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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


SouthPoint

06/05/2014


Leafing through Developments in the New Beige Book

Yesterday, the Fed´s Board of Governors published the Beige Book. The report, published in advance of the upcoming Federal Open Market Committee meeting, provides a summary of recent economic conditions gathered by all of the Federal Reserve Banks.

The first sentence of each section often gives a succinct overview of economic conditions in each specific region. Below is a compilation of each section´s lead sentence:

National: All twelve Federal Reserve Districts report that economic activity expanded during the current reporting period.
Boston: Business activity generally continues to increase on a year-over-year basis in the First District, but performance varies across sectors.
New York: Economic activity in the Second District has continued to grow at a moderate pace since the last report.
Philadelphia: Aggregate business activity in the Third District grew at a modest pace during this current Beige Book period.
Cleveland: Business activity in the Fourth District expanded at a modest pace during the past six weeks.
Richmond: Fifth District economic activity expanded moderately in recent weeks, and contacts reported an optimistic outlook.
Atlanta: Sixth District business contacts described economic conditions as improving modestly in April and May.
Chicago: Growth in economic activity in the Seventh District was moderate in April and May.
St. Louis: The economy of the Eighth District has grown modestly since our previous report.
Minneapolis: The Ninth District economy grew at a moderate pace since the last report.
Kansas City: The Tenth District economy expanded modestly in late April and early May with solid expectations for growth during the coming months.
Dallas: The Eleventh District economy grew at a moderate pace over the past six weeks.
San Francisco: Economic activity in the Twelfth District continued to improve moderately during the reporting period of early April through mid-May.

Overall, it´s clear that economic activity continued to pick up at a moderate pace in every region. Here are some highlights from the Atlanta Fed´s section:

Employment and prices
District payroll growth improved modestly since the last report. Staffing agencies noted a small increase in transitioning workers from temporary to permanent positions. Firms continued to show a preference towards using capital investment to enhance efficiency over hiring.

Consumer spending and tourism
District retail reports were mixed in April and May. Merchants with multiple sites stated that sales were better in locations with more affluent customers. Retailers reporting lackluster growth attributed it to a number of factors, including people diverting spending to obtain mandatory health insurance and a reduction in food stamp benefits. Contacts from the District´s tourism and hospitality sector expressed an overall exuberance regarding activity. The near-term outlook among contacts remains positive.

Manufacturing and transportation
District contacts reported that manufacturing activity continued to expand. Growth in new orders, production, and employment suggested substantial strengthening in the District´s manufacturing sector. Transportation contacts continued to cite expanding activity in April and May. District ports reported significant increases in exports of energy-related products; record unit volumes of cars, trucks, and tractors; and double-digit growth in containerized cargo.

Real estate and construction
More District brokers reported growth this period than the previous report expressed. Roughly two-thirds of broker reports indicated that home sales had increased from the year-earlier level. The majority of contacts continued to report that home prices remained ahead of the year-earlier level. Reports on current conditions from District builders were also more positive than the previous report. Most contacts reported that recent activity either met or exceeded their plan for the period.

Banking and finance
On balance, loan demand across the District increased, evidenced by a combination of new loan growth and increased lines of credit. Community banks also noted loan growth. However, new loans were being poached from larger banks.

Natural resources and agriculture
Energy activity in the District continued to expand as new discoveries, production, and oil field development increased across the Gulf Coast. Energy firms expect continued strength in the sector during the summer months.

The Board will publish the next Beige Book on July 16.


Photo of Sadat Karim By Sadat Karim, strategic information research analyst in the public affairs department of the Atlanta Fed

June 5, 2014 in Beige Book, Economic conditions, Economic Growth and Development | Permalink

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04/24/2014


Reaching the Public with Confidence

Last week's Beige Book noted that "economic activity increased in most regions of the country since the previous report." Here in the Sixth Federal Reserve District, we wrote that:

On balance, the Sixth District economy expanded at a modest pace from mid-February through March. Reports across sectors were optimistic and most business contacts expect near-term activity to grow at a moderate pace.

How did the Atlanta Fed come to this conclusion? It is a combination of several inputs, including a careful analysis of what our business contacts reported to us in a series of one-on-one meetings held throughout the region. But we also factor in what we hear from broader audiences, such as public speeches, presentations to professional or community groups, and industry- or geographic-specific meetings throughout the region.

Atlanta Fed economists and regional executives connect with their communities on a frequent basis. Such an approach allows us to reach a broad audience, and although we do not have the opportunity to perform deep dives like we do in our one-on-one meetings, we do get a good sense from the audience just how the local economy is performing.

For example, Adrienne Slack, our regional executive in New Orleans, delivered two talks on the Gulf Coast, one to a local group of businesses and one to an audience made up of businesses from throughout the country. What she heard confirmed our analysis that the economy in this region was performing somewhat better than the nation as a whole. She reported that:

The tenor of the Gulf Coast audience was optimistic and inquisitive about our thoughts regarding our forecast and the staying power of the recovery. The national audience was also keenly interested in our outlook; however, their own perspective was less optimistic. They too were seeing encouraging trends but not the growth and investment currently at play along the Coast.

Chris Oakley, our regional executive working from our Jacksonville Branch, delivered a talk in Tampa where he noted some concern regarding the level of confidence in our economic forecast. Chris was asked, "What makes you more confident that projections for growth in 2014 will come to fruition as compared to the last several years?" Chris responded that we were more confident that the economy would improve because of several factors, including:

  • Consumers have adjusted to the reinstatement of the 2 percent social security payroll tax;
  • There are no looming fiscal deadlines in the short term (debt ceiling, fiscal cliff, etc.); and
  • Economic weakness among some of our foreign trading partners appears to have abated.

"This environment is allowing for greater visibility and confidence, which translates to more investment and spending," Oakley said, echoing comments made by Atlanta Fed President Dennis Lockhart in a March 6 speech at Georgetown University:

Let me expand on my claim that the economy's fundamentals are stronger. I think basic conditions in several key sectors of the economy are much improved compared with earlier in the recovery period. I would cite banking, housing, energy, and manufacturing as examples.

Household balance sheets are much healthier now thanks to reduced debt, higher saving, and stronger asset prices, including higher home values.

Business and financial-system leverage has been significantly reduced from levels precrisis that were demonstrated to be unsustainable. Business profitability is good, and firm balance sheets are generally liquid.

Likewise, fiscal imbalances, while not solved for the long term, are somewhat less a near-term concern. Finally, employment markets are unquestionably in a better state compared to even a year ago.

President Lockhart continued:

At the same time, certain headwinds that have persistently buffeted the economy and restrained growth appear to have lessened. The fiscal drag associated with federal government budget austerity measures has eased. The risk of another financial meltdown emanating from Europe seems to have receded. Concerns about European sovereign debt and the exposure of the European banking system were an important source of uncertainty that weighed heavily on business confidence in the years 2011 and 2012, for instance.

Photo of Mike ChrisztBy Mike Chriszt, vice president in the public affairs department of the Atlanta Fed


April 24, 2014 in Beige Book, Economic conditions, Economy | Permalink

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03/06/2014


Beige Book: Did Weather Cool the Nation's Economic Growth?

Eight times a year, the 12 Reserve Banks gather anecdotal information on current economic conditions in their districts through reports from Bank and branch directors as well as interviews with key business contacts, economists, market experts, and other sources. These findings are reported in the Beige Book. Then, one of the Reserve Banks is randomly selected to write the national summary, a digest of all 12 Banks' reports. This time, my Atlanta Fed colleagues and I wrote the most recent national summary.

Similar to recent incoming economic data citing possible weather-related effects on consumer spending, manufacturing, and transportation (to mention a few), the national summary of the Beige Book cites the weather as also having an impact on activity in several sectors. Here are some Beige Book excerpts that mention weather-related economic effects (emphasis mine):

Consumer spending and tourism:

Retail sales growth weakened since the previous report for most Districts, as severe winter weather limited activity. Weather was also cited as a contributing factor to softer auto sales in many Districts, with the exception of Cleveland, which saw strong gains.

Recent winter weather conditions benefited many ski resorts in Kansas City, Richmond, and Minneapolis. Atlanta and Boston also indicated that hotels fared well from the >weather, but that restaurants, museums, and other attractions were negatively impacted. Airline contacts from Dallas indicated solid to slightly stronger demand, with some temporary disruptions due to severe winter weather across the nation.

Nonfinancial services and transportation:

Both New York and Philadelphia reported that severe winter weather reduced demand for services in their region.

Severe weather reportedly disrupted supply chains and delayed shipments in several Districts. In Dallas, railroad cargo volumes fell slightly below year earlier levels, with winter weather conditions across the country largely to blame. Manufacturing sales and production in several Districts were negatively impacted by severe winter weather; however, modest improvements were noted in Boston, Atlanta, Minneapolis, and Dallas.

Real estate and construction:

Residential real estate markets continued to improve in several areas, albeit modestly. Most of the Districts indicating otherwise attributed the slowing pace of improvement to unusually severe winter weather conditions.

Philadelphia noted that there was very little activity to report in construction or leasing due to severe winter weather.

Agriculture and natural resources:

Severe winter weather affected several Districts with some crop damage being reported by Richmond and Atlanta, while Chicago noted disruptions in the flow of agricultural products. Both Kansas City and Dallas cited dry conditions adversely affecting wheat crops, while San Francisco reported concerns about water shortages and water costs.

District reports showed continued strength in energy production and demand for oil and gas; much of the increased demand was driven by unusually cold winter weather. In contrast, Minneapolis indicated that oil and gas exploration decreased slightly from recent months, primarily due to the extremely cold weather. Inventory drawdowns and supply shortages of natural gas and propane were reported in Atlanta, Chicago, and Dallas due to increased withdrawals that were exacerbated by the severe weather. Nearly all Districts attributed energy price surges to increased demand during the unusually cold weather; yet, Boston reported that natural gas prices were also driven up by pressure on pipeline capacity in New England.

Employment and prices:

Since the previous report, the pace of hiring had reportedly softened in Boston, Richmond, and Chicago, with those Districts attributing at least part of the recent slowdown to unusually bad winter weather.

Chicago, Minneapolis, and Dallas noted that unseasonably cold weather had pushed up costs for some energy products.

Although it seems that the weather has had a negative effect on economic growth so far this year, we won't know the full impact until a little more time has passed and Mother Nature decides to bring on the sunshine.

Here are some notable highlights from the Atlanta Fed's portion of the Beige Book:

Employment: Since the last report, job growth remained muted across the District. Contacts in construction, manufacturing, energy, hospitality, and real estate noted modest growth in employment.

Prices: Most contacts reported modest and relatively stable labor and material cost pressures. Construction industry contacts remained a notable exception, indicating strong upward pressure on labor costs and some material prices.

Consumer spending and tourism: Merchants reported a slow start to the year with sales growth declining. Many contacts noted that the drop in sales growth was partially attributed to the unusual winter weather experienced in parts of the region. Hospitality contacts reported an increase in business and convention bookings.

Real estate and construction: Most brokers said sales were slightly up compared with a year earlier, and more contacts noted that sales activity was in line with their plan for the period. By most accounts, inventory levels had fallen on a year-over-year basis. The majority of contacts reported that home prices remained ahead of the year-earlier level but that price gains have slowed on a month-over-month basis.

The majority of builders reported that construction activity and new home sales were ahead of the year-earlier level, although most reports indicated that unsold inventory levels had remained unchanged from a year ago. The majority of contacts also reported modest home price appreciation.

District brokers noted that demand for commercial real estate continued to improve. Construction activity continued to increase at a modest pace from last year. Most contacts reported that their backlog was ahead of year-earlier levels.

Manufacturing: Manufacturing contacts in the region cited expanding activity from January through mid-February, but the pace of growth was moderate. Contacts reported improvements in new orders and production. However, a number of contacts stated that the unusual winter weather affected production in late January, and output was lower than planned for that month.

Banking and finance: A number of lenders reported increases in purchase mortgages, but not enough to offset the declines in refinances.

The next Beige Book will be published April 16.

Photo of Shalini PatelBy Shalini Patel, an economic policy analysis specialist in the Atlanta Fed's research department.

March 6, 2014 in Beige Book, Economic conditions, Economic Growth and Development, Weather | Permalink

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12/11/2013


Beige Book: Southeast Growing at a Moderate Pace

Eight times a year, the 12 Reserve Banks gather anecdotal information on current economic conditions in their districts through reports from Bank and branch directors as well as interviews with key business contacts, economists, market experts, and other sources. Then, approximately two weeks prior to each Federal Open Market Committee meeting, results are published in the Beige Book on the Federal Reserve Board of Governors' website.

Because the lead sentence—of the national summary and each district's section—often gives a broad view of economic conditions in that region, that first sentence often gets much attention. Here is a roundup of the first sentences of these sections:

  • National: Reports from the twelve Federal Reserve Districts indicated that the economy continued to expand at a modest to moderate pace from early October through mid-November.
  • Boston: Economic activity continues to expand in the First District.
  • New York: Economic growth in the Second District has continued at a moderate pace since the last report.
  • Philadelphia: Aggregate business activity in the Third District continued to rise at a modest pace during this current Beige Book period (beginning with the first partial week of October).
  • Cleveland: Business activity in the Fourth District expanded at a moderate pace since our last report. On balance, demand for manufactured products grew at a moderate rate.
  • Richmond: The District economy expanded moderately in recent weeks.
  • Atlanta: Businesses across the Sixth District described economic activity as moderately increasing from October to mid-November.
  • Chicago: The rate of growth in economic activity in the Seventh District continued to be modest but slowed a bit in October and early November.
  • St. Louis: Business activity in the Eighth District has expanded at a moderate pace since the previous report.
  • Minneapolis: The Ninth District economy grew at a moderate pace since the last report.
  • Kansas City: The Tenth District economy continued to grow modestly in November.
  • Dallas: The Eleventh District economy expanded at a moderate pace over the past six weeks.
  • San Francisco: Economic activity in the Twelfth District expanded at a modest pace during the reporting period of early October through late November.

As you can tell, all 12 districts experienced similar levels of activity. Here are some notable highlights from the Atlanta Fed's portion of the Beige Book:

Employment
On balance, contacts across the private sector reported that the partial federal government shutdown had little to no direct impact on employment, but it has negatively affected business confidence, which could translate into delayed hiring decisions now or in the near term. Contacts continued to express concern about shortages of qualified labor. Their concern is that companies seeking to hire and expand their business could be impeded by an inability to find qualified workers. Overall, firms experiencing any growth in demand for their products expressed no plans to hire in the near term.

Prices
Contacts continued to report stable pricing, with no major concerns about inflation. Isolated reports of cost increases (for example in fast food, grocery stores, and construction) were generally passed through successfully to customers. Year-ahead unit cost expectations were unchanged at 1.9 percent in November, according to the Atlanta Fed's Business Inflation Expectations survey (see the chart). Overall, profit margins were tight across most industries. Aside from scattered reports of upward pressure on wages for high-skilled workers, increases remained stable (mostly in the range of 2 percent to 3 percent) across most industries.

Year-Ahead Unit Cost Expectations

Consumer spending and tourism
District retail contacts indicated that economic uncertainty was having an impact on consumer confidence and behavior. Although merchants reported plans to offer robust discounting, beginning even earlier than the traditional Black Friday, retailers' expectations for the upcoming holiday season are only mildly optimistic. Sales of light vehicles were steady. Hospitality firms continued to cite expanding levels of activity in both leisure and business travel.

Real estate and construction
District brokers indicated that growth of existing home sales have slowed notably in recent months. By most accounts, inventory levels continued to decline on a year-over-year basis. Home prices remained ahead of the year-earlier level, but price gains seemed to be slowing. The majority of builders noted that new home sales and construction were ahead of the year-earlier level. Reports on unsold inventory were mixed, while contacts continued to note modest home price appreciation. District commercial brokers noted that demand for space continued to improve modestly. Construction activity slightly increased as well from earlier in the year.

Manufacturing
District manufacturers reported gains in new orders, production, and employment in October compared with the previous month. An increasing number of contacts cited higher-than-desired finished inventory levels and remarked that commodity prices continued to rise, albeit at a modest rate. Manufacturers also noted a mild decrease in supplier delivery times.

Banking and finance
Banking contacts reported better overall lending activity relative to our previous report, although loan demand in rural areas remained low. Commercial real estate lending increased as property values rose; commercial and industrial and auto lending was strong. Mortgage lending and refinancing activity slowed as mortgage interest rates increased. Deposit levels were high at most institutions, and banks remained competitive in seeking quality loan customers. Some banks loosened underwriting standards and reduced margins to attract new loan business.

The next Beige Book will be published January 15.

Photo of Shalini PatelBy Shalini Patel, an economic policy analysis specialist in the Atlanta Fed's research department

 

December 11, 2013 in Banks and banking, Beige Book, Commodity Prices, Construction, Economic Indicators, Employment, Inflation, Jobs, Manufacturing | Permalink

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10/16/2013


Beige Book: Economy Expanding Moderately

Eight times a year, all of the 12 Reserve Banks gather anecdotal information on current economic conditions in their districts through reports from Bank and branch directors as well as interviews with key business contacts, economists, market experts, and other sources. Then, approximately two weeks prior to each Federal Open Market Committee meeting, results are published in the Beige Book on the Federal Reserve Board of Governors' website. Because the lead paragraph of each region's section often gives a broad view of economic conditions in that region, they get the most attention. The national summary, which compiles the major themes from the 12 reports, provides a very useful overview. Here is a roundup of some of content from the most recent Beige Book, released October 16:

National: Reports from the 12 Federal Reserve Districts suggest that national economic activity continued to expand at a modest to moderate pace during the reporting period of September through early October.

Employment growth remained modest in September. Several districts reported that contacts were cautious to expand payrolls, citing uncertainty surrounding the implementation of the Affordable Care Act and fiscal policy more generally.

Price pressures remained limited in September. Most districts reported only slight increases in commodity prices and limited ability to pass through these increases to their customers.

Contacts across districts generally remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate.

Boston: Reports from business contacts indicate the First District economy continues to grow, at a pace that varies depending on sector. Firms doing business with the government have been affected by the sequester; other firms are also concerned about potential effects of the government shutdown on consumer demand or broader economic effects of hitting the debt ceiling.

New York: Economic growth in the Second District has continued at a moderate pace since the last report. More broadly, some contacts express concern about potential disruptive effects of a prolonged federal government shutdown.

Philadelphia: Aggregate business activity in the Third District slowed to a modest pace of growth during this current Beige Book period. Despite a slower pace of growth in some sectors, contacts overall maintained an outlook for moderate growth.

Cleveland: The Fourth District’s economy continued to expand at a moderate pace during the past six weeks.

Richmond: District economic conditions improved modestly, on balance, since our last report.
Remarks on effects of sequestration were mixed.

Atlanta: Sixth District business contacts described economic activity as expanding slowly in September. The outlook among firms remains optimistic as most expect near-term growth to be sustained at or slightly above current levels.

Chicago: The rate of growth in economic activity in the Seventh District slowed a bit in September. Contacts remained generally optimistic, but several expressed concern about the potential impact of a protracted federal government shutdown.

St. Louis: Economic activity in the Eighth District has grown at a moderate pace since the previous report.

Minneapolis: The Ninth District economy grew moderately since the last report. The effects of the partial federal government shutdown on the Ninth District economy were too early to determine.

Kansas City: The Tenth District economy expanded modestly in September after growing at a slightly faster pace during the previous survey period.

Dallas: The Eleventh District economy expanded at a moderate pace over the past six weeks.

San Francisco: Economic activity in the Twelfth District expanded at a modest pace during the reporting period of late August through early October.

Here are some highlights from the Atlanta Fed's portion of the Beige Book:

  • Payrolls across the region expanded, albeit at a slower pace than the previous report.
  • Firms noted input costs remained stable.
  • Most retailers cited slightly improved levels of spending and auto dealers continued to experience solid results.
  • Hospitality reports remained largely positive.
  • Residential brokers and builders continued to witness improvements in many parts of the district as sales and prices of new and existing homes increased compared with a year ago.
  • Commercial development picked up slightly, led by multifamily construction.
  • Manufacturers indicated that new orders and production had increased since the last report.
  • Bankers saw increased volumes for both commercial and consumer loans.
  • Energy refiners across the region have been in the throes of expansion as new projects and investments continue to be announced.
  • The average monthly prices paid to farmers for corn, cotton, soybeans, hogs, and broilers were down but were up for rice, citrus, beef, and milk.

The next Beige Book will be published December 4.

Photo of Mike ChrisztBy Mike Chriszt, a vice president in the Atlanta Fed's public affairs department


October 16, 2013 in Beige Book, Economic Indicators, Employment, Manufacturing, Prices | Permalink

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09/04/2013


Beige Book: Modest, Moderate Growth Continues

Eight times a year, all of the 12 Reserve Banks gather anecdotal information on current economic conditions in their districts through reports from Bank and branch directors as well as interviews with key business contacts, economists, market experts, and other sources. Then, approximately two weeks prior to each Federal Open Market Committee meeting, results are published in the Beige Book on the Federal Reserve Board of Governors' website.

Because the lead sentence—of the national summary and each region's section—often gives a broad view of economic conditions in that region, that first sentence often gets much attention. Here is a roundup of the first sentences of these sections:

  • National: Reports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand at a modest to moderate pace during the reporting period of early July through late August.
  • Boston: Economic activity in the First District continued to expand at a modest pace.
  • New York: Economic growth in the Second District has continued at a moderate pace since the last report.
  • Philadelphia: Aggregate business activity in the Third District continued at a moderate pace of growth during this current Beige Book period.
  • Cleveland: Business activity in the Fourth District expanded at a moderate pace since our last report.
  • Richmond: Economic conditions in the Fifth District improved moderately since our last report.
  • Atlanta: According to reports from Sixth District contacts, economic conditions modestly improved from July to mid-August.
  • Chicago: The pace of economic activity in the Seventh District improved in July and August, and contacts generally expected moderate growth for the rest of the year.
  • St. Louis: The economy of the Eighth District has expanded at a moderate pace since the previous report.
  • Minneapolis: The Ninth District economy grew at a moderate pace since the last report.
  • Kansas City: The Tenth District economy expanded moderately in July and early August with further gains anticipated during the coming months.
  • Dallas: The Eleventh District economy expanded at a moderate pace over the past six weeks.
  • San Francisco: Economic activity in the Twelfth District expanded at a modest pace during the reporting period of early July through late August.

You have no doubt detected a pattern. Here are some highlights from the Atlanta Fed's portion of the Beige Book:

Employment

  • The region’s pace of payroll growth improved with gains concentrated in Georgia and Florida. On balance, firms were hesitant in hiring new staff due to various uncertainties, with healthcare reform mentioned most frequently. Similarly, in recent polls, contacts expressed a clear preference for investing in capital expenditures to improve efficiencies and reduce costs rather than hiring additional labor.

Prices

  • Growth in input costs was muted for most businesses as price inflation for crude and intermediate materials remained relatively subdued. Businesses continued to note tight margins and very little pricing power. Wage pressures were largely subdued, except for industries where workers are in short supply, such as information technology and specialized construction.

Consumer spending and tourism

  • District retailers indicated that sales rose slightly from July to late-August. Reports described consumers as remaining cost conscious. Automotive dealers noted that year-end projections are being revised up as truck sales strengthen mostly from contractors purchasing vehicles again. Hospitality contacts continued to witness strong travel and tourism activity this summer.

Real estate and construction

  • District brokers and homebuilders continued to report that existing home sales and prices remained ahead of last year's level. When polled about rising mortgage rates, nearly half of broker respondents said that rising rates were having a negative impact on their business while the majority of builders said that rising rates were not having an impact on their business. Low inventory levels continued to put upward pressure on home prices in many submarkets across the District. Commercial construction activity was described as flat to slightly up from earlier this year with apartment development dominating activity.

Manufacturing

  • While the majority of the region’s manufacturers cited expanding activity, the pace of growth decreased from July to mid-August. New orders and production experienced modest decreases which contributed to the slowing of activity. However, a number of firms, especially those in the auto sector, continued to report solid demand for their products. When asked about their outlook, one-third of regional purchasing managers expect higher production over the next three to six months.

Banking and finance

  • Banking contacts did not witness any noticeable increase in overall lending as most borrowers had already taken advantage of lower rates. However, the recent uptick in rates did motivate many businesses to move to lock-in rates through refinancing. Some bankers also reported a pickup in loan volume for lending products such as second mortgages, credit cards, auto lending, and commercial lending.

The next Beige Book will be published October 16.

Photo of Mike ChrisztBy Mike Chriszt, a vice president in the Atlanta Fed’s public affairs department


September 4, 2013 in Beige Book, Economic Indicators, Employment, Manufacturing, Prices, Real Estate | Permalink

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07/17/2013


Beige Book: Modest Growth and Optimism

Eight times a year, all of the 12 Reserve Banks gather anecdotal information on current economic conditions in their districts through reports from Bank and branch directors as well as interviews with key business contacts, economists, market experts, and other sources. Then, approximately two weeks prior to each Federal Open Market Committee meeting, results are published in the Beige Book on the Federal Reserve Board of Governors' website.

Because the lead sentence—of the national summary and of each region's section—often gives a broad view of economic conditions in that region, that first sentence often gets much attention. Here is a roundup of the first sentences of these sections:

National: Reports from the twelve Federal Reserve Districts indicate that overall economic activity continued to increase at a modest to moderate pace since the previous survey.

Boston: Economic activity in the First District continues to expand at a moderate pace, according to business contacts.

New York: Economic activity in the Second District has continued to expand moderately since the last report.

Philadelphia: Aggregate business activity in the Third District maintained an overall moderate pace of growth during this current Beige Book period.

Cleveland: The economy in the Fourth District expanded at a moderate pace during the past six weeks.

Richmond: District economic activity strengthened moderately in recent weeks.

Atlanta: Reports from Sixth District business contacts indicated that economic activity expanded at a modest pace in June and early July.

Chicago: Economic activity in the Seventh District expanded at a moderate pace in June, and contacts remained cautiously optimistic about growth prospects in the second half of the year.

St. Louis: The economy of the Eighth District has expanded at a moderate pace since our previous report.

Minneapolis: The Ninth District economy showed signs of moderate growth.

Kansas City: The Tenth District economy grew modestly in June, and expectations for future activity improved slightly.

Dallas: The Eleventh District economy generally expanded at a slightly stronger pace over the past six weeks than during the previous reporting period.

San Francisco: Economic activity in the Twelfth District expanded at a modest pace during the reporting period of late May through early July.

Here are some notable highlights from the Atlanta Fed's portion of the Beige Book:

Employment and prices

Since the last report, District payrolls grew at a modest pace. In general, most input costs remained relatively stable, helping to support slightly stronger profit margins in the face of improving, but still below pre-recession sales levels. The Atlanta Fed's Business Inflation Expectations survey showed year-ahead unit cost expectations ticking down from 2 to 1.8 percent in June, marking the lowest reading since January.

Consumer spending and tourism

Reports from District retailers were mixed. While most merchants experienced modest growth, growth was lower than expected in some cases. Some attributed lackluster sales to weather conditions. Auto dealers continued to experience strong growth. Travel and tourism activity continued to exceed expectations. Contacts throughout the District reported that key indicators of demand (visitation, hotel occupancy, average daily rate, and revenue per available room) and profitability were positive and steadily rising.

Real estate and construction

District brokers continued to report that existing home sales remained ahead of last year's level and were mostly ahead of expectations. However, brokers still report that inventories remain at low levels, and thereby restrain sales. Shortages were also said to be putting upward pressure on home prices.

District homebuilders reported that new home sales and construction were ahead of year-earlier levels. However, builders noted that access to financing and a shortage of developed lots continued to constrain construction activity. Most contacts reported that new home inventories were below the year earlier level and prices rose modestly.

District commercial real estate contacts indicated that demand continued to improve from earlier in the year. Construction activity was described as flat to slightly up from earlier this year and was dominated by build-to-suit projects and renovations of existing space. Brokers reported that most markets still favored tenants; however, rate increases continued to be noted in select submarkets.

Manufacturing

Regional manufacturers reported expanding activity; however, the rate of growth slowed as a result of a decrease in new orders, production, and finished inventory. Less than half of purchasing managers expect production to be higher in the next three to six months, slightly lower than our previous report.

Banking and finance

Some institutions reported a pickup in mortgage loan demand attributed to improved housing markets and increasing interest rates. They also indicated that while mortgage refinancing had slowed, new purchase loan demand had increased. Some bankers indicated vigorous competition for loans has led them to change loan features, such as relaxing guarantee requirements or covering a substantial chunk of closing costs. Local community bank contacts had eased up on covenants and guarantees and were willing to take more risks, particularly when a loan fit a category in which they were interested.

A final thought: The Atlanta Fed's Beige Book summary notes that "The outlook for the rest of the year remains optimistic for most firms." This matches up well with Atlanta Fed President Dennis Lockhart's view, which he shared in a June 27 speech in Marietta, Georgia:

I expect the moderate pace of growth we have been experiencing to continue, resulting in a GDP number for the year as a whole in the range of 2 to 2.5 percent. To achieve that, the second half will have to be a little stronger than the first half, and I expect 2014 to improve slightly on the pace of the second half of 2013.

The next Beige Book will be published September 4.

Photo of Mike ChrisztBy Mike Chriszt, a vice president in the Atlanta Fed's public affairs department

 

July 17, 2013 in Beige Book, Construction, Employment, Manufacturing, Real Estate, Tourism | Permalink

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06/06/2013


Turning through the New Beige Book

Eight times a year, each of the 12 Reserve Banks gathers anecdotal information on current economic conditions in its district through reports from Bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. Results are published in the Beige Book on the Federal Reserve Board of Governors website approximately two weeks prior to each Federal Open Market Committee meeting.

Because the lead sentence often gives a broad view of economic conditions in that region, that first sentence of the national summary and each Bank's report often gets much attention. Here is a roundup of each report’s first sentence:

  • National: Overall economic activity increased at a modest to moderate pace since the previous report across all Federal Reserve Districts except the Dallas District, which reported strong economic growth.
  • Boston: First District business contacts generally report year-over-year increases in economic activity.
  • New York: Economic activity in the Second District has continued to expand at a moderate pace since the last report.
  • Philadelphia: After many months at a generally more modest pace of growth, aggregate business activity in the Third District has accelerated somewhat to a moderate pace of growth during this current Beige Book period.
  • Cleveland: The economy in the Fourth District grew at a moderate pace since our last report.
  • Richmond: Economic activity strengthened modestly across the District.
  • Atlanta: On balance, Sixth District business conditions improved modestly in April and May.
  • Chicago: Economic activity in the Seventh District again expanded at a modest pace in April and May.
  • St. Louis: Economic activity in the Eighth District has expanded at a moderate pace since the previous report.
  • Minneapolis: The Ninth District economy posted moderate growth.
  • Kansas City: The Tenth District economy grew at a modest pace in late April and early May.
  • Dallas: The Eleventh District economy expanded at a stronger pace over the past six weeks than in the previous reporting period.
  • San Francisco: Economic activity in the Twelfth District expanded at a modest pace during the reporting period of early April through late May.

As you can see, almost all districts are experiencing the same level of economic activity.

Here are some notable highlights from the Atlanta Fed's portion of the Beige Book:

Consumer spending and tourism

  • District retail contacts noted an improvement in consumer spending but were cautiously optimistic regarding their outlook. Automobile sales remained steady at high levels.
  • Leisure and international travel continued to experience healthy demand, with several contacts reporting that activity exceeded expectations.

Real estate and construction

  • District brokers reported that existing home sales remained ahead of last year’s level. Brokers continued to report that low home inventories were restraining sales. Existing home prices continued to rise on a year-over-year basis.
  • District homebuilders reported that new home sales and construction activity were stronger than in our last report and from a year ago. Buyer traffic continued to increase, as well. Most contacts reported that new home inventories were below the year earlier level and prices have risen slightly.
  • District commercial real estate contacts indicated that demand continued to improve from earlier in the year. Construction activity rose modestly again.

Manufacturing

  • District manufacturers continued to report expanding activity in April and May. Growth was driven by increases in new orders, production, and employment.

Banking and finance

  • Overall demand for new loans remained weak.

Employment

  • District payrolls grew at a mild pace since our last report.

Prices and wages

  • Most firms continued to experience fairly stable input costs. Though most firms continued to report having little pricing power, retailers indicated that profit margins continued to improve since the beginning of the year as they have been able to successfully contain costs.

The next Beige Book will be published July 17.

Photo of Shalini PatelBy Shalini Patel, an economic policy analysis specialist in the Atlanta Fed's research department

June 6, 2013 in Beige Book, Economic Indicators, Employment, Manufacturing, Prices, Real Estate | Permalink

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04/25/2013


Beige Book: Southeast, U.S. Exhibiting Similar Trends

The Summary of Commentary on Current Economic Conditions by Federal Reserve District—commonly known as the Beige Book—is a report is published by the Federal Reserve eight times a year. Each Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.

Below is a comparison of the national summary and the Atlanta Fed's portion of the report, which was released on April 17:

Overall economic conditions

  • National: Reports from the 12 Federal Reserve Districts suggest overall economic activity expanded at a moderate pace during the reporting period from late February to early April.
  • Atlanta: Sixth District business contacts reported that economic activity continued to advance at a modest pace.

Outlook

  • National: Outlooks among respondents remained optimistic across sectors and Districts, with growth mostly expected to continue at the same or a slightly improved pace.
  • Atlanta: Reports across sectors were generally positive, and expectations for the coming months remained optimistic.

Consumer Spending

  • National: Consumer spending grew modestly, and firms in some Districts cited higher gasoline prices, expiration of the payroll tax cut, and winter weather as factors restraining sales growth.
  • Atlanta: Retail reports were mixed, with some retailers citing improved sales and others feeling the pinch from a constrained consumer.

Tourism

  • National: Travel and tourism expanded across most reporting Districts, boosted by both business and leisure travel.
  • Atlanta: Hospitality contacts reported healthy activity in both leisure and business travel.

Real estate

  • National: Most Districts said residential and commercial real estate improved markedly since the last report. Home prices were rising in many areas of the country.
  • Atlanta: Homebuilders and brokers experienced further improvements in sales and prices of new and existing homes, and inventories continued to decline on a year-over-year basis. Commercial contractors noted a strong year to date as construction levels improved from late last year.

Manufacturing

  • National: Most Districts noted increases in manufacturing activity since the previous report.
  • Atlanta: Overall, manufacturing activity remained positive as new orders and production increased.

Banking

  • National: Loan demand was steady to slightly up in most Districts.
  • Atlanta: Loan demand remained steady, according to bankers.

Employment

  • National: Employment conditions remained unchanged or improved somewhat.
  • Atlanta: Payrolls continued to grow at a tepid pace as firms remained reluctant in hiring, in part because of uncertainty over fiscal policy and health care reform.

Prices

  • National: Aside from reports of increases in home prices and residential construction materials, price pressures remained mostly subdued across Districts.
  • Atlanta: Prices remained stable and most firms continued to report having relatively little pricing power.

Based on these comparisons, the southeastern economy appears to exhibit trends similar to the rest of the nation.

The next Beige Book will be published June 5.

Photo of Shalini PatelBy Shalini Patel, an economic policy analysis specialist in the Atlanta Fed's research department

April 25, 2013 in Beige Book, Economic Growth and Development, Employment, Manufacturing, Prices, Real Estate | Permalink

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03/06/2013


Beige Book Highlights: Modest Growth Continues

The Federal Reserve's most recent report on current economic conditions, also known as the Beige Book, was released earlier today. The national summary began, "economic activity generally expanded at a modest to moderate pace since the previous Beige Book.” The Sixth District’s report struck a similar tone, stating “business conditions appear to have improved modestly.” In comparing these two lead sentences, it appears that the Southeast economy continues to follow the same growth trend as the rest of the United States.

Although the Beige Book reports on several sectors of the economy, given the Fed’s dual mandate of maximizing employment and maintaining price stability, it’s always interesting to read what is written regarding these two topics in the national summary.

The national summary stated:

Price pressures remained modest. The majority of Districts reported modest improvements in labor market conditions, although hiring plans were limited in several Districts.

In comparison, the Sixth District’s summary was similar:

Hiring in District labor markets expanded at a modest pace and prices generally remained flat compared with late last year.

From the tone of the reports, the economy seems to be moving in a positive direction, albeit slowly.

Below are other sector highlights from the Atlanta Fed's contribution to the Beige Book:

  • General conditions and outlook: On balance, Sixth District business conditions appear to have improved modestly in January and early February, and the outlook among most contacts remained generally optimistic across sectors.
  • Consumer spending and tourism: Overall, retailers cited mild sales growth at the beginning of the year. The District’s tourism industry remained a bright spot with both domestic and international visitors contributing to its growth.
  • Real estate and construction: Homebuilders and brokers noted home sales and prices were above year-ago levels for new and existing homes, while commercial real estate markets continued to witness slow but steady improvements in overall activity.
  • Manufacturing and transportation: Manufacturers reported increases in new orders and production. District rail companies reported lower total carloads from a year earlier but slight increases in intermodal traffic.
  • Banking and finance: Reports from bankers suggested that loan demand remained constant, largely because of refinance activity.
  • Natural resources and agriculture: As domestically produced oil has become increasingly available, Gulf Coast refiners reported declining dependence on imported crude for processing and the export of more refined product. Recent rains improved drought conditions in Alabama and Georgia, while Florida saw dry conditions expand over most of the state. Prices for corn, soybeans, beef, broilers, and eggs were higher than year-ago levels while the price for cotton was down.

The Beige Book is published eight times per year and contains individual Reserve Bank reports as well as a national summary. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The next Beige Book will be published April 17.

Shalini PatelBy Shalini Patel, a senior economic research analyst in the Atlanta Fed's research department

March 6, 2013 in Beige Book | Permalink

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