Turning the pages of the Beige Book
On July 27, the latest Beige Book was released. What follows is the Atlanta Fed's summary of economic conditions in the Sixth District, broken out by sector.
- Overall conditions: Sixth District business contacts described economic activity as little changed in June through mid-July.
- Consumer spending and tourism: Retail sales grew slowly, although higher-end goods sales saw more traction, and tourism activity was very strong.
- Real estate and construction: Existing home sales remained soft outside of Florida, while new home sales and construction were very weak throughout the region. Contacts continue to note downward pressure on prices of both existing and new homes. Contractors reported that the pace of commercial development was basically unchanged, although activity in health care and apartment construction had improved.
- Manufacturing: Manufacturing contacts indicated that production and new orders increased, but at a slower pace than experienced earlier in the year.
- Banking and finance: Credit availability for entrepreneurs and real estate developers remained tight, although loan availability for some commercial projects increased.
- Employment and prices: Most business contacts indicated that their hiring plans remain modest. Firms' expectations for unit cost increases have softened, mainly because nonlabor input costs have moderated.
- Natural resources and agriculture: Some energy contacts have noticed a considerable uptick in early stage fabrication for oil and gas extraction capital goods. While most of the District continued to experience drought conditions, recent rains have provided relief to some of the District's stressed agricultural lands.
For the most part, our region seems to be in line with recent national data pertaining to these sectors. However, last Friday, state payroll and unemployment data were released for June. The District shed 19,100 jobs, and the unemployment rate remained unchanged at 10 percent. At first glance, the District data appear to contradict what was reported in the employment section of the Sixth District's Beige Book. Our report said:
"Most business contacts indicated that their hiring plans remain modest. Uncertainty regarding future demand and the regulatory environment were the most commonly cited reasons for the muted hiring outlook. Of those that reported plans to increase employment, many pointed to having reached maximum productivity with existing staff. Staffing agency contacts continued to experience high demand for temporary or contract workers. According to reports, demand for qualified, higher skilled candidates is robust, especially in the technology sector."
Nowhere does this paragraph mention firms reducing employment. So why the decrease in District payroll? Let's begin by looking at the individual state numbers:
As you can see, Tennessee accounted for most of the job losses, losing 16,900 jobs. What isn't obvious is that almost 91 percent of the losses came from the government sector. When the Atlanta Fed collects anecdotal information for the Beige Book, it typically comes from our contacts, who are mostly from the private sector, explaining why the Sixth District's Beige Book summary did not mention job losses.
By Shalini Patel, a senior analyst in the Atlanta Fed’s research department
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