WASHINGTON (MNI) – The following is the text of the Federal
Reserve’s Beige Book survey Eighth District summary, published
Wednesday:

Summary

Economic activity in the Eighth District has expanded modestly
since our previous report. Manufacturing activity increased, on balance,
as did activity in the services sector. Residential real estate market
conditions were mixed. Although commercial and industrial real estate
market conditions remained soft, there were reports of increased
activity in some areas. Overall lending activity at a sample of small
and mid-sized banks in the District declined in the three-month period
from mid-June to mid-September.

Manufacturing and Other Business Activity

Manufacturing activity has continued to increase since our previous
report. Several manufacturers reported plans to open plants and expand
operations in the near future, while a smaller number of contacts
reported plans to close plants or reduce operations. Firms in the
detergent, frozen foods, transformer, plastic products, motor vehicle
parts, and primary metal manufacturing industries reported plans to
expand existing operations and hire new employees. Contacts in the
construction machinery, electronic component, and wood product
manufacturing industries reported plans to open new facilities in the
District as well as hire new employees. In contrast, firms in the
appliance, tobacco, chemical, and furniture manufacturing industries
announced plans to decrease operations and lay off workers.

The District’s services sector has also continued to improve since
our previous report. Firms in the restaurant, automotive repair, air
transportation support, and social services industries opened new
facilities in the District and hired new employees. In contrast,
contacts in the business support services, hotel, and gambling
industries reported plans to decrease operations and lay off workers.
Sales of new automobiles were down compared with the same time last
year, while used automobiles have shown stronger sales. General retail
contacts reported that sales were flat over the reporting period.

Real Estate and Construction

Home sales were mixed throughout the Eighth District. Compared with
the same period in 2009, August 2010 year-to-date home sales were down 4
percent in St. Louis and 2 percent in Memphis. Over the same period,
however, year-to-date home sales increased 14 percent in Louisville and
2 percent in Little Rock. Residential construction continued to improve
throughout the District. August 2010 year-to-date single-family housing
permits were up in most District metro areas compared with the same
period in 2009. Permits increased 14 percent in Little Rock, 15 percent
in St. Louis, and 16 percent in Memphis. In contrast, single-family
housing permits decreased 4 percent in Louisville.

Activity in commercial real estate and construction remained slow
throughout most of the District. Contacts in Louisville reported that
the office market remained soft and there is low demand for commercial
real estate loans. While a contact in central Arkansas reported some
improvement in commercial property sales, a contact in northeast
Arkansas noted that commercial construction remains at a virtual
standstill. Industrial real estate and construction was mixed throughout
the District, with some regions showing signs of improvement. A contact
in west Tennessee noted industrial development projects that are
expected to aid business activity in the area. A contact in Evansville,
Indiana, reported that there seems to be more quoting on major
construction, but no real jobs are starting. In contrast, contacts in
the west Kentucky region reported construction projects primarily
related to health and hospitality. Contacts in St. Louis noted limited
industrial construction projects.

Banking and Finance

Total loans outstanding at a sample of small and mid-sized District
banks decreased 1.8 percent in the three-month period from mid-June to
mid-September. Real estate lending, which accounts for 73.2 percent of
total loans, decreased 2.2 percent. Commercial and industrial loans,
accounting for 16.1 percent of total loans, decreased 1.6 percent. Loans
to individuals, accounting for 5.1 percent of loans, decreased 7.9
percent. All other loans decreased 8.5 percent and accounted for 5.6
percent of total loans. Over this period, total deposits increased 0.3
percent.

Agriculture and Natural Resources

Recent dry weather throughout most of the District provided
excellent conditions for harvesting crops, although many parts of the
District have subsequently faced moderate or severe drought conditions.
At the beginning of October, the overall corn, soybean, sorghum, cotton,
and rice harvests were ahead of their normal paces by 28 percent to 137
percent. Since our previous report, overall crop conditions deteriorated
slightly for corn but remained similar or improved slightly for
soybeans, cotton, and sorghum. Yield estimates for corn and tobacco in
all District states that grow these crops and for soybeans, cotton, and
sorghum in most District states that grow these crops declined from
August to September. The remaining yield estimates, including those for
rice, stayed the same or increased slightly.

** Market News International Washington Bureau: 202-371-2121 **

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