WASHINGTON (MNI) – The following is the first of two parts of the
text of the Federal Reserve’s Beige Book survey from the Richmond
district, published Wednesday:

Finance

Loan demand in the District continued to improve at a slow pace
across most market segments over the last six weeks. One banker noted an
uptick in demand for industrial equipment loans, particularly from auto
suppliers in the District. Loan demand for autos (notably from fleet
purchasers) also picked up. However, the banker also added that consumer
demand-excluding auto loans-was flat at his bank, with most new
applications being primarily for home improvement projects. Another
banker, who reported an increase in consumer loan demand over
third-quarter levels, did not expect demand to fade after the holidays.
In Richmond, a loan officer stated that consumers were more confident
about submitting loan applications, particularly for renovation loans. A
regional commercial banker reported improvement in small business
lending, especially for equipment leases; she also noted that her bank
experienced an increase in SBA loans. While most lending officials
reported strong demand for home refinancing, a Richmond banker also
cited an improvement in home purchase applications. Only in West
Virginia, which lagged in entering the recession, did a banker report
that loan demand around the state was still “awfully soft” across most
market segments over the last six weeks, and added that there was very
little in the pipeline.

Real Estate

Residential real estate activity around the District was mixed over
the last six weeks. A Maryland contact reported that sales were down
compared to a year ago, but also noted an increase in permits (mostly
multi-family). However, a contact in the Charlotte, North Carolina area
stated that real estate was flat across the board. Several contacts said
that problems getting appraisals approved on a timely basis had reduced
sales by discouraging potential buyers and had also increased
transaction costs. Several real estate agents in other areas reported
that housing had started to move, although at deeply reduced prices.
Sales activity varied by price range around the District, with most
contacts indicating that sales were concentrated at the low end of the
price range. Contacts generally reported that prices were either stable
or still declining, although one contact stated that prices in his area
were rising moderately.

While commercial real estate activity remained weak throughout the
District, reports of modest improvement increased since our last report.
For example, a Realtor in the Research Triangle area of North Carolina
reported that property sales were moving briskly, although partly
because prices were low. Contacts indicated that leasing activity in the
area also improved, particularly at locations that already had
relatively high occupancy rates. Apartment construction edged up,
according to District reports, particularly in the Washington, DC area.
A survey of construction contractors showed an even split among
increasing, decreasing and no change in activity over the past six
weeks. Most respondents noted little change in credit availability, with
many still having difficulty obtaining credit. Moreover, price pressures
remained intense, with most indicating that not only were materials
prices increasing but also that intense competition, even for small
projects, was squeezing profit margins.

Labor Markets

Employment activity in the District was generally stable to
somewhat stronger in recent weeks. Several firms reported cautiously
hiring back employees as the economy improved. Several small retailers
in the Richmond area reported that holiday hiring was limited this year;
some hired fewer seasonal employees and extended hours for permanent
personnel. However, several contacts noted that fewer staff often meant
increased theft. Several employment agencies stated that demand for
temporary workers was at least stable or stronger than six weeks ago. A
temporary employment agency in the Charlotte area reported an uptick in
requests from small- and medium-sized firms, whereas previously only
large firms were hiring. In contrast, an executive search firm stated
that employment activity had stalled in October and had not yet picked
up.

Tourism

Assessments of tourist activity remained mostly positive since our
last report. Managers at ski resorts in Virginia and West Virginia
characterized demand as somewhat stronger than at this time a year ago,
as unusually cold weather got the ski season off to an early start. A
market analyst reported that the Baltimore area was experiencing its
best tourist activity in at least three years. A contact in Myrtle Beach
reported a modest increase in resort bookings and noted that tourists
were spending more at local shops than a year ago. A contact from the
Outer Banks of North Carolina, however, described tourist demand as
somewhat weaker than a year ago and characterized holiday spending by
tourists on gifts and food as flat to down from a year ago.

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

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