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

EIGHTH DISTRICT – ST LOUIS

Summary

Economic conditions in the Eighth District softened in most sectors
since our previous report. Manufacturing activity declined on balance,
as did activity in the services sector. Although residential real estate
markets remained weak, home sales and issuance of construction permits
increased in some metropolitan areas of the District. Activity in the
commercial and industrial real estate markets, construction in
particular, remained weak throughout the District. Overall lending
activity at a sample of small and mid-sized District banks decreased
slightly in the first quarter of 2010 compared with the fourth quarter
of 2009.

Manufacturing and Other Business Activity

Manufacturing activity declined since our previous report. Contacts
reported more plant closures and job layoffs than plant openings and new
hires. Several manufacturers reported plans to consolidate operations
and lay off employees, including firms in the appliance; heating,
ventilation, and air conditioning; steel; and machinery manufacturing
industries. Furthermore, firms in the construction materials, auto
parts, and food and beverage manufacturing industries announced plans to
close a plant in the District. In contrast, a major firm in defense
goods manufacturing announced plans to add new jobs and expand
production. Several small firms in food and beverage manufacturing and
metal products manufacturing announced plans to expand operations and
hire new workers.

The District’s services sector also continued to decline despite
the increase in temporary employment from the 2010 Census. Several
regional government agencies and education services providers announced
job cuts in response to declining budgets. A major firm in print and
publishing services announced it will close a facility in the District.
A large medical services provider also announced significant job cuts to
achieve operational efficiencies. In contrast, a large regional
transportation authority was awarded a major contract from the
Department of Transportation, and a firm in business support services
announced plans to hire new workers. Contacts in the retail sector noted
the opening of several new establishments, particularly in the food
industry. A major trade show also signed a long-term lease with a
metropolitan area in the District. An auto dealer noted stronger than
expected demand, particularly for light sport utility vehicles.

Real Estate and Construction

Home sales were mixed in the Eighth District. Compared with the
same period in 2009, February 2010 year-to-date home sales were down 5
percent in Little Rock and 9 percent in Memphis and St. Louis.
Year-to-date home sales in Louisville, however, were up 16 percent for
the same period. Residential construction, on the other hand, is
improving throughout most of the District. February 2010 year-to-date
single-family housing permits increased in most District metro areas
compared with the same period in 2009. Permits increased 17 percent in
Louisville, 30 percent in Memphis, 41 percent in Little Rock, and 60
percent in St. Louis.

Commercial real estate and construction markets continued to
struggle throughout the District. A contact in St. Louis expects
commercial property foreclosures to rise. A contact in Evansville,
Indiana, reported that major construction is still slow. A contact in
northeast Arkansas noted that the only major construction projects are
related to a local university and medical center. Industrial real estate
and construction contacts throughout most of the District also continued
to report a sluggish environment. A contact in Louisville described the
first-quarter industrial real estate market as dismal. A contact in
Memphis, however, indicated that industrial real estate may be showing
signs of improvement. A contact in St. Louis expects little to no
speculative industrial construction to take place in 2010.

Banking and Finance

Total loans outstanding at a sample of small and mid-sized District
banks decreased 2.7 percent in the first quarter of 2010 relative to the
fourth quarter of 2009. Lending activity in various sectors was mixed,
however. Real estate lending, which accounts for 73.6 percent of total
loans, decreased 2.3 percent. Commercial and industrial loans,
accounting for 16.1 percent of total loans, decreased 4.9 percent. Loans
to individuals, accounting for 5.6 percent of loans, increased 3.3
percent. All other loans decreased 8.3 percent. Over this period, total
deposits increased 0.6 percent.

Agriculture and Natural Resources

Total winter wheat acreage in the District states in 2010 decreased
by 41 percent from 2009 levels, and most of each states crop was
reported to be in fair or good condition. Farmers in the District
reported that they expect to plant 5 percent more acres of corn and 10
percent more acres of both cotton and rice in 2010 than in 2009. In
contrast, they anticipate planting 6 percent fewer acres of sorghum and
4 percent fewer acres of tobacco than last year. They expect to plant
the same number of acres of soybeans as last year.

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

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