WASHINGTON (MNI) – The following is the second part of the latest
Beige Book survey of economic conditions in the Federal Reserve’s
Eleventh District, published Wednesday:

Construction and Real Estate Single-family housing activity
remained strong. Both new and existing home sales activity increased
over the past six weeks. Contacts noted that despite a pickup in new
construction, low inventories of both existing and new homes have led to
moderate price increases overall. Apartment construction remained
robust, but contacts said that leasing activity slowed. Outlooks are
positive through year-end.

Contacts in the commercial real estate industry said that demand
for office and industrial space continued to increase since the last
report. Contacts said that some businesses were holding back on
expansions due to uncertainty, but overall outlooks remained positive.
Investment activity remains less aggressive than earlier in the year,
although some contacts noted that investment in apartment development
remains quite strong.

Financial Services Financial institutions reported mixed loan
demand. Contacts said used auto lending was weak, while first mortgages
and energy-related lending increased. Loan pricing continues to be very
competitive, partly due to loosening credit standards. Despite low
deposit rates, deposit levels at most institutions remain high. Contacts
expressed concern about new regulations for community banks.

Energy Respondents at energy-related service firms said activity
remained steady at high levels despite a decline in the rig count that
was mostly natural gas related. Although oil prices remain at healthy
enough levels to support current activity, recent price declines coupled
with high volatility are making some firms nervous about drilling in
higher cost fields. Contacts expect activity to be flat through
year-end, with improvement in 2013.

Agriculture The District remained largely in drought, although dry
conditions eased in some areas. The crop harvest generally progressed at
a good pace. Winter wheat crop conditions were much better than last
year, when the drought was more severe in the District. Grain prices
trended down over the reporting period but were still at relatively high
levels. Cotton prices remained weak and may lead to fewer cotton acres
being planted next year. Cattle prices were still higher than normal but
contacts noted that high feed costs were keeping producers from
expanding their operations and were creating negative margins for
feedlots.

(2 of 2)

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$]