WASHINGTON (MNI) – The following is the text of the Federal
Reserve’s Beige Book survey from the St. Louis district, published
Wednesday:

Eighth District – St. Louis

Summary

Economic activity in the Eighth District has increased modestly
since our previous report. Manufacturing activity has continued to
increase, and the services sector has improved slightly. Early reports
from general retailers indicate that holiday sales increased over a year
ago. Home sales have continued to decline across the District, and
commercial real estate and construction activity was sluggish. Overall
lending activity at a sample of small and mid-sized District banks
declined in the three-month period from mid-September to mid-December.

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
automobile and automobile parts, plastics product, glass, furniture,
sanitary paper products, and food manufacturing industries reported
plans to expand existing operations and hire new employees. Contacts in
the household appliance and paper manufacturing industries reported
plans to open new facilities in the District and hire new employees. In
contrast, firms in container manufacturing and wood products
manufacturing announced plans to close plants and lay off workers.

Activity in the District’s services sector has increased since our
previous report. Contacts in the storage, business support services,
restaurant, and health care industries reported plans to open new
facilities in the District and hire new workers. In contrast, contacts
in the hazardous waste disposal industry announced plans to decrease
operations and lay off workers. General retail contacts noted that
holiday sales increased compared with the same period last year. Sales

of new automobiles have grown modestly in recent months, while used
car sales have been mixed across the District.

Real Estate and Construction

Home sales continued to decline throughout the Eighth District.
Compared with the same period in 2009, November 2010 year-to-date home
sales were down 14 percent in St. Louis, 8 percent in Little Rock, 17
percent in Memphis, and 1 percent in Louisville. Residential
construction, however, continued to increase throughout most of the
District. November 2010 year-to-date single-family housing permits
increased in the majority of the District metro areas compared with the
same period in 2009. Permits increased 4 percent in Little Rock and 6
percent in St. Louis and Memphis but decreased 5 percent in Louisville.

Commercial real estate and construction conditions were sluggish
throughout most of the District, but contacts anticipate improvements in
some areas. A contact in Louisville noted that commercial real estate
markets continue to struggle, although contacts expect improvements in
the suburban office market in 2011. A contact in northwest Arkansas
reported that commercial real estate markets are soft. Contacts in St.
Louis noted that commercial construction activity was slow. Contacts in
south-central Kentucky noted that commercial construction activity has
been very limited, but they anticipate some recovery in the next few
months. Contacts in northeast Arkansas reported a few new commercial
construction projects in retail centers. Industrial construction
activity remains slow throughout most of the District. A contact in St.
Louis reported low levels of construction activity. Contacts in
south-central Kentucky noted some manufacturing and healthcare-related
projects. Contacts in Louisville and St. Louis reported more
build-to-suit than speculative industrial construction.

Banking and Finance

Total loans outstanding at a sample of small and mid-sized District
banks decreased 2.5 percent in the three-month period from mid-September
to mid-December. Real estate lending, which accounts for 73.3 percent of
total loans, decreased 2.4 percent. Commercial and industrial loans,
accounting for 16.3 percent of total loans, decreased 0.9 percent. Loans
to individuals, accounting for 4.9 percent of loans, decreased 6.1
percent. All other loans, accounting for 5.5 percent of total loans,
decreased 5.3 percent. Over this period, total deposits increased 0.7
percent.

Agriculture and Natural Resources

Cotton production was strong in the District. The number of bales
of cotton ginned (separated from the seed) increased by 75 percent from
2009 by early December and by 6 percent from the average 2007-2009
levels. The District’s mid-December year-to-date coal production
increased by 2 percent from 2009, while total coal production from
mid-November to mid-December was 5 percent higher compared with the same
period in 2009.

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

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