WASHINGTON (MNI) – The following is the text of the summary Federal
Reserve’s Beige Book survey of Fed districts, published Wednesday:
Summary
Reports from the twelve Federal Reserve Districts suggest that, on
balance, national economic activity continued to rise, albeit at a
modest pace, during the reporting period from September to early
October.
Manufacturing activity continued to expand, with production and new
orders rising across most Districts. Demand for nonfinancial services
was reported to be stable to modestly increasing overall. Consumer
spending was steady to up slightly, but consumers remained
price-sensitive, and purchases were mostly limited to necessities and
nondiscretionary items. New vehicle sales held steady or rose during the
reporting period; sales of used automobiles were strong as well.
Activity in the travel and tourism sector picked up.
Housing markets remained weak with most Districts reporting sales
below year-ago levels. Reports on prices suggested stability, however.
Conditions in the commercial real estate sector were subdued, and
construction was expected to remain weak. Lending activity was stable in
most Districts. Agricultural conditions were generally favorable, and
above-average yields were expected in most reporting Districts. Activity
in the energy sector continued to expand.
Input costs, most notably for agricultural commodities and
industrial metals, rose further. Shipping rates increased, and retailers
in some Districts noted rising wholesale prices. However, prices of
final goods and services were mostly stable as higher input costs were
not passed on to consumers. Wage pressures were minimal.
Manufacturing
Manufacturing activity continued to expand, and several Districts
reported gains in production or new orders across a wide range of
industries. The only exceptions were the Philadelphia and Richmond
Districts, where activity softened compared with the previous reporting
period. Exports boosted manufacturing activity according to contacts in
the Cleveland, Chicago, and Kansas City Districts. Producers of
semiconductors and other high-tech equipment saw continued growth in
sales in the Boston, Dallas, and San Francisco Districts. Auto
production rose strongly in the Cleveland and Chicago Districts. Metals
producers in the Chicago District reported that September sales were the
strongest year-to-date, while contacts in the Minneapolis, Dallas, and
San Francisco Districts saw only modest gains. Shipments of steel in the
Cleveland District continued to be buoyed by demand from energy-related,
automotive, and heavy equipment industries. Food processors in the
Philadelphia and Dallas Districts noted solid demand for their products,
while a few contacts in the St. Louis and Minneapolis Districts reported
plans to expand existing operations.
Refiners in the Dallas and San Francisco Districts noted a slowdown
in activity and rising inventories. Demand for construction-related
products remained weak, and reports on activity in the wood products and
furniture manufacturing industries were mixed.
Hiring at manufacturing firms remained sluggish. Inventories were
generally light or in line with orders. Future capital spending plans
appeared to be limited, except for in the St. Louis District where
several manufacturers reported plans to build new plants or expand
operations. Manufacturers’ assessments of future factory activity were
optimistic in the New York, Philadelphia, Chicago, and Kansas City
Districts, where contacts expect business conditions to remain positive
or to improve in coming months.
Nonfinancial Services
Activity was stable to modestly increasing for most professional
and nonfinancial services. Demand for information technology (IT)
services remained solid. IT firms in the San Francisco District noted
recent growth was spurred by business investment to enhance production
efficiency. In the Minneapolis District firms noted solid demand for IT
services from corporate clients.
Accounting activity improved slightly, spurred by merger and
acquisition work. Contacts in the Boston and Dallas Districts noted
increases in consulting activity since the last report. Healthcare
consulting picked up as businesses responded to regulatory changes
following healthcare reform. Appraisal and title companies noted
continued strength during the reporting period, and there were some
reports from architectural firms that activity had picked up.
Demand for transportation services appears to have slowed, although
reports were mixed. Freight companies in the Cleveland District noted
steady to declining volumes over the past six weeks, and Kansas City’s
report said transportation firms saw unexpected weakness. Rail companies
in the Atlanta District reported positive, but slower growth of
automobile and industrial goods shipments, while port activity in the
Richmond District was mixed. Dallas’ report said intermodal and railroad
cargo volumes edged up, but growth in international container trade
volumes flattened, and small parcel shipping volumes declined in
September. San Francisco reported a pickup in demand for trucking
services.
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** Market News International Washington Bureau: 202-371-2121 **
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