WASHINGTON (MNI) – The following is the summary of the latest
Federal Reserve Beige Book survey of economic conditions in the 12 Fed
districts, published Wednesday:

(* Prepared at the Federal Reserve Bank of Atlanta and based on
information collected before July 9, 2012. This document summarizes
comments received from businesses and other contacts outside the Federal
Reserve and is not a commentary on the views of Federal Reserve
officials.)

Reports from most of the twelve Federal Reserve Districts indicated
that overall economic activity continued to expand at a modest to
moderate pace in June and early July. The Atlanta, St. Louis, and San
Francisco Districts reported modest growth, while Boston, Chicago,
Minneapolis, Kansas City, and Dallas described economic activity as
advancing moderately. The New York, Philadelphia, and Cleveland
Districts noted that activity continued to expand, but at a slower pace
since the last report, while Richmond cited mixed activity.

Retail sales increased slightly in all reporting Districts except
Boston and Cleveland, where sales were categorized as flat, and New
York, where sales softened. Of the Districts that saw an increase in
activity, most noted strength in auto sales. In particular, auto dealers
noted that demand for fuel-efficient vehicles continued to support
sales. Tourism activity remained strong according to contacts in the New
York, Richmond, Atlanta, Minneapolis, and San Francisco Districts.

All District housing market reports were largely positive as sales
and construction levels increased and home inventories declined. Rental
markets continued to strengthen with rising rents being reported in
Boston, New York, Atlanta, Chicago, and Dallas. Commercial real estate
leasing and construction continued to improve as demand for multifamily
units increased in Atlanta, Chicago, and San Francisco. However, both
New York and Richmond noted a slowdown in commercial activity, while
Philadelphia and Dallas held steady.

Manufacturing activity continued to expand slowly in most
Districts, and Cleveland, Atlanta, Chicago, and Kansas City cited slight
increases in production levels. However, several Districts reported a
deceleration in new orders, and the Philadelphia and Richmond Districts
reported declines in shipments and orders. Demand for nonfinancial
services remained generally stable in most regions. Richmond noted
strong sales among professional, scientific, and technical firms, while
Dallas noted strength in energy, legal, and audit-related services.
Transportation reports were generally positive, with Kansas City noting
an uptick in trucking activity, while Richmond reported increased port
activity.

Demand for loans, particularly those related to real estate, grew
modestly in most Districts. However, both Cleveland and Richmond noted
some weakness in loan activity. Credit standards remained unchanged in
New York, Richmond, and Kansas City, while credit quality improved in
Philadelphia, Kansas City, Dallas, and San Francisco. Agricultural
production and pricing reports were mixed. While drought conditions have
affected production in some Districts, others noted favorable
conditions. Chicago and Kansas City reported a significant deterioration
of corn crops, which has pushed up prices since the end of June.

All Districts conveyed that input prices had stabilized in recent
months. Price pressures were described as easing in New York,
Philadelphia, Atlanta, and San Francisco as energy costs declined. Wage
pressures remained modest, except for highly skilled workers in
information technology, health care, transportation, and manufacturing.
Employment levels improved at a tepid pace for most Districts. Overall,
Districts reported that their contacts remained cautiously optimistic
about future business conditions.

Consumer Spending and Tourism

Most Districts reported modest increases in retail spending on a
year-over-year basis, but many reported slower growth in recent months
compared with earlier in the year; however, Boston and Cleveland
reported sales as flat, and New York cited softer sales. There were a
few reports that high summer temperatures negatively affected sales.
Sales of big-ticket household goods were strong in the Richmond,
Chicago, Kansas City, and Dallas Districts, while sales were reportedly
flat for home furnishings and major appliances in the San Francisco
District. Boston reported that sales for furniture and electronics had
slowed, and retailers in the New York District reported that home goods
sales were weak. Reports from luxury-goods retailers were mixed. Firms
in the Philadelphia, Atlanta, and Chicago Districts reported that sales
of high-end goods remained strong, while retailers in the Kansas City
and San Francisco Districts indicated demand had softened, and those in
the Cleveland District noted that sales of luxury goods had slowed. Most
Districts reported that vehicle sales remained robust. Demand was high
for fuel-efficient vehicles in particular. Looking forward, merchants in
the Boston and Philadelphia Districts were concerned that economic
uncertainty could result in restrained sales growth, while retailers in
the Cleveland District anticipated that the third quarter will be higher
compared with year-ago levels. Kansas City noted that merchants there
expected further strengthening in the coming months.

Travel and tourism activity was reported as strong across several
Districts. Hotel occupancy rates and revenue per room were robust in
many areas according to reports from New York, Richmond, Atlanta,
Chicago, and San Francisco. Attendance numbers were solid at attractions
in various Districts, including theme parks in Florida and New Yorks
Broadway theaters. Richmond, Minneapolis, and San Francisco reported
that natural disasters had negatively affected bookings in some parts of
their Districts. Dallas reported that demand for international travel
was strongest for South America and Mexico destinations. Atlanta shared
their contacts concerns about the potential impact of economic and
financial stress abroad and the effect it could have on international
travel. That said, several Districts reported that the outlook among the
majority of hospitality contacts for the remainder of the summer is good
as hotel and convention bookings continued to exceed last years pace.

Real Estate and Construction

Reports on residential housing markets remained largely positive.
Sales were characterized as improving in Philadelphia, New York,
Richmond, Chicago, St. Louis, and Minneapolis, while home sales
increased in Boston, Cleveland, Atlanta, St. Louis, Minneapolis, Kansas
City, Dallas, and San Francisco. However, reports on sales were mixed in
the New York District, and gains in the Boston District eased from
earlier in the year. New home sales were described as disappointing in
the Philadelphia District. Construction increased in the New York,
Atlanta, St. Louis, Minneapolis, Dallas, and San Francisco Districts,
while reports from the Cleveland District said construction slowed. Most
Districts reported declines in home inventories. Homes prices have begun
to stabilize in some markets and price increases were noted in select
markets. Boston and Atlanta noted that appraisals were coming in below
market prices.

Rental markets continued to strengthen by most accounts. Rising
apartment rents were reported in the Boston, New York, Atlanta, Chicago,
and Dallas Districts. Strong demand for rental units spurred increases
in multifamily construction in the San Francisco District. Multifamily
construction was described as strong in the Atlanta and Chicago
Districts. Apartment construction is expected to pick up over the next
several months in the Dallas District.

Recent activity in commercial real estate markets has been mixed.
Modest improvements were noted in Boston, Atlanta, and St. Louis and
demand strengthened in the San Francisco District. Softer conditions
were reported in the New York and Richmond Districts, while demand held
steady in the Philadelphia and Dallas Districts. Nonresidential
construction activity varied as well. Construction activity increased
modestly in the Minneapolis and Kansas City Districts, while
construction continued to gain momentum in the Boston District. Demand
for commercial construction rose in Chicago, while activity was
described as much improved from a year earlier in the Cleveland
District. Construction was flat in the Atlanta District on a
year-over-year basis, while activity had softened in recent months in
the Richmond District. Overall, the outlook among commercial real estate
contacts and contractors was slightly positive.

-more- (1 of 2)

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$]