Fed Beige Book Regional Breakdown: Trends Still Positive

Though some districts were negatively affected by the much-discussed cold and snowy/icy winter weather, most of the country continued to expand at a modest to moderate place in January and early February, according to the Federal Reserve’s Beige Book economic roundup.

First District (Boston): Most manufacturers reported heightened activity in the district. Those tied to construction felt a slightly dip, mainly because weather stunted activity therein. The commercial and residential real estate sectors were somewhat mixed, though leaning positive, on greater economic uncertainty.

Second District (New York): Sales were down noticeably as this district was among the most impacted by snow and ice storms. Manufacturing and service sector firms report positive plans to increase staffing levels, on aggregate. Commercial lending activity remained largely unchanged, save for a slight decline in delinquency rates.

Third District (Philadelphia): Like New York, the district’s struggles were tied more to horrendous weather than mid- or long-term downward trends. But it did put stress on manufacturing, real estate and retail during the opening period of 2014.

Fourth District (Cleveland): Weather was more an “inconvenience” than a growth-slowing problem. The auto industry and energy sector (shale gas, primarily) continued to show strength. Manufacturing production was on-pace with or better than a year ago in most quarters. Business delinquency rates were stable or trending lower.

Fifth District (Richmond): Retail and manufacturing orders showed an uptick that is expected to accelerate with more favorable weather in the spring. Eastern port activity was mixed, especially where agricultural products were concerned. Agriculture contacts noted declining prices for crops and higher input prices. Non-residential construction was strong in Washington, DC, but not elsewhere.

Sixth District (Atlanta): Expansion continues, albeit slowly, mostly on the back of tourism from internationals. Residential and commercial builders showed increased optimism amid recent improvements. Manufacturing and port contacts expect acceleration in activity levels over the next three-to-six months. Agriculture struggled amid dry soil conditions.

Seventh District (Chicago): This was one of only four districts that did not show growth. Builders, manufacturers, farmers and retailers were all hit by brutal winter conditions, even by upper-Midwestern standards. Credit conditions changed little. Plans for business capital expenditures and other expansion in key sectors trended upwards.

Eighth District (St. Louis): Manufacturing is outperforming service sector counterparts significantly. Manufacturers spent more money on equipment and workers, with auto and plastic producers leading the way. Residential and commercial real estate showed strong gains. Commercial loan demand increased, while delinquencies fell again. Coal production was among the industries that declined significantly.

Ninth District (Minneapolis): Most industries, with exceptions of residential real estate and agriculture, showed moderate growth. New hotel construction is proving to be a boon for suppliers and employment in that sector, though others in retail had setbacks. Service sector contacts reported reasons for optimism. The energy sector sputtered slightly, which is expected in the upper Midwest at this time of year. Farming conditions also unsurprisingly continued to soften.

Tenth District (Kansas City): Growth was stable and expected to show an uptick as early as the next period. Manufacturers, especially of durable goods, saw a fast rise in new orders, production and shipment. Real estate activity decreased, by only slightly. Business credit lending standards showed little change. Agricultural conditions deteriorate throughout the period. Natural gas producers enjoyed strength, but a temporary price drop is on the horizon in the short term.

Eleventh District (Dallas): Manufacturing grew on aggregate with particular bright spots in food and energy production. Though retail was down for the period, which is not shocking after the holiday shopping season, but the outlook is positive. Drought conditions made it a tough go for agriculture. Commercial construction activity was strong.

Twelfth District (San Francisco): Moderate expansion was noted. Commercial loan demand trended upward. Manufacturing was a bit mixed, though semiconductor sales showed record levels through late 2013 with expectations for more growth. Agricultural activity expanded on balance. Demand for business and consumer services rose.

- Brian Shappell, CBA, CICP, NACM staff writer

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