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

Eighth District – St. Louis

Summary

Economic activity in the Eighth District has expanded at a moderate
pace since our previous survey. Recent reports of planned activity from
manufacturing and services contacts have been positive. Residential real
estate market conditions have continued to improve moderately, while
commercial and industrial real estate market conditions have continued
to be mixed. Overall lending activity at a sample of small and mid-sized
District banks increased slightly from mid-June to early September.
Agricultural conditions in the District have generally improved since
our previous report.

Manufacturing and Other Business Activity

Reports of plans for manufacturing activity have been positive
since our previous report. Several manufacturers reported plans to hire
new employees, open new plants, or expand operations, while fewer
manufacturers reported plans to lay off workers or close plants. Firms
in poultry processing, furniture, commercial printing, boat, conveyor
equipment, HVAC equipment, and industrial gas manufacturing plan to hire
new workers, open new facilities, or expand current operations. In
contrast, firms that manufacture iron and steel products, mining
equipment, and food products plan to lay off workers or close existing
facilities.

Reports of planned activity in the District’s service sector have
been positive since our previous report. Firms in business support,
distribution, healthcare technology, and personal care reported plans to
hire new workers or expand operations. A transportation services firm
also announced large-scale hiring plans for seasonal employees recently.
In contrast, a financial services firm announced plans to relocate
workers to a new location outside the District. Lastly, auto dealers in
certain parts of the District reported weak hybrid vehicle sales.

Real Estate and Construction

Home sales increased throughout most of the Eighth District on a
year-over-year basis. Compared with the same period in 2011, August 2012
year-to-date home sales were up 15 percent in Louisville, 6 percent in
Little Rock, 11 percent in Memphis, and 17 percent in St. Louis.
Residential construction increased in the majority of the District.
August 2012 year-to-date single-family housing permits increased in the
majority of the District metro areas compared with the same period in
2011. Permits increased 41 percent in Louisville, 27 percent in Little
Rock, 39 percent in Memphis, and 17 percent in St. Louis.

Commercial and industrial real estate conditions were mixed
throughout most of the District. A contact reported that apartment
occupancy rates in northwest Arkansas remained high in Rogers,
Bentonville, Fayetteville, and Springdale and strong multi-family real
estate activity is expected in the second half of 2012. A contact in
Louisville reported that office leasing activity declined in the central
business district, while it remained strong in the suburban area. A
contact in Memphis reported that industrial real estate activity has
improved. Commercial and industrial construction activity improved
throughout most of the District. A contact in Little Rock reported
several new office building construction projects in the Fayetteville
metropolitan area. A contact in Louisville reported that with demand for
multi-family units remaining strong, plans for apartment construction
continued to increase. A contact reported new mixed-use development
plans in the Memphis metropolitan area.

Banking and Finance

Total loans outstanding at a sample of small and mid-sized District
banks increased 1.4 percent from mid-June to early September. Real
estate lending, which accounts for 73.3 percent of total loans,
increased 0.2 percent. Commercial and industrial loans, accounting for
15.8 percent of total loans, increased 1 percent. Loans to individuals,
accounting for 4.7 percent of total loans, increased 2.5 percent. All
other loans, accounting for 6.2 percent of total loans, increased 16.4
percent. During this period, total deposits at these banks increased 0.2
percent.

Agriculture and Natural Resources

The condition of pastureland in the Eighth District has improved
significantly from early August to late September. Excluding
Mississippi, where 97 percent of pastureland was already rated as fair
or better, the fraction of pastureland in fair or better condition has
increased by at least 20 percentage points in all District states. The
share of crops in fair or better condition has similarly increased
across the District, although the condition of the corn crop remains
relatively unchanged. Harvest completion rates have outpaced their
5-year averages for almost all crops in all District states. In
particular, harvest completion rates for corn and rice are on average 30
percentage points ahead of their 5-year averages. Total year-to-date
coal production in the states comprising the District, with the
exception of eastern Kentucky, was 9 percent higher through the end of
August than it was in the first eight months of 2011. August production,
however, was 6.8 percent lower than in August 2011.

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

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