Fed Outlook
By The Associated Press
Wednesday August 8, 3:31 pm Eastern Time
Economic conditions in the Federal Reserve's 12 regional bank districts as reported Wednesday in the Fed's ``beige book.''
BOSTON: A majority of business contacts in the retail and manufacturing sectors said activity is down compared with a year ago. Housing markets across New England were strong, but activity was softer compared with last year. Prices for goods other than housing were flat or lower. Most business contacts said they are stepping up efforts to cut costs.
NEW YORK: The economy has been generally sluggish since the last report, except for housing. Retailers said sales were soft in June and July, with general merchandise stores reporting a year-over-year decline. Retail prices were down and businesses worked hard to whittle excess inventories. Demand for labor eased, especially in manufacturing and in financial services. Business costs were subdued, aside from sharply higher utilities and medical-care costs. The housing market remained strong with prices running ahead of last year's.
PHILADELPHIA: Overall business conditions showed little or no improvement in July compared with June. Manufacturers reported a decline in shipments and orders during the month. General merchandise stores said sales were flat, but automobile sales rose. Tourism activity throughout the region was slower and business travel was down sharply from a year ago. In general, businesses said they expected some slight improvement in the fall and manufacturers forecast an increase in orders in the next six months. Retailers also were hopeful about a pickup.
CLEVELAND: Manufacturing continued to deteriorate. Steel orders remained soft and inventory levels were high. A slowdown in construction and appliance manufacturing is expected to further weaken demand for steel. Steel prices have fallen by at least 25 percent since a year ago. Attempts by some companies to boost steel prices 5 percent per ton have not stuck. Retail activity was mixed, with some chain stores reporting strong sales and most others faring poorly. Heavy discounting was under way to help boost sales. Demand for temporary workers was off 10 percent to 15 percent from last year.
RICHMOND: The economy grew at a slow pace, with moderate growth at service firms accounting for most of the strength. Retailers saw sales decline and laid off workers. Manufacturers said shipments and new orders continued to slide, but were optimistic business would pick up by the end of the year. Prices of manufactured goods were flat, while prices for services were modestly higher. In agriculture, hot and dry weather stressed crops and pastures, but recent rains renewed hopes of higher yields. Tourism was flat.
ATLANTA: Economic activity remained sluggish. Retail sales were weak and heavy discounting was reported. Automobile sales remained soft, but sales of luxury cars and some SUVs improved because of generous incentives from manufacturers. Manufacturing activity declined, resulting in further job losses. Housing remained strong, but commercial construction was weaker. Business travel softened throughout the district, while leisure travel remained strong in South Florida. Ample rain should lead to robust orange production, though citrus producers continued to battle tree disease that may limit crop yields. Peanut exporters faced strong price competition from producers in China and Argentina.
CHICAGO: Overall economic activity was sluggish. Consumer spending was soft, with buyers opting for less expensive goods and services. Manufacturing production remained weak, but companies made a lot of progress working off inventories. Office space continued to increase, while demand for housing remained robust. Demand for labor softened. Manufacturing payrolls decreased. Crop conditions were less favorable than last year when timely rainfall led to near record crop production. The western and northwestern parts of the district were most seriously affected by a wet spring followed by damaging hot, dry weather.
ST. LOUIS: Growth remained slow, particularly in manufacturing, which suffered layoffs. Retail sales were flat compared with last year, although activity was beginning to pick up. Housing markets remained strong, with sales and prices on the rise. Commercial real-estate activity was mixed. In agriculture, corn, cotton, soybean and rice crops were generally in good-to-excellent condition in most of the district, except Missouri, where soybean and cotton crops were in fair condition. Some Illinois business contacts described the winter wheat crop as disappointing. Tobacco crops were in mostly good to excellent shape.
MINNEAPOLIS: Manufacturing, commercial construction, mining and tourism were down. Residential real-estate, consumer spending and energy exploration were up slightly. Wage and price increases moderated, except home prices rose sharply. Oil and natural gas explorations remained above last quarter levels. Ethanol production rose. Iron ore shipments were down from last year. Commodity prices have fallen for many metals. In agriculture, prices were strong for milk, broilers, cattle, hogs and calves, but were weaker for eggs and turkeys.
KANSAS CITY: The economy weakened further. Manufacturing activity fell, construction and real-estate activity slowed. Retail sales were flat, but car sales picked up after several months of declines. The energy sector performed well. The regional count of active drilling rigs was near a 15-year high. Overall, prices remained steady and wage pressures were minimal. In agriculture, wheat yields in many areas were better than expected.
DALLAS: Economic activity continued to decelerate. Manufacturers reported falling sales. Construction and real-estate activity declined and the demand for business services softened. Retail sales were flat or up slightly. Energy activity was weaker. Business contacts said companies are reassessing investments, particularly in light of falling natural gas prices. Demand for drilling rigs was down 85 percent to 90 percent, with growing consensus that domestic drilling activity probably has peaked for now. On the farm scene, dry weather and temperatures soaring over 100 degrees threatened crop yield.
SAN FRANCISCO: Growth slowed. Energy costs increased as higher electricity rates were only partially offset by lower natural gas prices. Retail sales were weak and employment contracted. Investment in high-tech equipment and software remained depressed. Commercial real-estate markets softened, while single-family housing was stable. On the agricultural front, producers struggled against lower prices, weak exports, higher energy costs and weather. |
