The Federal Reserve’s Beige Book economic roundup this week illustrated an economy improving and a pace of growth quickening. Reports from the 12 Fed Districts found, overall, a “modest to moderate” expansion since the Beige Book release just short of two months ago. Importantly, consumer spending is up, perhaps foreshadowing an uptick in all-important confidence.

However, two key districts – Boston and Chicago – showed much slower growth amid its industries that are more sensitive to ongoing problems with Congress and the Obama Administration simply not being able to work through issues like the budget/debt/”Sequestration.” San Francisco performed better than the two previously mentioned districts, but has some similar concerns of note.

Also threatening potential spring growth of the St. Louis and Kansas City regions is continued uncertainty within the agricultural sector. Both districts are heavily dependent on it, and optimism for a strong crop year, especially in a Kansas City district struggling with drought conditions, doesn’t seem to be especially high.

Still, the majority of district had much more positive news than negative on expansion in areas including sales (especially automotive), demand for services (notably technology and logistics-based), residential real estate, manufacturing (albeit modestly), labor market conditions and post-Hurricane Sandy reconstruction (New York and Philadelphia districts, primarily). To keep the overall good news rolling and growth pace accelerating though, the U.S. government is going to have to find ways to avoid the type of brinksmanship that has been all the rage on Capitol Hill over the last few years, NACM Economist Chris Kuehl, PhD hinted:

“In general, the Beige Book report holds that the economy is doing relatively well, but the stress in each report is that conditions would be far better were it not for the anchor of the budget crisis. The uncertainty factor is still a big concern nationwide.”

-Brian Shappell, CBA, NACM staff writer

The Federal Reserve’s periodical roundup of economic activity in its 12 regions sang a familiar song about conditions over the last six or so weeks: that there is modest to moderate growth, but little that can be considered exceptional, let alone exciting. Perhaps the only notable exception is the bounce-back, primarily in the Philadelphia and New York regions, following Hurricane/“Super Storm” Sandy.

The Beige Book said noticably improved growth was apparent in Sandy-affected as well as regions including Boston, Richmond and Atlanta; though some deterioration existed in St. Louis. Still, it appears better results were expect for the period that included the peak of 2012 holiday season shopping even though sales were “modestly higher” than the previous year. Sales categories were bolstered somewhat, yet again, by steady or stronger auto sales in 10 Fed districts.

In the ever-important manufacturing category, conditions were mixed. It was about an even split between districts growing in manufacturing and a combination of those contracting or remaining mostly unchanged. Boston (bolstered by industries including aerospace and chemicals) and Chicago (auto) appeared to be doing best among the expanding regions. Also, more than half of the regions are optimistic about growth prospects for the rest of 2013, with Philadelphia and Atlanta having a particular surge in confidence.

Long downtrodden residential real estate contacts reported to the Fed of expansion, albeit from low levels, in all regions thanks in no small part to historically low interest rates and home prices. Commercial real estate also was strong, though not as much as residential.

Few regions – New York, Atlanta, Chicago, Dallas – reported a noticeable increase in loan demand in recent weeks. Several, mostly northern districts, reported improvements in asset quality, said Beige Book. There has also, finally, been some loosening in long-high credit standards, according to contacts.

As was the case in much of 2012, agriculture reports to the Fed were mixed, largely on inconsistent and unhelpful weather patterns. Ongoing drought conditions hurt in regions such as Kansas City and Dallas. However, such conditions ceded a bit in parts of Richmond and Atlanta.

Meanwhile, Beige Book noted input prices appeared to hold steady, overall, in the waning days of 2012 into 2013. There were, however, some food and constructing-material costs that rose in a few districts.

-Brian Shappell, CBA, NACM staff writer
 

The latest Federal Reserve Beige Book, an economic conditions report released about eight times annually for the nation’s 12 Fed banking districts, finds a bit more of a mixed situation than the slow, yet steady growth reported for much of the year.

The Fed noted in the new Beige Book that a majority of districts remain in growth territory, but the tone seems less optimistic. Of particular concern appears to be the New York and Kansas City districts, both of which reported flat and/or softening sales. New York, notably, also had struggles to report in the real estate, commercial and residential (which showed a rare uptick again over the last six week period) as well as the all-important manufacturing sector. Also a bit off in manufacturing were the Boston and Philadelphia districts. Those reporting manufacturing improvement included Boston, Richmond, Atlanta, St. Louis, San Francisco and Kansas City. The rest essentially were middling. Whatever the district, vehicle sales continue to be supporting sales more than most product areas and, without its success, the numbers might look considerably bleaker.  

Another area more on the radar than usual is that of agriculture (noted in the previous blog entry and this week’s Thursday NACM eNews release). The drought conditions continue to impair the Minneapolis, Chicago, Dallas and Kansas City Districts -- all off from average levels -- though there has been some needed improvement in crop conditions from the last two periods. However, problems earlier this year are showing up in feed prices, which have affected businesses in half of the 12 Fed districts.

On the finance side, loan demand and credit standards held relatively stable. There were noted improvements in several districts in loan quality and delinquency rate declines.

-Brian Shappell, CBA, NACM staff writer

(Federal Reserve)  Reports from the12 Federal Reserve districts suggest economic activity continued to expand gradually in July and early August across most regions and sectors. Six Districts indicated the local economy continued to expand at a modest pace, and another three cited moderate growth. Among the latter, Chicago noted that the pace of growth had slowed from the prior period. The Philadelphia and Richmond districts reported slow growth in most sectors and declines in manufacturing, while Boston cited mixed reports from business contacts and some slowdown since the previous report.

Most districts indicated that retail activity, including auto sales, had increased since the last Beige Book report, although Cleveland, Chicago, St. Louis, Dallas, and San Francisco noted the retail improvements were small. Atlanta said that retail growth had slowed, while Philadelphia indicated growth in retail sales was somewhat faster than in the previous report. Boston, New York, Richmond, Atlanta, Minneapolis, and San Francisco recorded strong performance in tourism. Many districts reported some softening in manufacturing, either a slowdown in the rate of growth or a decline in the level of sales, output, or orders; among those with declining shipments and orders, Philadelphia noted that the rate of decline was tempering.

Bankers in New York, Philadelphia, Cleveland, Atlanta, Chicago, and Kansas City saw increases in demand for most loan types in recent months. By contrast, St. Louis, Dallas, and San Francisco indicated that loan demand was mixed, softening, or slightly weaker.

Real estate markets were generally said to be improving. Reports on commercial real estate markets were generally positive.

The Midwest drought has reduced actual and expected farm output, especially cotton, soybean, and/or corn crops in the Chicago, Kansas City, and St. Louis districts. Several districts noted concerns about rising agricultural commodity prices.

Hiring was said to be modest across the Districts, and wage pressures were characterized as contained.

-Source: Federal Reserve

Contacts in all 12 Federal Reserve Districts reported that the last six-week tracking period of the Beige Book economic roundup has brought continued growth with, stop us if you’ve heard this many times before, manufacturing leading the charge.

Manufacturing’s mid-winter increase was characterized as “steady” through the nation, with new orders, shipments and production up in most of the districts. Auto-related industries and those tied to capital spending, as previously noted in Business Credit and NACM eNews, continued to thrive.

Agriculture and real estate were more mixed bags, pending on the location – but, for the latter, anything above across-the-board stagnation for the reeling construction industry reads like a win.
Business credit quality and demand were stable or showed a slight uptick in districts including Cleveland, Richmond, San Francisco in Atlanta. There was particular middle-market strength in Dallas in that regard, and there was also a bump in large corporate lending in Chicago.

For overall growth, across all sectors, Philadelphia and Atlanta demonstrated the best six-week showing, according to Beige Book. The east-coast duo was followed by auto-friendly districts of Cleveland and Chicago as well as Kansas City, Dallas, and San Francisco.

The good news was well-timed for a long-battered Fed Chairman Ben Bernanke. The chairman was due on Capitol Hill Thursday to present the Semi-annual Monetary Policy report to the House Financial Services Committee, where he has faced sharp criticism before election-mode lawmakers in recent months.

Brian Shappell, NACM staff writer
 

From Federal Reserve:

"Contact reports from the 12 Federal Reserve Districts suggest that national economic activity expanded at a modest to moderate pace during the reporting period of late November through the end of December. Seven Districts characterized growth as modest; of the remaining five, New York and Chicago noted a pickup in the pace of growth, Dallas and San Francisco reported moderate growth, and Richmond indicated that activity flattened or improved slightly. Compared with prior summaries, the reports on balance suggest ongoing improvement in economic conditions in recent months, with most Districts highlighting more favorable conditions than identified in reports from the late spring through early fall.

Consumer spending picked up in most Districts, reflecting significant gains in holiday retail sales compared with last year's season, and activity in the travel and tourism sector expanded in most areas. Demand strengthened further for nonfinancial services, including professional and transportation services. Manufacturing activity generally continued to expand, although the pace of growth has slowed for selected subsectors such as technology products. Agricultural producers and extractors of natural resources reported generally robust conditions. Activity stayed sluggish in residential real estate markets, and conditions in commercial real estate markets remained somewhat soft overall but showed signs of ongoing improvement in several Districts. Reports from financial institutions generally indicated a slight uptick in loan demand by businesses, along with improvements in overall credit quality.

Upward price pressures and price increases remained quite limited for most categories of final goods and services, as the effects of prior increases in the costs of selected inputs have eased. Upward wage pressures were modest overall, although a few Districts noted substantial compensation increases for workers with specialized skills in selected sectors and regions."

Source: Federal Reserve

From the Federal Reserve:

"Overall economic activity increased at a slow to moderate pace since the previous report across all Federal Reserve Districts except St. Louis, which reported a decline in economic activity. District reports indicated that consumer spending rose modestly during the reporting period. Motor vehicle sales increased in a number of Districts, and tourism showed signs of strength. Business service activity was flat to higher since the previous report. Manufacturing activity expanded at a steady pace across most of the country. Overall bank lending increased slightly since the previous report, and home refinancing grew at a more rapid pace. Changes in credit standards and credit quality varied across Districts. Residential real estate activity generally remained sluggish, and commercial real estate activity remained lackluster across most of the nation. Single family home construction was weak and commercial construction was slow. Districts mostly reported favorable agricultural conditions. Activity in the energy and mining sectors increased since the previous report.

Hiring was generally subdued, although some firms with open positions reported difficulty finding qualified applicants. Wages and salaries remained stable across Districts. Overall price increases remained subdued, and some cost pressures were reported to have eased."

See Full Federal Reserve Beige Book analysis here.

The Federal Reserve’s periodical roundup of economic conditions in each of its 12 districts throughout the nation finds that, in most areas, growth is continuing but at a notably weaker pace than the same time last year. Additionally, the word of the day appears to be “uncertainty.”

The Fed’s Beige Book roundup finds growth best characterized as “modest or slight,” with a decidedly slower pace than in recent months or early fall 2010. Though not every industry sector or district is reporting bad news, conditions are not nearly as positive as had been expected because of long-time “expert” predictions that, by this point, the economic recovery would be in or near full-swing.

Consumer spending, overall, was up for the recent six-week period ending in early/mid-October. However, much of that was driven by auto sales and tourism increases. Businesses also increased spending in most districts, with areas of construction and mining equipment as well as auto-related products setting the pace. Yet, in a continuation of the good news-bad news theme, Fed contacts noted particular “restraint in hiring and capital spending plans:”

Manufacturing, long the proverbial bread-winner among all industries during the slow recovery period, showed improvement from the declines reported in the last two Beige Book periods. Again, the auto producers performed best.

On the credit front, a lengthy period of small improvements in credit conditions are ceding in some areas for anyone not in the very top tier of borrowing. That said, demand remains stunted anyway, especially in districts like Chicago and Kansas City. Also important to those two districts were declines in the agriculture sector. While yields have not fallen to shortage level, almost unilaterally, yields are noticeably down for this time one year ago. Part of this is fallout from unpredictable and/or uncooperative weather earlier in the year, especially in the central-south part of the country.

Real estate, unsurprisingly, was changed little as activity remains at low, weak levels.

Brian Shappell, NACM staff writer

A roundup of economic activity completed about every six weeks by the Federal Reserve found that about half of its 12 districts were experiencing slow or stagnant economic growth. There were even some reports of slowing growth during the period in some places, including the Philadelphia district, during the period that began in mid-July and ended in late August.

The Federal Reserve's Beige Book report contained a bit of the same old story: commercial and residential real estate were considered weak, an employment growth rebound has yet to come to fruition and business loan demand is far from robust. What is of note is the continued slide of the manufacturing sector, which had carried economic growth during much of the last two years. Fed contacts illustrate that conditions remain mixed, but the pace of activity has slowed in many districts, including several key ones. Notably, the pace has dropped off in the key New York, Philadelphia and Dallas districts. Districts such as Boston and Dallas also noted a decline in demand from European-based customers. However, at least four districts (Minneapolis, Kansas City, San Francisco, St. Louis) reported increases, albeit mild ones.

Additionally, contacts told the Fed that an uptick in economic uncertainty and the rollercoaster-ride of the stock market has caused them to downgrade their near-term outlooks. In a spot of good news, it appears credit quality has improved, and availability has not worsened, the Fed noted.

Meanwhile, the agriculture sector, like most others, appeared to be a mixed bag as well. Hot and dry weather has been causing problems for producers in the Chicago, St. Louis, Kansas City and, especially, Dallas districts. Still, those who’ve weathered overly dry or, on the opposite end, wet conditions from Hurricane Irene, have high values for their products.

Brian Shappell, NACM staff writer

The Federal Reserve’s latest of roundup of economic conditions in the nation’s 12 regions sings a familiar tune to reports from the last three or more months: that growth is still occurring in the U.S. economy, but at a noticeably slower pace.

Slow and modest growth is the name of the game, said the latest edition of the Federal Reserve's Beige Book, unveiled Wednesday. Part of the reasoning for the lasted moderation of the growth pace, especially in the middle of the country, was concern over political disruptions in the run-up of the debt ceiling debate and shutdowns of some governments entirely, particularly Minnesota. Also in play in many of the central region is wrench that unpredictable weather has thrown into matters in the agricultural sector.  Those in the agriculture industry who did see their crops survive did enjoy high prices for their commodities. However, such higher costs because of weather-related supply reductions and the aftermath of the previous six-week period’s gas price spike, mean businesses around the nation had to contend with higher costs of doing business. One light at the end of the tunnel, however, is the belief/hope among Fed contacts that falling gas/oil prices during the latest six-week tracking period will continue in the coming months, providing a boost for growth.

Manufacturing remained steady in most districts, though some slowing of growth levels was reported. An uptick in auto production returned as Japanese supply-chain disruptions finally started easing. Granted, auto producers still are playing from behind, so to speak, and the back-up could lead to slower automotive and auto-parts sales for a bit longer.

Credit conditions have changed little, through there were some reports of the cost of capital dropping amid inter-bank competition for well-regarded business borrowers (Richmond, Atlanta, Chicago, Dallas, San Francisco). Commercial real estate was about split down the middle between the have’s reporting improvement and the have not’s continuing to report weak conditions.

To view the full 12-region Fed Beige Book report, click here.

Brian Shappell, NACM staff writer

A regional study tracking manufacturing activity indicators in the Mid-Atlantic that is often used to predict future conditions for the national picture took a surprising and sharp tumble in June, adding to recent concerns for the previously strong sector.

The Philadelphia Federal Reserve’s Business Outlook Survey fell to its lowest reading in 31 months (down to a level of -7.7 from 3.9 just one month ago) on concerns over labor markets as well as costs of transportation in the form of surcharges, commodity price-hikes and energy bills. Only 14% of those polls reported employment increases or a need for them in the near future.

The findings are not surprising following the Federal Reserve’s national picture painted by Beige Book earlier this month. The study found in most of its 12 districts that the economy was still growing, but the pace of what was already small growth has fallen off dramatically, partly on the inability of the manufacturing sector to carry other categories as it has been doing.

NACM’s breakdown of all 12 Federal Reserve districts in the latest Beige Book is available by clicking here.

Brian Shappell, NACM Staff Writer

(Updated 6/10/11 -- hyperlinks to district breakdowns at bottom) Though the Federal Reserve’s newly released Beige Book economic summary found an economy still slowly growing on aggregate over the last six weeks, the pace continues to decelerate in key bank regions including New York, Philadelphia and Chicago.

Even the once mighty manufacturing sector, responsible for much of the growth measured in the last year, is starting to see its expansion rate slip in several areas and concern creep in, according to Beige Book. Part of the problem is the aftermath the Japan earthquake/tsunami/nuclear crisis is having on the supply line of automotive parts. It’s an especially notable problem in districts including Cleveland and Richmond, among others.

Conditions deteriorated for most districts in the areas of agriculture and materials prices, as well. However, overall, commercial real estate and banking seem to be about on part with recent Beige Book reports with some scattered signs of tepid improvement on the horizon.
One of few districts reporting a noticeable ramp-up in the pace of overall growth, perhaps partly because of its ties to the oil industry, is the Dallas district that encompasses all of Texas.

For analysis from each of the 12 individual Federal Reserve districts, click here.

Brian Shappell, NACM staff writer

Review of the most recent economic growth conditions in the 12 Federal Reserve districts and the outlooks for them appear to both continue to grow, slowly, but not without some significant shades of gray.

The Fed’s latest Beige Book regional conditions roundup found only moderate improvement to the economy; but it was an improvement characterized as “widespread across sectors.” Perhaps the most enthused about overall recent growth and near-term prospects were contacts in the Kansas City district.

The Beige Book noted manufacturing continued to lead the way for the rest of the economy with the most steady improvement and, long-absent evidence of increased hiring. Ten of the 12 district (excluding mixed results in the Boston and Richmond districts) demonstrated “robust” manufacturing sector activity, with New York performing exceptionally well. There was even talk of improvements in the long-battered commercial real estate sector, with more than half of the districts noting reasons for an optimistic view.

Granted, there were plenty of worrisome signs in the latest Beige Book roundup, which tracked a period from mid-to-late February through early April. Chief concerns among Fed contacts were the possibility of significant sales and production disruptions stemming from the Japan disasters, elevated commodity prices and the impact of a still dragging resident real estate sector on household wealth/consumer confidence.

(Note: for an extended version of this story, featuring a region-by-region breakdown of the Fed’s 12 Beige Book districts, click here.

Brian Shappell, NACM staff writer

As Federal Reserve Chairman Ben Bernanke carried a message of cautious optimism to Congress on Wednesday on strong manufacturing gains, exporting activity and rising business confidence; the Beige Book economic conditions roundup of the 12 Fed districts told a similar tale.

The March-released Fed Beige Book, summarizing district-by-district economic conditions eight times annually, noted retail sales and manufacturing increases in all districts, except for St. Louis, even as crippling snowstorms blanketed much of the nation during portions of February. The Cleveland, Atlanta, Minneapolis and Kansas City district noted especially "sold expansion" for manufacturing. However, Chicago noted that its rise was more moderate than in past periods.

Meanwhile, about half the districts reported the long-wounded commercial real estate sector "showing signs of gaining traction." Commercial loan demand also was mixed, though financial institutions reported widespread improvements in all other loan segments. Credit standards, however, continued to be tight even as credit quality has improved, the Beige Book indicated.

Agriculture, in the areas of crop yields and production, may have suffered the worst because of the cold and snowy weather conditions. There were, however, some exceptions in areas like in the strong-performing St. Louis district. Additionally, high prices of Ag commodities such as cotton, corn, soybean and wheat, among others, continued to hold firm or improve.

First District - Boston
Manufacturing contacts appeared to start 2011 in celebratory fashion as sales and outlooks demonstrate continued strength. One auto components manufacturer called 2010 his best year to date. Semi-conductor and pharmaceutical industry contacts also did particularly well, the Fed noted. Commercial real estate fundamentals are stable in many areas (Hartford, Boston) or improving. Retail sales remained positive though inventories remain tight.

Second District - New York
Sectors like those in automotive sales reported better ordering and inventory activity. Upstate New Yorkers saw 10% to 20% increases compared to January 2010, for example. Commercial real estate continued to struggle with high office vacancy levels, but stability is creeping in. Even the much-maligned condominium market appears to have steadied, the Fed said. Business lending standards tightened even as commercial delinquency rates continued to show improvement.

Third District - Philadelphia
Strong shipping and new order increases were realized in the district between January and February. Eleven of the largest manufacturing sub-sectors all had positive things to say about demand, the Fed noted. Contacts pontificated that exporting was behind the high demand and will continue to drive it in 2011. Business loan volume reportedly increased slightly though companies largely "are not looking to borrow." Commercial real estate activity hasn't much changed. One contact predicted it will take some office markets "several years to recover the loss of occupancy caused by the recession."

Fourth District - Cleveland
New orders and production were generally up though there were a few expected seasonal declines. Manufacturers expect moderate growth throughout 2011, with particular strength in the energy-related, auto and heavy equipment industries. The district is among those still reporting weaker commercial real estate activity. Commercial lending requests held stable, edging toward slight growth since late 2010. Credit quality of businesses was seen as "stable to improving," said Fed contacts.

Fifth District - Richmond
Manufacturing continues to perform well in the region, though there is concern with raw materials prices because of extreme demand in nations like China and India. Most business loans are coming from larger area businesses in the process or mergers/acquisitions. It appears business confidence is improving, according to Fed contacts' reports; so expect an uptick in lending in the near-term. Commercial real estate saw "broad-based, but moderate improvement. Though vacancy rates remain high, pricing and leasing rates have stabilized for the most part. Agriculture contacts rued cold temperatures that limited crop development and profits alike.

Sixth District - Atlanta
Growth is the name of the game in manufacturing, but more so in new orders than production levels. Shipping experienced particularly high demand though that area faced weather problems in January and could face fuel cost issues in the coming Fed tracking period. Credit conditions are a mixed bag in the district: improving for those outside of commercial real estate, and worsening for those in it. Cold temperatures and drought conditions have hit Ag businesses in the district, particularly Florida, hard. The spot of optimism comes in global demand elevating prices of commodities such as cotton and soybeans.

Seventh District - Chicago
While manufacturing continued to expand, Fed contacts quipped that they were surprised that the gains were more moderate than in previous months. The worry might be unfounded though, as new orders and backlogs continued to rise at strong levels. Steel, automotive and heavy equipment continue to lead the pack in the sector. Rental vacancy rates stabilized, though pressure on pricing remained. Businesses, especially in agriculture and energy, again appeared more free to spend and invest here than in other districts. Credit availability and use of lines showed improvement.

Eighth District - St. Louis
Dubiously, the district was the only one to show a decrease in manufacturing activity, with many plants planning to close up shop or reduce operations (employment) soon. This includes the wood products, auto, aircraft and primary metal industries. Commercial property demand remained anemic. Like District Six, credit availability depended on the industry, with commercial real estate drawing the short straw, so to speak. Agriculture saw total production on the rise, though there were certainly yield winners (cotton) and losers (corn, soybeans).

Ninth District - Minneapolis
Manufacturing increased, notably in the less populated markets. One of the areas with reports of production weakness was Minneapolis. Still, certain industries there (metal fabricators, semiconductor chip producers) continue to expect significant production gains in 2011. Commercial construction permits rose noticeably, giving hope to those in the industry despite flat vacancy rates. Agriculture conditions improved on the strength of commodities prices. Recent Department of Agriculture rulings on using certain genetically modified products proved helpful to some.

Tenth District - Kansas City
Though slowing was noted in the high-tech and transportation sectors, overall manufacturing grew. Concern did grow over input, raw materials costs though. Commercial real estate has stabilized; but credit conditions for the sector still were considered "constrained" and worsening. Credit conditions were stable for other industries, said Fed contacts. Weather and supply issues hurt crops badly, but lifted prices considerably for those whose yields survived the double-whammy.

Eleventh District - Dallas
Manufacturing's growth in the district depended on the industry: growth in orders for high-tech, petrochemical, food and aviations products but less so for those in the construction game. Agriculture had a virtual horror show on its hands as "exceptionally dry conditions along with extended periods of below-freezing temperatures adversely affected the vegetable crop in Texas [and] greatly stressed livestock..." Commercial and industrial loan activity was mixed, though credit quality improved in many cases.

Twelfth District - San Francisco
The manufacturing rebound continued with strength in areas including technology, semiconductor, commercial aircraft and petroleum refinery production. Commercial real estate was generally weak, but vacancy levels have stopped rising for now. This is tied to a recent increase in commercial rental space demand. Unlike most districts, District 12 did not experience much extreme weather, so most crop production was solid, and "robust" demand continued.

Brian Shappell, NACM staff writer, can be reached at brians@nacm.org