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Beige Book: Economic Activity continues at modest pace


The twelve Federal Reserve District reports indicate that economic activity increased at a modest pace in most regions of the country since the previous Beige Book report. Economic growth was modest in the Districts of Cleveland, Richmond, Atlanta, Chicago, St. Louis, Dallas and San Francisco. In the Minneapolis District the economy grew moderately, while in the Kansas City District growth was steady on balance with mixed conditions across sectors. In the New York District economic conditions leveled off since the previous report, and in the Philadelphia District aggregate business activity continued to grow at a modest pace. In the Boston District, growth was somewhat slower despite reports of revenue increases.

Consumer spending increased in nearly all Districts since the previous Beige Book, with the pace of sales ranging from sluggish in New York to moderate in Minneapolis and San Francisco. Sales of light vehicles remained robust in recent weeks, with low gasoline prices helping to boost sales of light trucks and larger vehicles. Inventory levels were satisfactory.

Tourism was mixed across reporting Districts. In the Richmond, Atlanta, Minneapolis and Dallas Districts, tourism grew in recent weeks. In the New York District, activity was at or below year-ago levels.

Non-financial services were little changed to stronger, with most of the growth in technology-related services. Transportation activity was softer on balance since the previous report. Port activity remained strong, although largely on the strength of imports, as exports continued to fall. Cargo volume in Dallas remained soft in recent weeks due to the slowdown in energy-related cargo.

Conditions in the manufacturing sector were mixed in recent weeks. The strong dollar, low commodity prices, and weak global demand were named by several Districts as factors for constrained demand. The Boston, Richmond, Atlanta, Chicago, St. Louis and Dallas Districts reported improvements since the previous Beige Book report, while the New York, Philadelphia and Minneapolis Districts reported declines in manufacturing activity. The Boston, St. Louis and Kansas City Districts reported solid capital investment plans. Manufacturers in most Districts looked for slightly improved business conditions in the next six months.

On balance, housing markets improved at a moderate pace since the previous Beige Book, and home prices increased modestly. Home sales rose in the Boston, New York, Philadelphia, Cleveland, Richmond, Chicago and Kansas City Districts. Philadelphia described a "slow growth market" in which inventories were stable at low levels. Housing inventories continued to fall year-over-year in the Boston, Cleveland, Richmond and St. Louis Districts.

Residential construction grew at a modest to moderate pace since the previous report. The New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis and Kansas City Districts reported growth in residential construction, while construction in Dallas and Minneapolis was flat.

Commercial construction strengthened modestly in most Districts. However, the Minneapolis District saw continued strong growth, particularly in cities where commercial permitting increased. In contrast, New York reported little change. Commercial leasing activity generally grew at a moderate pace in recent weeks. Activity increased in the Districts of Boston, Cleveland, Richmond, Atlanta, Chicago, Dallas and San Francisco, but was unchanged in the New York District.

Loan demand increased according to a majority of Districts that report on the sector. Residential mortgage demand was stable on balance. Demand for home equity loans and lines of credit rose in the Richmond and Dallas Districts. Commercial loan demand was reported to be generally strengthening in most Districts. Credit quality was mostly stable. San Francisco noted an increasing role of nontraditional lenders in mortgage markets.

Agricultural conditions varied across Districts in recent weeks. Rainfall helped alleviate drought conditions in the Atlanta and Dallas Districts, while in the Richmond and St. Louis Districts crops suffered from too much moisture. Energy activity declined mildly with limited gas exploration being undertaken. Investment fell at oil and gas exploration and services firms in the Atlanta District as a result of continued weak global demand and an oversupply of oil. The Dallas, St. Louis, Kansas City and San Francisco Districts reported declines in energy activity.

Labor markets continued to tighten modestly, on balance, since the previous Beige Book. The Atlanta, Kansas City and Dallas Districts reported a slight pickup in hiring, while the remaining Districts characterized their increase as modest to moderate. Many Districts indicated that increased hiring was driven by temporary and entry-level positions that were being fulfilled by staffing firms. Employers in several districts reported difficulty finding skilled craftsmen and general laborers in the construction industry. However, the Atlanta, Minneapolis, Kansas City and San Francisco Districts said that difficulties were spreading to lower skilled and entry-level positions. Most Districts said that wage pressures increased only for skilled occupations and for workers that were in short supply.

Prices were generally steady. Input and finished goods prices were stable for manufacturing firms, according to most Districts. Some prices were lower due to further declines in commodity and energy prices as well as the strong dollar. Agricultural commodity prices were also lower. Some upward price pressures were reported by nonmanufacturing firms in the New York, Philadelphia, Richmond, Kansas City and San Francisco Districts




Posted: December 2, 2015 Wednesday 02:00 PM




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