Fed Beige Book District-By-District Summary
By Meena Thiruvengadam
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Blame it on the weather. In its monthly Beige Book, released Wednesday, the U.S. Federal Reserve said severe snowstorms held back economic activity in several of its districts in early February.
Still, the Fed said economic conditions continued to improve across the country, with consumer spending and demand for services rising in many areas.
Here's a breakdown of how each of the Fed's 12 districts fared:
Boston: Demand grew for manufacturing, software and IT services, but commercial real-estate markets remained "very weak." The Fed's contacts, however, were hopeful the commercial real-estate sector was stabilizing. "In Boston, leasing activity in January and early February, while still light, was up from the preceding quarter as well as year-over-year," the report said. The Fed also noted pay and hiring freezes are being removed.
New York: Snowstorms slowed down the retail business in February, but the economy here continued to strengthen in the month. Tourism activity rose in New York City, while retailers reported same-store sales were up from a year ago. Meanwhile, the housing market softened despite signs of a pickup that materialized late last year. Rents and condo prices continued to drop.
Philadelphia: February snow kept a lid on retail sales and hindered construction and sales activity in the real-estate sector. But the area's businesses were optimistic. Manufacturers were expecting shipments to rise in the next sixth months. Auto dealers were expecting more sales this year than last, and the Fed's contacts in the residential real-estate sector were expecting a home sales boost because of government homebuyer tax credits.
Cleveland: Economic activity remained "significantly below" pre-recession levels, but there was some hope on the horizon for the labor market. Some companies have begun to recall workers and boost production hours. Staffing firms reported an increase in job openings, particularly in health care and manufacturing. The Fed's contacts noted rising costs for steel and an increase in capital spending. Still, the Fed noted capital spending in the district is below pre-recession levels.
Richmond: Economic activity was soft across this district, largely because of the weather. "Many consumers avoided driving during dangerous road conditions, causing weakness in retail sales," the Fed said. Also, "One banker noted that even borrowers with pre-approved mortgage loans were unable to do much house shopping during the bad weather." The weather, however, boosted business at ski resorts. "A manager at a ski lodge in Virginia stated that this Presidents Day weekend had been the busiest in the past five years," the Fed said.
Atlanta: Weakness persisted in the economy here, with residential real estate activity weaker than a year ago and sluggish loan demand. Commercial construction activity remained subdued. "Looking ahead, the majority of contacts anticipate commercial construction activity for the remainder of the year to be largely flat," the Fed said.
Chicago: Snow didn't hinder an improving economy in this region. Consumer and business spending rose, the manufacturing sector strengthened and hog and cattle prices climbed. Still, Toyota recalls and a lack of auto buyer incentives have brought down auto sales at area lots. Subdued vehicle sales could persist, with the Fed noting its "contacts indicated that many Toyota customers had likely held off on purchases given concern over the recall's negative impact on the residual value of their Toyota vehicles."
St. Louis: Economic conditions were mixed. Manufacturing activity rose and auto parts makers moved to increase hiring. Retail sales dipped, and auto sales were steady. Men's apparel was among the strong spots for retailers.
Minneapolis: Weakening in the labor market appeared to have slowed as consumer spending rose and residential construction increased. "The value of January residential permits in the Minneapolis-St. Paul area increased 16% from a year ago.
New residential permits in Sioux Falls, S.D., increased 15% in value in January from the previous year, and remodeling activity increased as well," the Fed said. Still, commercial real estate continued to slump.
Kansas City: The weather brought unexpected weakness to several sectors of the area's economy, the Fed said. Consumer spending was flat compared with a year ago; loan demand remained weak; commercial real-estate conditions continued to deteriorate, and a rise in manufacturing activity did not bring with it a rise in factory hiring. That could, however, change in the near future. "Expectations for future hiring improved markedly in the latest survey period," the Fed said.
Dallas: Economic activity improved in many sectors, but commercial real estate, financial services and construction-related manufacturing was left behind. Still, the Fed's contacts, except for those in manufacturing, were largely more optimistic about the economic outlook for the region.
Manufacturers reported excess capacity and depressed margins.
Financial services firms described loan demand as feeble but said they were seeing improvements in loan quality.
San Francisco: Economic activity rose as sales of agricultural products grew and wage pressures remained contained. "Most sectors characterized wages as essentially flat, although some businesses reported significant increases in the costs of employee benefits, especially for health insurance," the Fed noted. Retail sales were sluggish but showed signs of a pickup in discretionary spending.
Demand for commercial real estate continued to slide while inventory levels in the residential sector were elevated, holding back new construction activity.
-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629; meena.thiruvengadam@dowjones.com |
