and other sectors report some softening in business conditions. Retailers, however, report generally favorable results: auto dealers note that sales remain fairly strong, and non-auto retailers report some recent improvement. Tourism activity has remained strong. Residential real estate markets have shown signs of improvement, and Manhattan’s office market picked up slightly. Finally, bankers report increased loan demand, no change in credit standards, and further declines in delinquency rates. ”

Philadelphia: “Aggregate business activity in the Third District has continued to grow slowly since the previous Beige Book, although the pace of growth has shifted in a few sectors. Manufacturing activity declined further, but the rate of decline is tempering. Retail sales have grown somewhat faster than was the case at the time of the last Beige Book, while auto sales have continued to increase at a consistent pace. Lending volumes at Third District banks have continued to grow steadily, and credit quality has continued to improve since the last Beige Book. Demand for new home construction grew at a slightly faster pace than during the previous Beige Book period, and brokers report steady growth in sales of existing homes. Commercial real estate contacts report more widespread growth, but overall demand remains modest. On average, service-sector firms report more flattening of growth. Price pressures have changed little in most sectors since the last Beige Book.”

Cleveland: “The economy in the Fourth District grew at a modest pace since our last report. On balance, manufacturing output moved slightly lower, while residential and nonresidential construction picked up. Retailers saw a modest rise in sales during July, and motor vehicle purchases held steady. Natural gas producers increased production, though the demand for coal has softened. The slowdown in freight transport volume, which began in the second quarter, has leveled off. And the demand for business credit showed a modest increase. Little net hiring was reported across industry sectors. Staffing-firm representatives said that the number of job openings has declined during the past six weeks. Open positions were found primarily in engineering, healthcare, and manufacturing. Wage pressures are contained. Input prices were generally stable, although concerns exist about the recent rise in agricultural commodity prices.”

Richmond: “Fifth District economic activity improved somewhat in most sectors since our last report, although manufacturing and employment weakened. Retail sales improved, and non-retail services providers reported a moderate increase in demand. Tourism contacts generally indicated that summer business was strong, and they anticipated a busy autumn season. Widespread precipitation in July and August brought relief from drought conditions, boosting expected crop yields. Residential real estate activity inched up, while commercial real estate reports were mixed. Lending activity also varied, and most mortgage lending was for refinancing. Manufacturing activity softened as orders declined. Weaker District hiring was led by a slowdown in requests for temp workers, although demand for highly skilled employees persisted. Price changes generally slowed in both the manufacturing and services sectors, with the exception of a small uptick in retail.”

Atlanta: “Reports from Sixth District business contacts indicated that economic activity expanded at a modest pace in July through mid-August. The majority of contacts described their short-term outlook for future business activity as restrained. Most retailers indicated that sales growth had slowed with the exception of autos, which remained quite positive. Tourism contacts continued to report strong activity in all segments except cruise lines. Residential brokers and builders noted improvement in home sales and construction. New and existing home sales prices were reported to be modestly higher than year-ago levels. Commercial builders continued to note improvement, driven by the multifamily sector. Manufacturers reported a pullback in new orders and production levels. According to banking contacts, loan demand remained low but some improvements were registered in home mortgages, and auto lending was brisk. Hiring activity remained muted across the District. The trend of using temporary workers to fill labor needs continued to be cited by many firms. Some contacts said that they had experienced lower overall input prices, but rising food prices was a concern. Wage pressures remained in check. ”

Chicago: “Economic activity in the Seventh District expanded at a moderate pace in July and early August, with the pace of growth once again slowing from the prior reporting period. Contacts reported heightened concern regarding the risks to the economic outlook, notably the U.S. fiscal situation and weaker growth in Europe and Asia. Business spending increased at a slower pace, while consumer spending growth picked up some. Growth in manufacturing production moderated further, while construction activity continued to slowly increase. Credit conditions were again slightly improved. Smaller anticipated corn and soybean harvests due to the ongoing drought pushed crop prices higher and raised the cost of feeding livestock, with some pass-through to wholesale prices already taking place.”

St. Louis: “The economy of the Eighth District has continued to expand at a modest pace since our previous survey. Retail and auto sales in July and early August increased over year-earlier levels. Residential real estate market conditions have continued to improve moderately. However, commercial and industrial real estate conditions have been mixed. Recent reports of planned activity from services firms have been positive. In contrast, reports from manufacturing contacts have been mixed. Reports of lending activity at a sample of large District banks during the second quarter of 2012 were somewhat mixed.”

Minneapolis: “The Ninth District economy grew at a modest pace since the last report. Increased activity was noted in consumer spending, tourism, professional services, construction and real estate, while activity slowed slightly in the manufacturing and energy sectors. Agriculture was mixed, while mining was steady at high levels. Overall labor market conditions were steady since the last report, and wage increases were modest. Prices were relatively stable.”

Kansas City: “The Tenth District economy continued to expand at a moderate pace in July and early August. Retailers and auto dealers reported higher sales and expected increased activity in the months ahead. Manufacturing activity expanded slightly, with additional gains expected over the next six months. Transportation activity grew moderately, while sales in the high-tech services sector declined slightly. Residential and commercial real estate markets continued to improve with increased sales, construction, and prices. Banking contacts reported slightly higher loan demand and improved loan quality. Agricultural conditions deteriorated under extreme drought conditions leading to higher crop prices and strained profit margins for livestock producers. The energy sector held steady as growth in crude oil drilling continued to offset the decrease in drilling for natural gas. Most sectors reported higher input prices, but final goods prices and wage pressures remained stable.”

Dallas: “The Eleventh District economy grew at a moderate pace over the past six weeks. Manufacturing activity continued to expand, demand for business services remained solid, and transportation services activity increased. Respondents said retail sales edged up, while automobile sales held steady. The housing and commercial real estate markets remained healthy. Financial firms noted softening loan demand. Energy activity remained robust, and agricultural conditions improved slightly. Employment levels were steady to slightly higher. Wage and price pressures were modest. Most contacts noted that European debt issues and the upcoming national elections added uncertainty to their outlooks.”

San Francisco: “Economic activity in the Twelfth District continued to expand at a modest pace during the reporting period of July through mid-August. Price inflation was limited for most final goods and services, and upward wage pressures were quite contained. Sales of retail items rose a bit further on net, and demand for most business and consumer services continued to expand. District manufacturing activity appeared to inch up on balance. Agricultural output expanded, while activity continued to trend up for providers of energy resources. Home demand in the District strengthened a bit further, and demand for commercial real estate was largely stable. Contacts from financial institutions reported that overall loan demand was unchanged or weakened slightly on balance.”

To contact the reporter on this story: James Tyson in Washington at jtyson@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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