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

Reports from contacts in the Eighth District have been mixed since
our previous survey. Manufacturing activity has continued to increase,
while reports of activity in the services sector have been mixed.
Residential real estate market activity has continued to decline, while
commercial real estate market conditions varied across the District.
Lending at a sample of small and mid-sized District banks declined
slightly during the three-month period from mid-June to mid-September.

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, railroad rolling stock, ceramic product, automobile parts,
sanitary paper product, and appliance manufacturing industries reported
plans to expand operations and hire new workers. In contrast, firms in
the ammunition, primary metal, and wood manufacturing industries
announced plans to lay off employees.

Reports of activity in the District’s services sector have been
mixed since our previous survey. Firms in business support services,
casinos, leisure, and health services industries announced plans to
expand operations and hire new workers. In contrast, contacts in social
services, media monitoring services, telecommunications, and education
services industries announced plans to decrease operations in the
District and lay off employees. General retailers noted that sales have
been flat to slightly down and they anticipate that consumers will
continue to cut back on their purchases through the end of the year.
Auto dealers noted that sales increased during the reporting period but
they anticipate that sales for the remainder of the year will be soft.

Real Estate and Construction

Home sales continued to decline throughout most of the Eighth
District. Compared with the same period in 2010, August 2011
year-to-date home sales were down 6 percent in Memphis, 9 percent in St.
Louis, 10 percent in Louisville, and 12 percent in Little Rock.
Residential construction also continued to decrease throughout the
District. August 2011 year-to-date single family housing permits
decreased in the majority of the District metro areas compared with the
same period in 2010. Permits decreased 12 percent in Memphis, 19 percent
in Louisville, and 24 percent in Little Rock and St. Louis.

Reports of commercial construction activity were mixed throughout
the District. Contacts in northeast Arkansas reported that Jonesboro and
Paragould are experiencing an increase in commercial construction
activity. In contrast, contacts in St. Louis reported that commercial
construction activity is weak and is expected to remain slow for the
remainder of the year. Reports of industrial construction activity also
varied across the District. Contacts in west Tennessee reported that
various medical-related establishments have either completed
construction projects or announced new ones. In contrast, contacts in
St. Louis and Louisville reported that speculative industrial
construction activity is expected to remain slow.

Banking and Finance

Total loans outstanding at a sample of small and mid-sized District
banks decreased 0.8 percent in the three-month period from mid-June to
mid-September. Real estate lending, which accounts for 73.7 percent of
total loans, decreased 1.5 percent. Commercial and industrial loans,
accounting for 15.7 percent of total loans, decreased 0.5 percent. Loans
to individuals, accounting for 4.9 percent of loans, increased 2.1
percent. All other loans increased 6.3 percent and accounted for 5.7
percent of total loans. Over this period, total deposits increased 0.1
percent.

Agriculture and Natural Resources

The rates of completion for the cotton, soybean, and rice harvests
in the District states were behind their 5-year average. In contrast,
the corn harvest was at least 5 percent ahead of schedule in the
majority of the Districts states. The fraction of corn, soybean and
sorghum crops rated in fair or better condition declined by at least one
percent in most states since the previous report. The fraction of
pastures in fair or better condition increased or remained unchanged in
most states, except Illinois and Missouri. The Districts monthly coal
production for August 2011 was 0.3 percent lower compared with August
2010; however, the Districts year-to-date coal production for August
2011 was 3.5 percent higher than the same period in 2010.

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

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