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

Summary

Economic conditions in the Eighth District have continued to
improve since our previous report. Manufacturing activity increased, on
balance, as did activity in the services sector. Auto sales increased
over a year ago. Residential real estate market conditions continued to
improve across the Districts largest metropolitan areas, while
commercial and industrial real estate markets remained weak, especially
construction. Overall lending activity at a sample of small and
mid-sized banks in the District decreased from early April to late June.

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 and reduce operations. Firms in the
furniture, plastics product, metal pipe, and plastics resin
manufacturing industries announced plans to expand operations and hire
new employees. Additionally, a major firm in the automobile
manufacturing industry announced the opening of a new production
facility. In contrast, firms in the motor and generator, furniture, and
polystyrene foam product manufacturing industries announced that they
will close plants in the District and lay off workers.

Activity in the District’s services sector has also increased since
our previous report. A major software publishing firm has announced
plans to open a new facility in the District and hire new workers.
Additionally, a firm in nursing care services announced plans to
relocate their headquarters to the District. In contrast, contacts in
education services, air transportation support services, and the casino
industry announced plans to decrease operations and lay off workers.

Sales of new and used automobiles in recent weeks were reported as
higher than a year ago and slightly above expectations.

Real Estate and Construction

Home sales continued to improve throughout the Eighth District.
Compared with the same period in 2009, May 2010 year-to-date home sales
were up 3 percent in Memphis, 12 percent in St. Louis, 19 percent in
Little Rock, and 30 percent in Louisville. Residential construction also
continued to improve throughout the District. May 2010 year-to-date
singlefamily housing permits were up in most District metro areas
compared with the same period in 2009. Permits increased 27 percent in
Louisville, 31 percent in Little Rock, 36 percent in St. Louis, and 52
percent in Memphis.

Commercial and industrial real estate market activity remained slow
throughout most of the District. Contacts noted that financing
requirements for new construction remained stringent and lease rates
remained low. A contact in St. Louis reported that commercial leasing
was up in some areas, but new commercial construction projects are not
expected before mid-2011. Industrial real estate and construction
contacts throughout the District continued to report a flat environment.
A contact in Louisville reported that demand for industrial real estate
continued to be weak. A contact in the Memphis area reported that while
industrial leasing has improved somewhat, no new industrial construction
is likely before the end of the year.

Banking and Finance

Total loans outstanding at a sample of small and mid-sized District
banks decreased 2.0 percent from early April to late June. Real estate
lending, which accounts for 73.6 percent of total loans, decreased 1.9
percent. Commercial and industrial loans, accounting for 16.0 percent of
total loans, decreased 2.5 percent. Loans to individuals, accounting for
5.3 percent of total loans, decreased 6.5 percent. All other loans,
roughly 5.1 percent of total loans, increased 4.1 percent. During this
period, total deposits at these banks decreased 1.2 percent.

Agriculture and Natural Resources

Generally, development of the District’s major crops remained ahead
of its 5-year average pace. In mid-July, the overall condition of rice
and cotton was rated as slightly better than last year, while the
condition of corn, sorghum, and soybeans was rated as slightly worse.
Farmers in the District states planned to harvest more acres of corn for
grain and rice in 2010 than in 2009 but fewer acres of soybeans and
sorghum for grain. The winter wheat harvest was complete or nearly
complete in all District states. Based on July estimates, total winter
wheat production in the District states was expected to be down 48
percent from last year. Since our previous report, pasture conditions
deteriorated in most District states.

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

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