WASHINGTON (MNI) – The following is the latest Beige Book survey of
economic conditions in the Federal Reserve’s Sixth District, published
Wednesday:
SIXTH DISTRICT – ATLANTA
Summary
Business contacts in the Sixth District indicated that economic
activity continued to expand at a modest pace in September and early
October. Merchants noted that retail sales decelerated slightly compared
with the previous month, although auto sales continued to advance at a
solid pace. Tourism activity remained robust throughout most of the
District. Homebuilders and Real Estate brokers reported that new and
existing home sales remained weak and home prices continued to decline.
Commercial developers indicated that construction activity increased
moderately compared with weak year-ago levels, and brokers noted an
increase in relocation activity. Manufacturers reported a modest decline
in production and new orders. Weakness in loan demand persisted,
according to banking contacts as both consumers and businesses refrained
from borrowing. Hiring for permanent positions remained very subdued
across most sectors. Pricing pressures moderated somewhat as input costs
declined or leveled off.
Consumer Spending and Tourism
District retailers reported that sales decelerated slightly in
September compared with the August results. Reports were mixed among
contacts with half noting that sales were below plan and the remainder
was evenly split between those reporting sales at or above expectations.
On a year-over-over basis, sales were generally higher although traffic
was lower. Most contacts anticipated that holiday sales would be similar
to 2010 results. Auto dealers reported that sales continued to increase.
Many retail contacts planned to raise prices, expecting to retract
the increases if customers pushed back. Merchants continued to
aggressively discount products to draw in traffic and have found it
difficult to end such practices because of concern over losing
customers. Leisure and business travel remained strong in the District.
Occupancy rates continued to improve, and both airport and cruise
traffic were up. International visitors bolstered activity, mainly in
Florida. Group bookings and theme park attendance were up in most areas.
Overall, hospitality contacts expect a vibrant holiday season.
Real Estate and Construction
Residential brokers indicated that sales softened somewhat in
September compared with the previous month and were flat to slightly up
compared with very weak levels from last year. Florida brokers reported
that home sales growth slowed. Outside of Florida, Southeast brokers
noted a modest pickup in sales growth. Cash purchases by investors,
second home buyers, international buyers, and retirees accounted for
much of the sales activity across most of the Southeast, according to
contacts. Existing home prices remained below year earlier levels.
District brokers anticipate only modest sales growth over the next
several months.
Reports from District builders indicated that new home sales and
construction activity were largely unchanged in September and were
slightly ahead of weak levels from a year ago. Home builders continued
to report that new home prices were largely flat compared with the
previous month and a year ago. Overall, construction and new home sales
growth are expected to be similar to weak year-ago levels over the next
several months.
Half of District commercial contractors polled reported that
construction activity in September exceeded the first half of the year,
while just under one-third signaled that activity was weaker. Backlogs
reportedly increased modestly as well. The outlook among contractors
remained weak as most anticipated commercial development to be flat or
down on a year-overyear basis for the remainder of 2011 and into 2012.
Commercial brokers remarked that market dynamics continued to largely
favor tenants in the District, particularly in the retail sector.
However, some reports indicated that available office space had
declined, and with little new office development underway, this could
result in an increase in rental rates. An opposing view shared by some
contacts was that smaller blocks of office space remained abundant on a
sublease basis from tenants that have downsized, but are still paying
for unused space. Corporate expansion and relocation interest has picked
up in some markets, which could have a positive impact on inventory and
construction.
Manufacturing and Transportation
Overall, manufacturers indicated a modest decline in new orders and
production levels in September. In addition, fewer contacts noted plans
to raise production in the near term. Energy exploration and extraction
firms cited investing more in capital goods, which is expected to help
equipment producers and suppliers. Auto manufacturers reported that the
impact from the disaster in Japan had waned and that production is back
to normal. Firms stated that they were increasing investment in
technologybased equipment as a means to increase efficiency.
Contacts reported that volumes of shipments were above last years
levels, and that chemical and agricultural goods shipments, in
particular, were strong. Rail contacts noted that shipments of energy
and food-related products were driving increases in activity.
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** Market News International Washington Bureau: 202-371-2121 **
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