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St Louis

/beige-book-reports/2014/2014-10-sl

"Beige Book Report: St Louis\nOctober 15, 2014\nEconomic activity in the Eighth District has increased at a moderate pace since the previous report. Recent reports of planned activity in manufacturing and services have been largely positive. Reports from retail contacts have also been positive. Overall residential real estate market conditions have remained weak. Commercial and industrial real estate market conditions have been mixed, but commercial and industrial construction has increased. Lending activity at a sample of small and midsized District banks increased from mid-June to mid-September.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been largely positive since the previous report. Several manufacturing firms reported plans to add workers, expand operations, or open new facilities in the Eighth District, while a smaller number of contacts reported plans to reduce employment. Producers of construction materials, tools, consumer goods, and aviation equipment announced plans to hire new employees and expand operations in the Eighth District. In contrast, a metal products manufacturer and a food manufacturer reported plans to lay off workers and close facilities. Reports from automobile and auto parts manufacturers were positive, with District contacts reporting plans to expand operations and hire new workers.\nReports of plans in the District\u2019s service sector have also been positive since the previous report. Firms in freight, insurance and financial, and communications services reported new hiring and expansion plans in the District. In contrast, firms in animal health services and firms in news media services announced plans to lay off employees. Reports from healthcare services firms were mixed. Anecdotal reports from retailers were mostly positive. Contacts in Memphis noted new openings or expanding operations in retail and grocery establishments. In contrast, a major nationwide retailer announced two store closures in the District.\nReal Estate and Construction\nHome sales decreased in the Eighth District on a year-over-year basis. Compared with the same period in 2013, August 2014 year-to-date home sales were down 3 percent in Little Rock, 2 percent in Louisville, 8 percent in Memphis, and 5 percent in St. Louis. Residential construction declined in the majority of the District\u2019s metro areas. August 2014 year-to-date single-family housing permits decreased in the majority of the District\u2019s metro areas compared with the same period in 2013. In particular, permits decreased 29 percent in Little Rock, 8 percent in Louisville, and 3 percent in St. Louis. In contrast, permits increased 2 percent in Memphis.\nCommercial and industrial real estate market conditions were mixed throughout the District. A contact in Louisville reported an increase in prospective commercial tenants in the downtown area. A contact in Memphis noted that the Germantown commercial real estate market remains strong. A contact in Little Rock reported robust demand for commercial real estate space. Commercial and industrial construction activity improved throughout most of the District since the previous report. A contact in Memphis reported plans for a large-scale mixed-use development in the downtown area. A contact in Louisville reported the construction of a building in an industrial park in southern Indiana, with tentative plans for the construction of additional buildings. A Little Rock contact reported the redevelopment of vacant commercial real estate space in Fayetteville. Contacts in St. Louis reported the expansion of a commercial real estate development in Chesterfield and multiple plans for speculative industrial development projects across the area.\nBanking and Finance\nTotal loans outstanding at a sample of small and midsized District banks increased 1.9 percent from mid-June to mid-September. Real estate lending, which accounts for 72 percent of total loans, increased 1.1 percent over this period. Commercial and industrial loans, which account for 16 percent of total loans, increased 2.0 percent over the period. Loans to individuals, which account for 5.3 percent of total loans, increased 4.6 percent over the period. All other loans, which account for 7.2 percent of total loans, increased 7.7 percent over the period. During this period, total deposits at these banks decreased 0.2 percent.\nAgriculture and Natural Resources\nAs of late September, about 75 percent of the District\u2019s corn, rice, and soybean crops was rated in good or excellent condition. Similarly, about 60 percent of the District\u2019s pastureland was rated in good or excellent condition; Kentucky\u2019s pastureland, in particular, has improved significantly since the previous report. Harvest completion rates across the District have lagged behind their five-year averages. District coal production for August was about 1.5 percent higher than a year ago.\nEmployment, Wages, and Prices\nAnecdotal information suggests that employment in the Eighth District grew moderately since the previous report, while wages and prices grew modestly. A contact in Louisville noted increased turnover of skilled employees who are switching to higher-paying jobs. Contacts also noted increases in the cost of lumber and other building materials, and indicated that increased demand has allowed some retail dealers of construction materials to increase prices to consumers.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

/beige-book-reports/2014/2014-10-cl

"Beige Book Report: Cleveland\nOctober 15, 2014\nThe economy in the Fourth District expanded at a moderate pace during the past six weeks. Manufacturers reported moderate to strong business activity. Demand for nonresidential construction strengthened, while the residential market slowed. Consumer spending at retail outlets grew, and year-to-date auto sales were above 2013 levels. Since the previous report, coal production and shale gas activity were little changed. Freight volume grew at a moderate to robust rate. The demand for business credit moved higher, and consumer lending was stable.\nPayrolls showed a mild increase, primarily in manufacturing, construction, and freight transportation. Staffing firms reported that the number of job openings has picked up, while placements have fallen. Several recruiters reported on a trend to replace permanent, lower-skilled employees with temporary workers. Due to perceived shortages in selected labor skill areas, upward pressure on wages is beginning to be felt by general building contractors and freight haulers. Overall, input and finished goods prices were stable. Prices for energy and agricultural commodities declined, while transportation equipment prices rose.\nManufacturing\nMost District factories reported little change in the pace of growth of new orders and production since the previous report and that year-over-year revenues were higher. Firms seeing lower production attributed it to seasonal factors or declining exports. Our contacts remain optimistic and expect moderate to strong demand for the remainder of the year. Steel shipments improved slightly since the last report. Fourth-quarter shipments are expected to increase on a seasonally adjusted basis relative to the third quarter, and a few steel producers project volume in 2014 will be about 5 percent higher compared to 2013. One steel executive noted that his capacity utilization rate has risen to 80 percent, a rise of 10 percentage points since the recession ended. Manufacturers and steel producers reported that the strongest demand came from the construction, motor vehicle, and oil and gas industries. Auto production at District assembly plants for the first eight months of this year was more than 7 percent higher compared to the same period in 2013.\nMany of our contacts anticipate that their capital budgets for fiscal year 2015 will be higher than current-year spending. In general, input and finished goods prices were stable since the previous report, apart from declines in agricultural commodities and steel. A food producer remarked that prices for the major commodities that he purchases are at their lowest level in five years and he does not believe food inflation will be a major issue for the next 12 months. We continue to hear numerous reports about new hiring, mainly for production jobs. The boost in hiring has put little upward pressure on manufacturing wages.\nReal Estate and Construction\nSales of new and existing single-family homes showed a modest decline in many parts of the District since the last report. Year-to-date sales through August were lower compared to a year ago. Most builders expect that activity will stabilize at current levels, though some expressed concern about the impact of a potential rise in interest rates combined with continued strict lending standards. Multifamily development (market rate, affordable, and senior) was characterized as very strong, with occupancy rates greater than 95 percent. In August, single-family construction starts across the District were at their highest level so far this year. However, the number of starts year-to-date remains slightly lower compared to the same time period in 2013. New-home contracts were mainly in the move-up price-point categories, though activity in the first-time buyer category continues to slowly improve. Some builders anticipate a modest rise in new-home prices before year's end, which they attribute to rising material and labor costs. The upward trend seen in sale prices of existing homes has leveled off, but the average price remains higher than the average level for 2013 as a whole.\nNonresidential builders reported continued strong pipeline activity since our last report, and a majority indicated that the level of activity has picked up compared to a year ago. A few builders noted that they are more selective about the inquiries that they respond to because they are at or near capacity. One builder commented that because his customers are not expecting prices for nonresidential construction to rise much, there is no sense of urgency to push forward with some projects. In general, backlogs were described as good or solid. Market demand is broad based, though demand for industrial space (manufacturing and distribution) and healthcare facilities is strongest. There has also been a pickup in requests for retail and office space. Leasing of vacant industrial space has increased. Most builders remain optimistic, but they are concerned about labor availability, tight margins, and capacity constraints, should a demand spike occur.\nGeneral contractors are not overly concerned with rising prices for building materials; the largest price increases are anticipated for steel components, drywall, and wood products. The pace of hiring has slowed since our last report, with some of the decline in hiring activity being seasonal. Nonetheless, a majority of general contractors reported that they expect to increase their payrolls across a broad range of occupations--craft workers, laborers, management, and back office. Little wage pressure was reported, except for craft workers. Subcontractors are pushing through rate increases to cover rising costs (including labor) and to widen their margins. Subcontractors are still encountering capacity and cash-flow issues. As a result, some general contractors are turning to prefabrication to circumvent subcontractors.\nConsumer Spending\nSpending at retail outlets during August and into early September was generally higher compared to earlier in the third quarter. Many retailers cited an extended back-to-school buying period as a contributing factor to the increase. Revenues were higher relative to the same time period in 2013 for most retailers, which they attributed to a stronger product mix and growing investment in e-commerce. In addition to back-to-school items, sales of home furnishings, athletic footwear, and food products were doing well. Fourth-quarter revenues are projected to be higher, with expected year-over-year percent gains in the low single digits. Vendor and shelf prices held steady. Several retailers noted that they are running more promotions than usual, mainly to clear inventory and boost revenues. Excluding new store openings and temporary seasonal hiring, retail payrolls were stable.\nNew motor vehicle sales showed a moderate decline in August on a month-over-month basis and were down slightly from a year ago. However, year-to-date sales through August were 5 percent higher compared to the same time period in 2013. Strong sales of SUVs and trucks continued. Inventory reports were mixed, which is attributable to the model-year changeover. Dealers believe that the level of sales will follow seasonal trends for the remainder of the year and that unit volume for 2014 as a whole will be about 6 percent higher compared to 2013. Used-car purchases showed a modest decline in August on a month-over-month basis, while year-to-date unit volume was slightly higher. We heard several reports about automakers becoming increasingly dependent on the use of incentives to boost sales. Demand for service technicians is growing, but dealers are having difficulty finding qualified applicants.\nBanking\nBankers reported that demand for business credit was stable to showing moderate growth during the past six weeks. While demand was described as broad based, it was strongest for commercial real estate and construction loans and C&I lending to manufacturers. Interest rates held steady. On net, consumer credit demand was roughly stable. The number of applications for auto loans remains very high, while households are making marginally greater use of home equity lines of credit. Residential mortgage activity was flat to down slightly; some of the decline is seasonal. Purchase transactions dominate mortgage applications. Delinquency rates are stable to improving across categories. No changes were made to loan-application standards during the past six weeks. However, to gain a competitive advantage, there has been some slight relaxing of terms and conditions. Banks saw growth in core deposits from businesses and consumers. On balance, banking payrolls held steady. New hires were mainly in the areas of compliance, risk management, and commercial lending; however, in response to reduced traffic at branches, payrolls there are being reduced.\nEnergy\nYear-to-date coal production across the District is consistent with prior-year levels, with no material change in output anticipated in the near term. A production decline in eastern Kentucky is being offset by a significant increase in northern West Virginia. Spot prices for thermal and metallurgical coal remain on a downward trend. Activity in the Marcellus and Utica Shales remains at a high level. During the first half of 2014, production in Ohio's Utica Shale was more than six times greater relative to the same time period in 2013, while the number of producing wells increased by 61 percent. Wellhead prices for natural gas and oil have declined since late in the second quarter. Since the last report, equipment and materials prices were largely unchanged and energy payrolls held steady.\nFreight Transportation\nFreight volume expanded since the last report, with contacts describing year-over-year growth as moderate to robust. Although demand is fairly broad based, it is strongest from the agriculture, motor vehicle, and oil and gas industries. The near-term outlook is favorable. Contacts from trucking and railroads observed that insufficient capacity is a major issue that is currently confronting the industry and that there is concern about stress on the freight-transport system from this year's grain harvest, which is expected to be at a historic high. We heard a report about rail carriers being reluctant to contract for shipments of less than five carloads, which is hurting small manufacturers. The cost of new equipment (truck tractors and rail cars) is rising, and in some cases delivery times are lengthening. Some of the higher cost was attributed to meeting regulatory requirements. Hiring is both for replacement and for adding capacity. Projected capital spending in fiscal year 2015 is mainly for equipment replacement. Although most fleets would like to add capacity, they are having difficulty finding drivers.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

/beige-book-reports/2014/2014-10-ny

"Beige Book Report: New York\nOctober 15, 2014\nGrowth in the Second District's economy has slowed to a somewhat more modest pace since the last report. Prices of finished goods and services continue to rise at a subdued pace; cost pressures remain fairly widespread among service firms but have largely subsided among manufacturers. Labor market conditions have shown further signs of strengthening, except in the manufacturing sector, where hiring activity has slowed. Contacts in most industry sectors report that business has been steady or improving, though manufacturers report that growth has stalled in recent weeks. General merchandise retailers report that sales were mixed but, on balance, weaker since the previous report; auto dealers report that sales were steady to slightly stronger. Tourism activity has continued to show strength since the last report. Housing markets have been steady or stronger, with inventories rising to more normal levels. New York City's commercial real estate market has continued to strengthen moderately, and there are scattered signs of a pickup in commercial construction. Finally, banks report that household loan demand has leveled off but that demand from commercial borrowers continues to grow; delinquency rates continue to decline, particularly for commercial loans and mortgages.\nConsumer Spending\nGeneral merchandise retailers say that sales were reasonably robust in August but mixed to weaker in September. Two major retail chains reported that sales, which were on or ahead of plan in August, softened noticeably in September and were below plan. Retail contacts at upstate malls report that sales were generally flat in both August and September, with some strength noted in back-to-school sales. Reports on inventories were mixed in September, but on balance, stocks are reported to be at or near desired levels. Prices are mostly described as steady, though some contacts characterize the environment as increasingly promotional.\nAuto dealers across upstate New York characterize sales as steady but fairly strong. Buffalo area dealers report that that new vehicle sales continued to increase moderately in August and September, while sales of used vehicles remained soft. Rochester area dealers report that new vehicle sales were flat in August and steady to up slightly in September; they note favorable market conditions for both new and used cars. Auto dealers in both areas continue to report that both wholesale and retail credit conditions remain in good shape.\nTourism activity has remained robust since the previous report. Business at Broadway theaters continued to show strength in August and September, with attendance up more than 10 percent from a year earlier and revenues up roughly 13 percent. Hotel occupancy rates in New York City have remained near record levels, while room rates have risen moderately. Hotel occupancy rates have also continued to climb in the Buffalo and Albany areas but edged back in metropolitan Rochester. Consumer confidence in the Middle Atlantic region (NY, NJ, PA) slipped in September, based on the Conference Board's latest survey.\nConstruction and Real Estate\nThe District's housing markets have been steady to stronger since the last report, while inventories have risen from unusually low levels in some areas. Rents have leveled off in Manhattan and Brooklyn--in part reflecting extensive luxury rental development coming on line--while rents in Queens have continued to increase briskly. New York City's co-op and condo market was generally steady in the third quarter. Resale prices for apartments were little changed in Manhattan but continued to rise moderately in Brooklyn and Queens; sales volume was down more than 10 percent from the extraordinarily high levels of a year earlier but little changed from the second quarter.\nNorthern New Jersey's housing market has continued to be mixed. Demand for single-family homes has remained sluggish, and so has new single-family construction, as builders remain reluctant to build for inventory. In contrast, a strong rental market has continued to spur multi-family construction, especially in areas easily accessible to New York City. Housing markets in western New York State flattened out in August and September, as both sales volume and prices leveled off. Multiple offers have become less common, as the inventory of available homes has increased from low levels.\nNew York City's office market continued to strengthen in the third quarter: Office availability rates declined moderately in the Midtown and Midtown South markets and fell more noticeably in Lower Manhattan. Asking rents continued to rise and were up 5 percent to 10 percent from a year earlier. There are a number of major commercial developments under construction in Manhattan, and an industry contact in northern New Jersey notes that there has been somewhat of a pickup in commercial construction there, albeit from low levels.\nOther Business Activity\nManufacturing firms in the District report that growth, which had been fairly robust through the summer, has stalled since the last report. Contacts in other industry sectors, however, report that business has been steady or expanding. Businesses generally report steady to modest increases in their selling prices. Reports on input costs have been mixed: Although service firms continue to report widespread increases in input prices, manufacturers generally report more that costs have leveled off.\nThe labor market has shown further signs of strengthening since the previous report. One major New York City employment agency notes brisk hiring activity and characterizes labor demand as increasingly robust--particularly for temps, workers with people skills, and especially IT workers. A contact at another employment agency has not seen the normal seasonal slowdown in recent weeks and characterizes the labor market as fairly good, with particularly brisk demand for HR people. While one industry contact describes salaries as \"pretty flat\", another reports upward pressure on salaries, as people are more frequently leaving jobs for higher pay. More broadly, service-sector firms continue to add workers at a moderate pace, though more contacts than in the last report say they plan to expand staff in the months ahead. One major retailer expects to hire moderately more seasonal workers for the holidays than last year. In contrast, manufacturers say they have scaled back both hiring activity and hiring plans.\nFinancial Developments\nSmall-to-medium-sized banks in the District report increased demand for commercial mortgages but steady demand for other types of loans and decreased demand for refinancing since the previous report. Bankers report that credit standards were unchanged across all loan categories. Respondents report narrowing spreads on consumer loans and residential mortgages. Banks indicate that average deposit rates remain unchanged. Finally, bankers report ongoing declines in delinquency rates, particularly for commercial loans and mortgages.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

/beige-book-reports/2014/2014-10-sf

"Beige Book Report: San Francisco\nOctober 15, 2014\nEconomic activity in the Twelfth District continued to improve moderately during the reporting period of mid-August through late September. Overall price and wage inflation remained modest. Retail sales grew slightly, and demand for business and consumer services increased moderately. Overall manufacturing activity picked up, while agricultural conditions were mixed. Real estate activity advanced, but growth in the residential sector varied across the District. Loan demand increased moderately.\nPrices and Wages\nOverall price inflation remained modest during the reporting period. Contacts reported that consumers are very price conscious. A shortage of cattle drove up beef prices, and the California drought boosted nut prices. Although operating costs, commodity costs, and packaging costs in the wholesale food industry increased slightly, contacts reported that competition prevented these cost increases from being passed on to retail prices for most food items. Electric utility input prices increased modestly during the reporting period. Prices in the technology sector decreased for both businesses and consumers, driven by competitive pressures and technological advances. Prices of certain building supplies, including wallboard, wood, cement, and insulation increased a bit. Contacts reported that restaurant prices increased slightly in July and August in some states in response to minimum-wage increases. Las Vegas hotel room rates for August were higher than in any August since 2007.\nIn general, wages continued to increase at a modest pace. Most contacts reported that wages and salaries were up about 2-1/2 percent to 3 percent compared with last year. Wages for software developers, for workers in skilled trades, and, in some areas, for experienced construction workers increased faster. Declines in defense spending led some aerospace manufacturers to institute greater employee cost-sharing on benefits.\nRetail Trade and Services\nOverall retail sales grew slightly during the reporting period. Sales of higher-end clothing picked up, but somewhat less than respondents expected. Food sales increased a bit, and contacts reported that grocery inventories were stable. However, the droughts in California and other parts of the West resulted in lower-quality produce. Revenue at hobby game stores showed strong growth. Contacts characterized consumers as still cautious in their spending habits but expect retail demand to strengthen further soon.\nDemand for business and consumer services increased moderately. Demand for legal services picked up in some areas, in connection with rising real estate activity. Demand for advertising services declined, but businesses increased spending on cloud computing services. Contacts reported that industry leaders expect information technology spending to accelerate in 2015, driven by spending on big data and security services, as well as on cloud computing. Casual dining picked up in August, the first monthly increase in sales in that segment this year. Contacts expect continued slow growth of casual dining in the coming months. Las Vegas year-to-date visitor volume increased moderately over 2013. Total occupied room nights and occupancy percentage at Las Vegas hotels climbed.\nManufacturing\nOverall District manufacturing activity picked up during the reporting period. Worldwide semiconductor sales were up markedly over the previous year. Recent sales of manufactured steel and recycled metals also were up over the same period a year earlier. Revenue for biotech and pharmaceutical manufacturers grew notably since the previous reporting period. Industry contacts detected stronger demand for pharmaceuticals stemming from the increase in the number of insured people, and they expect healthy earnings growth to continue. Demand for medical equipment was also very strong. Aerospace and defense capacity utilization declined since the prior reporting period. In contrast, contacts reported that capacity utilization among commercial aircraft producers increased to record levels.\nAgriculture and Resource-related Industries\nAgricultural conditions in the District were mixed during the reporting period. Continuing droughts in California and parts of Washington and Idaho elevated water costs and depressed harvests of cotton and various grains, vegetables, nuts, and legumes. Farmers increased the number of acres lying fallow and reduced herd sizes. However, low corn prices and stable fertilizer and machinery prices benefited dairy and feedlot operations. Milk prices increased, and export demand for hay from the West Coast reached an historical peak. Sales of electricity and natural gas to the manufacturing sector have increased markedly since the beginning of the year. Agricultural land prices remained relatively high.\nReal Estate and Construction\nReal estate activity in the District advanced, but growth trends in the residential sector were uneven across the District. Contacts reported that in a few areas, prices of single-family homes accelerated, while in other areas the pace of price increases declined. In a few areas, year-to-date single-family housing starts were down compared with the same period in 2013. Sales of single-family homes were stable during the reporting period. Overall, multifamily construction and development activity remained strong. Commercial office demand was robust in San Francisco and Silicon Valley, and rents increased compared with the previous reporting period. In Los Angeles, commercial real estate construction picked up.\nFinancial Institutions\nOverall loan demand increased moderately since the previous reporting period. In some areas where lending activity had been stagnant for a long time, demand for commercial and industrial and commercial real estate loans picked up. Other areas that had already been experiencing growth in loans showed continued expansion. Asset quality improved since the previous reporting period, and contacts reported that current overall loan performance was comparable to that seen before the recession. Competition among lenders for customers with high-quality credit remained intense. Contacts reported that this competition had depressed interest rates on loans, reducing net interest margins and profitability.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2014/2014-10-mi

"Beige Book Report: Minneapolis\nOctober 15, 2014\nThe Ninth District economy grew at a moderate pace since the previous report. Increased activity was noted in consumer spending, tourism, commercial real estate, professional services, manufacturing, and energy. Agricultural conditions were mixed and mining was flat, while construction and residential real estate activity decreased. Labor markets continued to show signs of tightening. Overall wage increases were modest, while price increases generally remained subdued.\nConsumer Spending and Tourism\nConsumer spending increased moderately overall since the previous report. August and early-September same-store sales at a mall in North Dakota were up about 2 percent compared with the same period a year earlier. Recent sales and traffic at a South Dakota mall were relatively flat compared with last year, while August sales were flat relative to a year ago at a Minnesota mall. An apparel retailer noted that recent sales were up slightly from a year earlier. Recent vehicle sales at Montana dealerships were doing well with particularly strong sales in the northeastern part of the state, according to a representative of an auto dealers association.\nTourism activity was up from last year. This year's record attendance at the Minnesota State Fair was 5 percent higher than a year ago. A travel agency in Minnesota noted that recent leisure travel bookings were about 10 percent higher than last year, while another travel agency reported that leisure bookings in August and September were strong. Compared with last year, August visits to Glacier National Park were up 8 percent and visits to Yellowstone National Park were up 7 percent. According to a survey of lodging and camping properties in Minnesota, 48 percent of respondents reported that summer occupancy was up from a year ago, while 25 percent reported that it was down.\nConstruction and Real Estate\nCommercial construction activity decreased since the previous report. Commercial permits in Billings, Mont., were down significantly in value in September from a year earlier. In Sioux Falls, S.D., the value of August commercial permits decreased from a year ago. Residential construction decreased from last year. In the Minneapolis-St. Paul area, the value of September residential permits decreased 16 percent compared with September 2013. The value of August residential permits in Sioux Falls decreased 40 percent from the same period last year. The value of August housing permits decreased significantly in Bismarck from a year ago. However, September residential building permits in Billings increased in value from last year.\nActivity in commercial real estate markets increased since the previous report. Several commercial real estate transactions were announced around the District, including both purchase and lease transactions in retail, hotel, office, and industrial real estate. However, a retailer announced that it would vacate three of its stores in Minnesota this year. Residential real estate market activity decreased since the previous report. In the Sioux Falls area, August home sales were down 8 percent, inventory increased 11 percent, and the median sales price increased 5 percent relative to a year earlier. August home sales were down 5 percent from the same period a year ago in Minnesota; the inventory of homes for sale increased 13 percent, and the median sales price rose 4 percent. Several Minnesota real estate professionals and investors recently noted that out-of-state investor groups are paying above-market prices for single-family rental properties in Minneapolis. Meanwhile, August home sales in western Wisconsin were up 8 percent from a year ago; the median sales price was flat.\nServices\nActivity at professional business services firms increased at a modest pace since the previous report. Contacts from architectural firms noted some increases from a year ago in bidding activity for government and industrial projects. Contacts from accounting and legal firms noted steady activity since the previous report. Several contacts noted that capacity constraints in freight rail have increased demand for trucking services.\nManufacturing\nManufacturing activity grew moderately since the previous report. A manufacturing index released by Creighton University (Omaha, Neb.) increased in September from the previous month in North Dakota; the index fell slightly in Minnesota and South Dakota, but remained at levels consistent with expansion in activity in all three states. An agribusiness firm announced that it will move ahead in building a $3 billion fertilizer plant in North Dakota.\nEnergy and Mining\nActivity in the energy sector increased, while mining was steady since the previous report. Late-September oil and gas exploration activity increased in North Dakota and was level in Montana from a month earlier; production remained at record levels. A partnership announced plans to build a 450-mile pipeline from the Bakken oil fields to a hub in Wyoming. A crude oil storage facility in North Dakota announced a $5.5 million expansion. Production at District iron ore mines appeared steady in August compared with a month earlier. It was announced that construction will resume on a $1.8 billion ore production facility that was delayed due to financing. Freight rail congestion was leading to increased stockpiles at some ore production facilities, as locomotives and crews that move ore to port were in short supply.\nAgriculture\nAgricultural conditions were mixed since the previous report. The most recent USDA forecast calls for substantially increased production of corn and soybeans this year in District states compared with 2013. Livestock and dairy producers continued to benefit from lower feed costs and high output prices. Most of the district's crops were in good or excellent condition despite late planting; however, an early frost damaged soybeans in some parts of Minnesota and South Dakota. Relative to a year earlier, prices received by farmers in September were lower for corn, soybeans, and wheat; prices increased for hay, cattle, hogs, poultry, and milk.\nEmployment, Wages, and Prices\nLabor markets continued to show signs of tightening since the previous report. In Minnesota, a firm is hiring 1,000 seasonal workers to fill a variety of positions, a medical device manufacturer announced plans to add over 200 jobs, a window manufacturer will add 100 jobs, and a heating and air conditioning plant announced plans to add 95 jobs over the next three years. According to a survey of Minnesota businesses by an employment services firm, 19 percent of respondents expect to hire more employees during the fourth quarter, while 6 percent expect decreases in staffing. In last year's survey, 17 percent expected staffing increases, while 7 percent expected decreases. According to surveys conducted by four technical schools in South Dakota, almost all graduates were employed or continuing their education six months after graduation. Some contacts noted continued difficulty finding truck drivers to fill open positions. In contrast, a food manufacturer recently announced plans to eliminate up to 800 positions companywide.\nOverall, wage increases were modest since the previous report. However, according to a recent survey of central Minnesota businesses by St. Cloud State University, 54 percent of respondents expect to increase compensation over the next six months, up from 43 percent in last year's survey.\nPrice increases generally remained subdued. End-of-September Minnesota gasoline prices were down about 10 cents per gallon both from mid-August and from a year earlier. Metals prices decreased somewhat since the previous report.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nOctober 15, 2014\nPrepared at the Federal Reserve Bank of Minneapolis and based on information collected before October 6, 2014. This document summarizes comments received from business and other contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts generally described modest to moderate economic growth at a pace similar to that noted in the previous Beige Book. Moderate growth was reported by the Cleveland, Chicago, St. Louis, Minneapolis, Dallas, and San Francisco Districts, while modest growth was reported by the New York, Philadelphia, Richmond, Atlanta, and Kansas City Districts. In the Boston District, reports from business contacts painted a mixed picture of economic conditions. In addition, several Districts noted that contacts were generally optimistic about future activity.\nMost Districts reported overall growth in consumer spending that ranged from slight to moderate, at a pace that was often similar to that reported in the previous Beige Book. However, general merchandise retailers in New York noted that sales were weaker on balance since the previous report. Several District reports indicated that retailers were relatively optimistic about the remainder of the year. Meanwhile, tourism activity remained upbeat in several areas, with some reports of higher occupancy rates and solid advance bookings for travel and lodging.\nSeveral Districts reported that nonfinancial services grew at a moderate pace since the previous Beige Book. Districts reporting on transportation services generally noted growth in this sector, with a few pointing to capacity constraints in railroads, trucking, or both. Manufacturing activity increased in most Districts since the previous Beige Book; contacts in the Boston, Philadelphia, Atlanta, and Kansas City Districts reported positive near-term outlooks.\nResidential construction and real estate activity were mixed since the previous report. Commercial construction and real estate activity grew in most Districts. Banking conditions continued to improve relative to the previous Beige Book. Commercial loan volumes increased in nearly all reporting Districts. However, consumer loan demand was mixed, and some Districts pointed to low or reduced levels of demand for refinancing. Credit standards generally remained unchanged, and there were no reports of deterioration in credit quality.\nAgricultural conditions were mixed since the previous Beige Book. Prices for some crops declined, driven in part by very strong realized or anticipated production. These lower prices for some agricultural commodities were seen as weighing on producers' incomes, but as benefiting those using the commodities as inputs. In the energy sector, coal production was mixed and oil and natural gas production generally increased from already-high levels.\nEmployment continued to expand at about the same pace as that reported in the previous Beige Book. Most Districts reported that some employers had difficulty finding qualified workers for certain positions. A number of Districts characterized overall wage growth as modest, but reported upward wage pressures for particular industries and occupations, such as skilled labor in construction and manufacturing.\nConsistent with the previous Beige Book, price pressures remained subdued, with Districts reporting little to no change in price levels or modest increases. Firms generally reported that input prices were unchanged or up slightly.\nConsumer Spending and Tourism\nMost Districts described growth in consumer spending as slight to moderate, and at a pace roughly similar to that reported in the previous Beige Book. In particular, the Boston, Richmond, Chicago, St. Louis, Minneapolis, Kansas City, and Dallas Districts reported moderate growth; Philadelphia reported only slight growth in non-auto retail sales, and retailers in the Atlanta and San Francisco Districts also cited a slight improvement in sales. General merchandise sales in the New York District were weaker on balance since the previous report. Boston, New York, and Chicago reported that inventories were at desired levels. In Philadelphia, many retailers were avoiding the need for deeper discounting; however, New York and Cleveland reported that some contacts were running more promotions than usual. Boston, Philadelphia, Chicago, Kansas City, Dallas, and San Francisco indicated that retail contacts were relatively optimistic about the remainder of the year. In Chicago and Dallas, retailers were expecting that sales during the upcoming holiday shopping season would be up slightly from a year earlier.\nGrowth in auto sales varied across Districts, but was generally positive. In the New York District auto dealers reported that sales were steady to slightly stronger, while sales increased modestly in the Kansas City District. Auto dealers continued to report strong growth in the Philadelphia District. Lower gas prices spurred sales of larger vehicles in the Chicago District. Cleveland reported that new auto sales were down slightly in August from a year ago, but year-to-date sales were higher than the same period last year. Cleveland and Kansas City also reported solid sales of larger vehicles, such as light trucks and SUVs. In the Kansas City District, auto inventories fell; in Cleveland, inventory reports were mixed. Dallas reported that contacts were satisfied with their inventory levels. Philadelphia, Kansas City, and Dallas noted that dealers were optimistic about sales prospects for the rest of the year.\nTourism activity was relatively solid in several areas, with upbeat reports from the Boston, New York, Richmond, Atlanta, and Minneapolis Districts. In the Kansas City District, tourism fell from the previous month but was up strongly from a year ago. Growth was modest in Philadelphia. Boston, New York, Philadelphia, Atlanta, and San Francisco reported higher hotel occupancy rates in at least some parts of their Districts. Boston noted that restaurant revenues increased relative to a year ago. Advance bookings for travel and lodging were strong in the Philadelphia, Richmond, and Minneapolis Districts. In the Atlanta District, hospitality contacts maintained a positive outlook for the remainder of 2014 and the beginning of 2015.\nNonfinancial Services\nA number of Districts reported that activity in the nonfinancial services sector advanced since the previous Beige Book. The Boston District reported generally higher demand for consulting and advertising services. Philadelphia noted that over three-fourths of all service-sector contacts reported expectations that growth trends will remain positive over the next six months. Richmond reported that technology firms and engineering companies noted stronger revenue growth; Dallas indicated that demand for accounting services rose further from an already-high level; and Dallas and San Francisco noted that demand for legal services picked up in some areas. Staffing services increased in many Districts, including New York, Philadelphia, Cleveland, Richmond, Chicago, and Dallas. Philadelphia indicated that staffing requests increased for both temporary and permanent positions. A contact from a staffing firm in the Chicago District reported strong orders but noted that improving labor market conditions were leading to increased difficulties in finding qualified workers.\nDistricts reporting on transportation services generally noted growth since the previous report, with a few pointing to capacity constraints in railroads, trucking, or both. Atlanta reported increased railroad shipments and strong trucking freight demand. Contacts at trucking firms and railroads in the Cleveland District noted that insufficient capacity is a major issue that is currently confronting the industry. In the Minneapolis District, capacity constraints in freight rail have increased demand for trucking services and led to increased stockpiles at some iron ore production facilities. A trucking firm in the Kansas City District cited supply chain disruptions and new regulations as having slowed freight traffic. Dallas noted that air cargo volumes continued their upward trend, and Richmond indicated that activity remains strong at District ports. St. Louis reported some expansion plans for freight firms.\nManufacturing\nManufacturing activity increased in most Districts since the previous Beige Book. However, New York noted that manufacturing growth had stalled, and Boston indicated that their contacts cited weaker results than in the past few reports. The outlook for manufacturing was positive in a number of Districts.\nWithin manufacturing, growth was reported across a broad range of products. Cleveland, Chicago, and San Francisco noted increased steel demand. The Chicago and St. Louis Districts noted strength in the aerospace sector; however, San Francisco reported that aerospace and defense capacity utilization declined. Demand for construction materials or equipment increased in Philadelphia, Cleveland, Chicago, and St. Louis. Manufacturers reported continued demand from the energy sector in the Philadelphia and Cleveland Districts. Richmond and San Francisco noted strong demand for medical equipment. San Francisco reported that worldwide semiconductor sales were up markedly over the previous year. In contrast, a food producer in the Richmond District said that demand was flat; St. Louis and Minneapolis reported layoffs or plant closures by food producers; and Kansas City noted slower activity at some food processing plants. Chicago reported weaker demand for agricultural and mining equipment.\nReal Estate and Construction\nReports on residential construction and real estate activity were mixed. New York noted that single-family construction was sluggish in some areas, but that multifamily construction increased. Philadelphia reported only slight growth in home construction. In August, single-family construction starts in the Cleveland District reached their highest level so far this year, though the number of starts year-to-date remained slightly lower than last year. Richmond noted that residential construction across the District increased slightly for custom homes. Atlanta reported that multifamily construction continued to increase across much of the District, while Chicago indicated that both single- and multi-family construction continued to expand. Residential real estate contacts in the Atlanta District indicated that existing home sales and prices remained ahead of last year's levels and inventory levels were down from a year ago. Chicago noted that home sales were somewhat lower, and growth in home prices and residential rents slowed. San Francisco reported that sales of single-family homes were stable since the previous report.\nCommercial construction and real estate activity grew in most Districts. Richmond, St. Louis, and San Francisco reported increased commercial construction, industrial construction, or both. Cleveland noted that a majority of commercial contractors saw increased construction activity relative to a year ago. Commercial contractors in the Atlanta District saw an increase in construction activity across many property types. In Minneapolis, however, commercial construction activity declined. Richmond reported that commercial real estate activity improved modestly over the past several weeks. The New York District noted that the New York City office market continued to strengthen. Atlanta noted that many commercial brokers saw growth in activity. Chicago noted that commercial real estate activity continued to expand. Kansas City indicated that commercial vacancy rates declined and absorption and sales increased. Boston noted that commercial real estate fundamentals are either holding steady or improving.\nBanking and Finance\nIn most Districts, banking conditions continued to improve relative to the previous Beige Book, with net increases in loan volumes reported in a number of Districts.\nSince the previous Beige Book, New York reported that consumer loan demand had leveled off, Cleveland reported that consumer lending was stable, and Atlanta, St. Louis, and Kansas City noted that consumer loan demand increased. Chicago reported strong growth in auto lending. New York reported decreased demand for loan refinancing, Philadelphia noted negligible demand for refinancing, and Richmond reported that refinancing demand was mostly unchanged, but down in some areas.\nDemand for business credit expanded since the previous Beige Book. New York reported increased demand for commercial mortgages. Philadelphia noted increased loan volume for commercial and industrial loans. Cleveland, Atlanta, St. Louis, and San Francisco noted increased commercial loan demand. Chicago noted that business demand for equipment and commercial real estate financing rose. Financing for mergers and acquisitions as well as for capital expenditures rose in the Dallas District. Kansas City noted slight increases in commercial and agricultural lending.\nThere were no reports of deterioration in credit quality. New York reported that delinquency rates continued to decline, particularly for commercial loans and mortgages. Philadelphia banking contacts described steady improvement in credit quality, and San Francisco noted that asset quality has improved since the previous report. Most bankers in the Kansas City District reported that loan quality was unchanged compared with a year ago.\nCredit standards generally remained unchanged since the previous Beige Book. Cleveland noted that no changes were made to loan-application standards during the past six weeks, but lenders slightly relaxed terms and conditions. Some contacts in the Philadelphia District said that heated competition for loans was resulting in a slight rise in credit risks.\nAgriculture and Natural Resources\nPrices for many crops continued to decline since the previous Beige Book, driven in part by very strong realized or anticipated crop yields. This higher production is expected to offset some of the effect of lower prices on farm incomes. Chicago, St. Louis, and Kansas City reported very good crop conditions at the beginning of the harvest; additionally, Chicago and Minneapolis expect large corn and soybean harvests. Drought conditions persisted in parts of the Atlanta, Dallas, and San Francisco Districts. Atlanta, Chicago, Minneapolis, and Dallas noted that livestock, poultry, and dairy producers had benefited from increased output prices and lower feed costs.\nSince the previous Beige Book, oil exploration activity increased in the Minneapolis, Kansas City, and Dallas Districts. Richmond and Minneapolis noted increases in natural gas production, and San Francisco reported increased natural gas and electricity sales to manufacturers. Compared with a year earlier, coal production was flat in Cleveland, mixed in Richmond, and increased in St. Louis. Recent decreases in oil prices were reported by Atlanta and Kansas City; natural gas price decreases were reported by Cleveland, Richmond, and Kansas City. Iron ore production in the Minneapolis District held steady since the previous report.\nEmployment, Wages, and Prices\nThe pace of employment growth was about the same as that reported in the previous Beige Book. Most Districts reported that some employers had difficulty finding qualified workers for certain positions. In particular, manufacturers in the Boston District said that they continue to look for machinists; Chicago noted that difficulties in finding skilled labor have often delayed construction projects; and in the Dallas District a shortage of workers in heavy construction and engineering was causing some delays in projects for the petrochemical industry. Contacts in Richmond, Minneapolis, and Kansas City noted difficulty in filling openings for truck drivers.\nA number of Districts characterized wage growth as modest, though several also reported upward wage pressures for particular industries and occupations, such as skilled labor in construction and manufacturing. Cleveland, Richmond, and Kansas City noted upward wage pressures for transportation workers; Richmond also reported upward wage pressures for skilled engineers, managers, information technology professionals, and bankers. San Francisco noted that software developers were receiving above-average wage increases. New York reported that workers were more frequently leaving jobs for higher pay, while a contact in the St. Louis District noted increased turnover of skilled employees who were switching to higher-paying jobs.\nConsistent with the previous Beige Book, overall price pressures remained subdued, with Districts reporting little to no change in price levels or modest increases. Firms generally reported that input prices were unchanged or up slightly. Districts noted that several commodity prices fell since the previous report, although cattle, hog, and dairy prices remained at elevated levels. New York reported that cost pressures have largely subsided among manufacturers, but remained fairly widespread among service firms. Firms in the Atlanta District indicated that their pricing power remained relatively weak. However, in Chicago, a number of manufacturers expected to be able to raise prices, especially in the auto industry. St. Louis reported that some retail dealers of construction materials increased prices. Minneapolis noted that metals prices decreased somewhat since the previous report. Restaurant menu prices in Kansas City rose more slowly than in previous surveys; San Francisco reported that restaurant prices increased slightly in July and August.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nOctober 15, 2014\nGrowth in economic activity in the Seventh District remained moderate in September, and contacts maintained their optimistic outlook for the rest of the year. Consumer and business spending, manufacturing production, and construction and real estate activity all increased moderately. Credit conditions and cost pressures changed little on balance. Corn and soybean prices fell as a big harvest got underway, but milk, hog, and cattle prices increased.\nConsumer Spending\nGrowth in consumer spending remained moderate in September, led by continued strength in auto sales. Lower gas prices spurred sales of larger vehicles, especially light trucks, and consumers continued to take advantage of low lending rates and easing loan standards. Several auto dealers also noted that leasing activity had finally returned to pre-recession levels. Non-auto retail spending increased slightly, as growth picked up for discretionary spending categories in recent weeks. Retail contacts generally expected that sales in the upcoming holiday season would be up slightly relative to a year ago.\nBusiness Spending\nBusiness spending also continued to grow at a moderate pace in September. Inventories remained at comfortable levels for most retailers and manufacturers. Non-auto retailers reported adding more to their holiday season inventories than they did last year. Capital expenditures and capital spending plans steadily increased, with expenditures primarily going toward replacing IT and industrial equipment. A number of manufacturing contacts, especially auto suppliers, reported that demand was strong enough to justify expansion in the near future. Both actual hiring and hiring plans increased at a moderate pace, and many contacts reported slightly higher turnover. Many manufacturing contacts added hours to meet increased demand. Holiday hiring began, and retailers plan to hire slightly more holiday workers than last year. Demand remained strong for skilled workers, particularly for those in professional and technical occupations and skilled manufacturing and building trades. Contacts again mentioned expanding internal training programs to address worker shortages and an increased willingness to pay higher wages. A staffing firm reported strong order books, but noted that improving labor market conditions in the District were leading to increased difficulties finding qualified workers.\nConstruction and Real Estate\nConstruction and real estate activity also increased moderately over the reporting period. Residential construction continued to expand in both the single- and multi-family markets. An industry contact noted that with homebuilders beginning to exhaust their existing inventories of vacant in-fill lots, single-family construction might slow in some areas of the District until planned projects start to come online. Builders also noted improved availability of financing for new projects, but indicated that difficulties in finding skilled labor have often delayed construction. Home sales were somewhat lower, and growth in home prices and residential rents slowed. Real estate contacts expected sales to return to normal levels in the coming months, pointing to recent increases in online and open-house traffic. Nonresidential construction increased, driven in large part by demand for industrial and office buildings. Automotive parts manufacturers, in particular, remained a source of demand for industrial buildings. Commercial real estate activity continued to expand, with contacts noting strong demand for medical office buildings. Vacancies ticked down, rents rose, and leasing of industrial buildings, office space, and retail space all increased.\nManufacturing\nManufacturing continued to grow at a moderate pace in September. The auto, aerospace, and energy industries remained a source of strength for the District. Light vehicle production increased as manufacturers built up inventories in anticipation of continued growth in sales. Demand for steel steadily increased and most specialty metal manufacturers\u2019 order books continued to fill. Led by the U.S. market, demand for heavy machinery picked up some on net, as higher demand for construction machinery overshadowed weaker demand for agricultural and mining equipment. Slowing demand has led some agricultural machinery manufacturers to start offering incentives such as extended warranties, low interest rate loans, and special financing to help dealers sell used equipment. Manufacturers of construction materials reported a modest increase in demand, but still were disappointed in the slow pace of improvement in the housing market. Utility contacts reported that weather-adjusted load growth was flat over the reporting period.\nBanking and Finance\nCredit conditions were mixed in September. Financial market participants noted slightly tighter financial conditions, pointing to an increase in equity market volatility and widening corporate bond spreads. In contrast, banking contacts cited looser conditions, with business and consumer lending both increasing. Business loan demand for equipment and commercial real estate financing rose, as did utilization of credit lines for working capital. Banking contacts also noted that despite elevated acquisition multiples, their clients continue to seek opportunities for mergers and acquisitions; this was especially the case for large corporations with ample cash balances. Consumer loan demand increased, with contacts citing some additional growth in credit card lending, continued strong growth in auto lending, and an uptick in mortgage lending.\nPrices and Costs\nCost pressures changed little on balance over the reporting period. Energy costs declined. Steel and aluminum prices increased. A contact noted that supply constraints in the Midwest pushed up the local price for aluminum to a new high relative to benchmark spot prices. A number of manufacturers expected to be able to raise prices, especially those in the auto industry, where capacity is increasingly constrained. Retail prices were down slightly as contacts reported more generous sales promotions. Meat and dairy prices remained elevated, though contacts did not report price pressures for other grocery items. Overall, wage pressures were modest, but a number of contacts again reported moderate wage pressures for skilled workers. Non-wage labor costs changed little from the previous reporting period. Many contacts reported passing some of their higher health care costs on to employees in the form of higher co-pays or deductibles.\nAgriculture\nOverall crop conditions were very good at the start of the harvest. The District should see record corn and soybean harvests. Early results indicated yields for corn and soybeans would range from above-average to record-high levels. The huge anticipated harvests pushed down corn and soybean prices. Crop income was lower than a year ago as higher yields were insufficient to offset lower prices. Crop insurance will cover some of the lost income, but farmers already are planning to trim costs for next year, particularly spending on farm equipment and other capital purchases. Corn farmers helped bid up cattle prices, with the intention of using the abundant harvest as feed for their own cattle production rather than selling it. Hog and milk prices were higher as well, contributing to expansions in output of these commodities.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nOctober 15, 2014\nReports from business contacts paint a mixed picture of economic conditions in the First District. Manufacturers cite weaker results than in the last few reports and retailers are seeing flat to moderately increasing sales, while the tourist sector continues to be robust. Results from the consulting and advertising sector are generally quite positive. Commercial real estate markets are level or improving in the region, while residential real estate contacts mostly report declines in sales and prices, but ongoing cautious optimism. Firms are not generally hiring, on net, but those with substantial increases in business--one manufacturer and several in consulting and advertising--are raising their headcounts. Price pressures remain minimal according to contacts, with manufacturers and retailers noting only selective and modest price increases.\nRetail and Tourism\nRetail contacts for this round report comparable-store sales that are flat or increasing year-over-year; those with increases cite mid-to-high single digit growth from a year earlier. Spending is strong for furniture, household items, leisure and sporting goods, and apparel. Inventories are either \"healthy,\" slightly up, or slightly down, depending on the contact. Respondents cite some modest price increases (2 percent to 3 percent) on certain items and anticipate this trend will continue. For the rest of the year, contacts continue to predict low-to-mid single-digit sales increases on an annual basis, with an outlook for the U.S. economy that ranges from \"sideways growth\" to \"an optimistic outlook for steady growth.\"\nThe Boston-area economy continues to enjoy a strong boost from travel-related spending. In August 2014, hotel occupancy rates were up 12 percent year-over-year, while average nightly room rates were up almost 18 percent from August 2013. Through August, restaurant revenues were up 3.5 percent year-over-year, while attendance at museums and other attractions was up 2.2 percent. Though the results are not yet in for September, advance activity was strong for both September and October, traditionally the peak travel months. The hotel industry is predicting a 7 percent revenue increase for 2015 over 2014, with most of this growth reflecting rising room rates.\nManufacturing and Related Services\nOf the 11 manufacturing firms contacted this cycle, five report some weakness in sales, a much higher number than in any recent cycle. The reasons cited for the weakness are varied. A manufacturer of industrial motors and brakes says that August was typically slow but that sales had not bounced back in September as much as they usually do, with orders down about 5 percent year-on-year. A furniture maker cites a 10 percent dropoff in sales during the winter which continued through the summer. A firm making advertising products says that sales have been declining 10 percent per year for a while.\nOne contact expresses caution about an \"order bubble\" in commercial aviation, an industry that has generally been a robust source of growth in the region. According to the contact, airlines order jet planes to make sure that if they need them, they have a slot in the queue; the worry is that at some point there could be a wave of cancellations.\nNone of our contacts reports excessive pricing pressure from suppliers or excessive pushback on price increases from customers. One contact says it is \"always a battle,\" albeit successful, to convince customers to accept price increases. None of our contacts is laying off, but only one reports large hiring increases. A contact in the media business says they are \"very careful with headcount.\" The one firm to report substantial hiring, a biotech firm, cites rising costs of hiring skilled workers in New England. As usual, several contacts say they are always looking for workers with particular manufacturing skills, such as machinists. Our contacts report no significant changes in inventories. Most firms cite increased capital spending more or less in line with their plans; only the biotech firm reports major increases.\nIn general, the manufacturing outlook is positive but very guarded. Two firms, the manufacturer of motors and brakes and a firm in the textile and chemical businesses, say that they are waiting to see how things play out in the fall.\nSelected Business Services\nMost contacts report that demand for consulting and advertising is up from a year ago, although the pace of growth varies across sectors and firms. Government and strategy consultants note a strong uptick in requests for proposals and eagerly await contract award decisions. A high-end economic consulting firm is still overwhelmed with work, mostly related to mortgage-backed securities (MBS) litigation, and at 12 percent growth year-over-year is now beyond capacity. An advertising merchandise firm is slightly outpacing the 5 percent growth they estimate the industry is experiencing on average; they are seeing less pushback on prices from their large clients and cite an increase in large orders. In healthcare consulting, contacted firms' revenues range from flat to up 10 percent from a year ago.\nPrices are increasing in a bimodal fashion for contacts in consulting: Firms with relatively flat revenue are holding price structures constant for now, even as they bid on more jobs and anticipate winning their \"usual\" fraction; those whose business is booming are raising prices somewhat, taking on new personnel, raising wages, and experiencing increased compliance costs, and revenue growth is still outstripping costs. An advertising materials firm that has exhibited steady growth is keeping to its 5 percent increase in staff for this year, while the better-faring healthcare consulting firms are increasing employment in the 6 percent range. These firms are generally filling client-facing salesperson roles with some ease, and developer and e-commerce related roles with greater difficulty.\nAll contacts are hopeful about the future; they say that macroeconomic conditions are improving. Even the slower-growing firms see increases in demand and additional deals in the pipeline, and estimates for next year's growth range from 5 percent to 15 percent. The government and strategy consulting contacts' main concern is that they secure a normal percentage of the contracts for which they are contending. The business strategy contact notes strong business in the Northeast, but is concerned over a lack of new businesses being formed. The economic analysis firm continues to expect MBS-related work to dry up soon and is comfortable with the idea of throttling back growth when it happens. Healthcare consulting contacts feel somewhat at the mercy of government healthcare reforms, but generally feel that \"the wind is at their backs\" and growth will be sustained for the foreseeable future.\nCommercial Real Estate\nCommercial real estate fundamentals are either holding steady or improving across the First District. In Boston, contacts report that rents continue to rise in the popular Fort Point Channel area and have even started to increase in portions of the Financial District after several flat months. Healthy demand for office space and lack of new office construction are seen as the forces behind the latest rent increases in Boston, which are perceived as being in excess of increases in operating costs. Office leasing is also reportedly strong in Boston's inner suburbs, such as Waltham and Burlington. Construction activity in greater Boston is reportedly steady, but at a high level, with an emphasis on mixed use and \"adaptive reuse\" of existing structures. Labor shortages and associated high labor costs are seen as potential constraints on the growth of construction activity moving forward, in Boston and more broadly within Massachusetts. In Providence, leasing activity picked up modestly in both the office and industrial sectors since the previous report and industrial space remains in short supply in relation to demand. In greater Portland, the retail sector continues to grow, resulting in higher rental rates downtown and increased construction of small-scale retail outlets in surrounding areas. Maine's hospitality sector also remains strong, with better-than-expected occupancy rates at recently opened hotels in Portland and new hotels under construction around the state. In Hartford, leasing volume is unchanged in recent weeks and there is no significant construction activity reported. While that city's office vacancy rate has declined slightly in recent months, there has been no noticeable increase in asking rents. Also in greater Hartford, investment sales demand remains healthy and the number of properties being placed for sale is on the rise. A similar increase in supply of buildings for sale is reported for greater Boston, and contacts in both cities infer that a growing number of owners believe that prices are at or near their peak, borrowing costs are near their trough, or both. Contacts also report that demand for Boston's commercial real estate, especially from foreign buyers, remains strong and is expected to continue so for the foreseeable future.\nContacts are either cautiously optimistic (as in Hartford and Providence) or optimistic (Boston and Portland) that commercial real estate fundamentals will continue to improve. In both Providence and Hartford, contacts note that uncertainty over the outcomes of upcoming state and/or local elections is contributing to uncertainty in the local economic outlook.\nResidential Real Estate\nClosed sales of both single family homes and condominiums declined in August compared with a year earlier in at least four of the New England states. In Maine, by contrast, sales of single family homes increased as condominium sales decreased. Information for New Hampshire is not available. The median sales price also declined relative to August of last year for single family homes and condominiums in at least four states. The exception is Massachusetts, where prices for single family homes increased year-over-year for the twenty-third consecutive month and condominium prices rose for the fifteenth consecutive month. Massachusetts contacts say the sales decline and price increases are driven primarily by a shortage of inventory, as demand is steady; inventories have been falling on a year-over-year basis for more than two years. Contacts say affordability is a concern: \"With prices on the rise, it's becoming more difficult to save the down payment, especially with rents as high as they are. We are hearing that buyers are approaching their threshold for what they are willing to pay.\" In contrast, Maine is seeing inventory increases and contacts expect to be busy in the fall market. In Connecticut and Maine, contacts report a need for higher paying jobs in their states to help sell the inventory of non-starter homes. As one contact in Maine stated, \"We need the middle class to feel better. Right now they question what the next few years will be like.\" Notwithstanding declines in closed sales and median sales prices, residential real estate contacts say they are cautious but optimistic.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nOctober 15, 2014\nAggregate business activity in the Third District continued to grow at a modest pace during this current Beige Book period with very few shifts in the growth rates of specific sectors. The most notable change in growth was reported by staffing companies, which experienced further increases in staffing requests for temporary and permanent positions. Overall, service sectors maintained a moderate pace of growth. Nonauto retailers continued to report slight growth, auto dealers continued to report strong growth, and tourism activity continued at a reportedly modest pace. Manufacturers also reported an ongoing modest rate of increase in activity. The commercial and residential real estate sectors continued to report slight overall growth during the current Beige Book period for construction and for leasing of existing commercial properties; contacts reported little change for existing home sales, which continued to be down somewhat on a year-over-year basis.\nLending volumes continued to grow slowly, and credit quality continued to improve, while contacts continued to warn of a slight rise in credit risks because of heated competition for loans. Overall, contacts reported slight increases in wages, home prices, and general price levels that were similar to those reported for the previous Beige Book period. Contacts continued to anticipate moderate growth over the next six months.\nManufacturing\nThird District manufacturers have continued to report modest growth overall since the previous Beige Book, but signals were somewhat mixed. A somewhat greater percentage of firms reported increases in new orders and shipments, even as a slightly greater percentage of firms reported decreases (the share reporting no change in activity declined). Gains in activity continued to reflect demand from a broad base of sectors. Except for paper products, all sectors reported overall increases in shipments and orders. Contacts specifically mentioned ongoing demand from the auto and energy sectors. Some firms reported growing demand for home construction products; however, demand remains at a low level. Some producers of construction-related materials worried that if housing starts do not soon rise further, industry shakeouts may result in plant closings to eliminate idle capacity. Other contacts mentioned that demand from defense contracts had stabilized or was growing again from lower levels.\nOver half of Third District manufacturing contacts expected business conditions to improve during the next six months. While this is a slightly lower percentage than was reported during the previous Beige Book period, this is the second consecutive period in which no firms anticipated deterioration of business conditions. Moreover, a somewhat larger percentage of firms now expect to increase employment levels over the next six months, to increase their level of capital spending, or to do both.\nRetail\nSince the prior Beige Book period, Third District contacts have continued to report slight growth in nonauto retail sales. Although, sales growth of back-to-school shopping items was generally described as modest. An operator of area malls reported that cooler fall-like weather has helped move fall apparel inventory, which has allowed many retailers to avoid deeper discounting, thus improving their margins. After a midsummer lull, the restaurant business picked up in August and continued growing into September. Contacts reported very strong restaurant activity in Center City Philadelphia. Overall, contacts are increasingly optimistic. While hesitant to forecast the upcoming holiday season, one contact suggested that a lot of ongoing new tenant openings may attract more shoppers. Another contact was optimistic about three significant Center City retail openings this fall.\nAuto dealers continued to report strong sales growth. A Pennsylvania contact described August as one of the best months ever for auto sales at dealers throughout the state; reported sales for September were also strong but were beginning to show signs of their normal seasonal slowdown. New Jersey contacts also reported strong August sales followed by lower volumes for September, as they approach the model-year changeover and typical year-end selloff in October. Dealers remain very optimistic for continued strong sales levels through 2015.\nFinance\nThird District financial firms have continued to report slight increases in total loan volume since the previous Beige Book. Volumes increased most for commercial and industrial loans and for some consumer credit lines (though not for credit cards). Reports on demand for home mortgages varied across the region from modest growth to little change; all contacts described low levels of demand for new mortgages, and negligible demand for refinancing loans. Most contacts reported little change in the commercial real estate market. Overall, banking contacts continued to report steady improvement in credit quality; several mentioned that the financials of most small business customers had improved. However, competition remains intense for creditworthy loan prospects. Some contacts also cited risky loan terms that they would not match; one described the market as \"frothy.\"\nReal Estate and Construction\nThird District homebuilders have continued to report slight growth in new home construction since the previous Beige Book period. Contacts credited lower gas prices for improving sales traffic and lower interest rates for improving contract signings. Construction activity is expected to continue at modest levels, as builders are starting some homes on spec to boost their inventory of move-in-ready homes before the end of the year. Residential real estate brokers reported little change in sales this period from the prior Beige Book period. On a year-over-year basis, sales have fallen in most major markets. Brokers noted that more deals are falling through now than prior to the recession, and bankers noted that fewer people are qualifying for mortgages. These observations have been borne out by recent monthly reports from Third District multilists that have seen positive year-over-year growth of pending contracts evolve into negative growth of contracts closed one month later. Brokers also reported that the months' supply of inventory has begun to increase again. Still, brokers remain optimistic for some improvement in 2015.\nOverall, nonresidential real estate contacts have reported little change since the previous Beige Book period in the pace of growth of construction and leasing activity, which remains slight. Construction activity continues to be greatest for industrial/warehouse building projects; however, some major office and residential projects have broken ground in Center City Philadelphia, and construction activity will accelerate next spring when the buildings begin to go vertical. An architecture and engineering firm reported that its business continued to exceed its plan, and it will be hiring again. Demand for the firm's services has been especially strong from energy-related sectors. Contacts also reported improved leasing activity in downtown Philadelphia and suburban Philadelphia, especially for Class A office space. Strong demand continued in Center City Philadelphia for office, residential, and retail space. In the suburban Philadelphia market, a developer noted that a \"flight to quality\" from older properties has driven rents higher for Class A office space and prompted ongoing renovations to upgrade older offices into Class A space.\nServices\nThird District service-sector firms have continued to report moderate growth in activity since the previous Beige Book. Nearly half of all firms reported increases in new orders and sales. Several contacts from banking and health-related manufacturing reported that some health-care providers had reduced personnel and expenses. These cost-cutting measures were attributed to narrower margins due to smaller reimbursements from insurance plans. The cuts occurred even though these providers have been experiencing modest demand increases as a result of previously uninsured individuals gaining access to healthcare. Staffing contacts in eastern and central Pennsylvania reported moderate increases in hiring for temporary and permanent positions. Staffing requests have come from a variety of sectors and for business expansions as well as replacements. Staffing firms remained very upbeat about prospects for this year and next. Once again, over three-fourths of all service-sector contacts reported expectations that growth trends will remain positive over the next six months; none anticipated declines.\nThird District tourist areas continued to benefit from great weather conditions as the summer blended into fall. Accordingly, contacts reported modest gains overall. One retail contact reported dramatic sales increases throughout the shore areas, attributing double-digit year-over-year gains to more day-tripping even as occupancy rates of shore rentals continued to rise. (These gains, which were still strong in September, were viewed as resulting from lower gasoline prices as well as from favorable weather.) Several contacts continued to report that rebuilding from Hurricane Sandy was not complete in the hardest-hit areas, where new flood insurance and building standards have slowed reconstruction plans. In the Poconos, contacts reported favorable weather, higher occupancies, and strong bookings for the upcoming fall weekends. Contacts reported that recent casino closings in Atlantic City are expected to have a large effect on the city that should be relatively localized. Reported employment losses in Atlantic City are high; however, many of the lost jobs were part time (and many of these would have ended after the summer tourist season was over). Contacts expect that the remaining casinos may pick up some of the lost business from the recent closures; however, existing staff levels should be sufficient to service any added activity. More broadly, District tourism contacts remain generally positive regarding prospects for the fall.\nPrices and Wages\nOverall, Third District contacts reported little change to the steady, slight pace of price level increases that is similar to that seen in other recent Beige Book periods. Less than one-third of manufacturing contacts reported an increase in their input costs; just over 10 percent reported charging higher prices for their own products. About one-fifth of service-sector contacts reported an increase in prices paid and received--a somewhat smaller share than in the prior period. Auto dealers reported little change in pricing. Several contacts continued to report tight margins. Generally, contacts reported that hiring remains cautious--occurring when necessary for replacement or for incremental growth; however, staffing firms continued to note some increased hiring for expansion. Staffing contacts also reported a few leading signs of wage pressure: A few job prospects have turned down offers, some companies are making counteroffers to retain employees, and clients are generally less rigid about salary levels.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nOctober 15, 2014\nThe Tenth District economy grew modestly in late August and September, and most contacts were optimistic about future activity. Consumer spending was up moderately despite some sluggishness at restaurants and hotels, and expectations for future sales were mostly positive. District manufacturing activity grew modestly, and wholesale trade firms reported improved sales. District real estate activity increased slightly, and activity in the energy sector continued to expand. Transportation, professional, and high-tech firms reported slower growth relative to the previous survey. Bankers reported steady loan demand, better loan quality, and stable deposits. In agriculture, crop conditions remained solid in the District, but lower crop prices weighed on the outlook for farm incomes. Prices grew more slowly in most industries, while some firms reported increased wage pressures as well as labor shortages for specific positions.\nConsumer Spending\nConsumer spending grew at a solid rate, and contacts were more optimistic about future sales growth than in previous reports. Retail sales grew moderately, at a similar pace of growth as in the previous survey. Several retailers noted stronger sales of home improvement and building materials, though sales for some higher-priced items were characterized as weak. Expectations for future sales remained strong, and inventory levels were expected to rise somewhat. Auto sales were up modestly from the previous survey. Dealer contacts anticipated some increases in sales in the months ahead and noted solid sales for mid-sized vehicles and small SUVs. Auto inventories fell further, with one contact noting a considerable rise in the cost of inventory. Restaurant sales weakened in late August and September but remained well above year-ago levels, and contacts expected sales to improve in coming months. Many restaurants reported a reduction in employment, and one restaurant owner said they would be adding a health care surcharge of 3 percent to each check. District tourism activity fell from the previous month, but was up strongly from a year ago. Expectations for future tourism edged down somewhat but remained solid.\nManufacturing and Other Business Activity\nDistrict manufacturing and other business activity rose modestly in late August and September. Factory production increased, primarily at durable goods producers, though several nondurable-goods producers also reported modest gains. However, activity at some food processing plants continued to decline in the face of higher beef prices. Contacts reported solid gains in factory shipments and employment, with new orders up slightly. Expectations for future factory activity held steady at overall favorable levels. Manufacturers' capital spending plans increased slightly and remained well above year-ago levels. Growth in wholesale trade sales increased, with contacts expecting continued solid growth in the next few months. Transportation, professional, and high-tech firms reported smaller gains than the previous survey, although sales remained considerably higher than year-ago levels and many contacts expected solid improvement heading forward. One trucking firm cited supply chain disruptions and new regulations as having slowed freight traffic for both shippers and distributors.\nReal Estate and Construction\nOn balance, District real estate activity increased slightly in late August and September with residential real estate activity flat and commercial real estate activity increasing moderately. Residential home sales were unchanged compared to the previous survey period and were similar to year-ago levels. Sales of low- and medium-priced homes continued to run ahead of sales for higher-priced homes. Home prices increased modestly, and inventories continued to rise slightly. Most residential real estate contacts expected home sales to decrease in the coming months primarily reflecting typical seasonal declines. Housing starts and construction supply sales edged down since the previous survey period. Residential construction activity was expected to pick up slightly as builders anticipated a slight increase in traffic of potential buyers. Commercial real estate activity increased moderately relative to the previous survey period as contacts continued to report a decline in vacancy rates, an increase in absorption, higher sales, and increased construction activity. The commercial real estate market was expected to strengthen at a moderate pace over the coming months.\nBanking\nBankers reported steady overall loan demand, a modest improvement in loan quality, and mostly steady deposit levels in late August and September. Loan demand was slightly improved for agricultural loans, consumer installment loans and commercial and industrial loans. Demand for residential real estate loans was slightly weaker compared to the last survey. Even with the recent modest improvement in loan quality, most bankers indicated loan quality was unchanged compared to a year ago, and many expected it to remain the same over the next six months. Credit standards remained largely unchanged for all major loan categories, and deposit levels were stable for most banks.\nEnergy\nEnergy activity continued to expand in late August and September. District contacts reported steady growth in drilling activity, primarily for oil, and expectations for future drilling were solid, though somewhat lower than the previous survey. Oil prices declined in late August and September, as global demand failed to keep up with supply. Most respondents expected oil prices to decline marginally in the coming months, yet most producers anticipated that drilling would remain profitable across the areas where they are active. Natural gas prices continued to decline but remained slightly above year-ago levels; most contacts expected these prices to start to rise modestly as the winter heating season approaches. Energy firms' overall capital expenditure plans remained solid.\nAgriculture\nDespite expectations of above-average yields, further declines in crop prices weighed on farm income prospects in the District. However, crop insurance and some pre-selling of this year's crop at higher prices earlier in the year may help mitigate the effect on overall farm incomes of recent spot price declines. The corn and soybean crops were mostly rated in good to excellent condition as harvest began. Cattle prices rose since the last survey period while hog prices fell with increased production resulting from higher dressed weights. The demand for farm operating loans has risen substantially from last year as more crop producers borrowed to pay for operating costs. Bankers also reported a rise in requests for agricultural loan renewals and extensions and noted that loan repayment rates have edged down from the high levels seen the past few years. Despite the sharp drop in crop prices, farmland values were typically holding at high levels.\nWages and Prices\nRelative to the previous report, prices rose at a slightly slower pace in most industries, and while most firms reported only modest wage pressures, in some cases wage pressures were more pronounced. Retail price growth was minimal, likely because retailers' input costs rose more slowly than in previous surveys. Restaurant menu prices also rose less than in previous surveys despite persistent growth in input costs. Manufacturing selling prices rose slightly, while raw materials prices continued to increase at modest rates. Transportation input prices fell and fewer transportation firms raised their selling prices. Construction materials prices were up in late August and September, and many builders expected further increases. Contacts in most industries expected prices to rise moderately going forward. Increased wage pressures were noted in a few industries, particularly manufacturing, restaurants, transportation, and energy. Some contacts continued to report a short supply of workers, particularly for drivers, construction, and skilled manufacturing positions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nSeptember 3, 2014\nAggregate business activity in the Third District continued to grow at a modest pace during this current Beige Book period. The most notable changes in growth were reported among several consumer spending categories; these changes may have been triggered by unusually beautiful summer weather that delivered mostly sunny days (thus depressing retail spending but boosting tourism). In particular, contacts at tourist destinations throughout the District reported modest overall growth (greater than the slight growth seen last period) with stronger revenues for hotels, but mixed results for the tourist restaurants and shops. Contacts from nonauto retailers reported slight growth (slower than the modest growth last period), and auto sales decelerated to merely strong growth (from the very strong growth last period).\nService sectors maintained a moderate pace of growth overall, while staffing services continued to rise at a modest pace. Manufacturers also reported an ongoing modest rate of increase in activity. The commercial and residential real estate sectors continued to report slight overall growth during the current Beige Book period, both for construction and for sales and leasing of existing properties. Lending volumes continued to grow slowly over this period, and credit quality continued to improve. Contacts continued to warn of a slight increase in credit risks resulting from heated competition for loans. Overall, contacts reported slight increases in wages, home prices, and general price levels, similar to the paces reported for the previous Beige Book period.\nOverall, contacts continued to anticipate moderate growth over the next six months. Generally, more firms expressed greater confidence in the economy and more overall optimism for growth. Several contacts professed relief in the relative absence of any \"summer swoon,\" resulting in a reduced level of uncertainty.\nManufacturing\nOverall, Third District manufacturers have continued to report modest increases in new orders and shipments since the last Beige Book with somewhat faster growth in the early part of the seven-week period than in the latter. Gains in activity continued to reflect demand from a broad base of sectors. Contacts specifically mentioned stronger demand from the auto, aerospace, energy, and railroad car sectors. Housing construction and capital spending on equipment and building repair were also mentioned as spurring some growth in new orders. Weak demand was cited from sectors that produce farm equipment, CDs and DVDs, and toys. In general, contacts expressed their belief that overall consumer confidence had improved, as had the confidence of their business customers.\nTwo-thirds of Third District manufacturing contacts expressed expectations that business conditions would improve during the next six months; none anticipate deterioration. This represents significantly greater optimism than during the last Beige Book period. However, a somewhat larger percentage of firms now expect to reduce employment levels over the next six months, and a somewhat smaller percentage expect to increase their level of capital spending.\nRetail\nSince the prior Beige Book period, contacts reported slight growth in nonauto retail sales in the Third District overall--somewhat slower than last period's modest pace. Results were mixed throughout the period and among retail types. An operator of area malls reported a pickup in activity in August after a \"flattish\" July. Growth in activity was greatest for family and back-to-school shopping in areas where schools started early. Apparel sales were boosted by relatively cool August weather that helped to focus shoppers' attention on new fall inventories. An outlets operator reported moderate to strong sales growth for July but that one mid-August weekend was flat. However, the outlets operator stated that this has been \"the most positive summer since 2007\" and that retailers are not seeing the deep discounting (of up to 50 percent) that was evident last summer. Contacts remain optimistic; one stated that retail health is generally better than it was before the recession. Contract talks for future leases are beginning to look out to 2016. Meanwhile, fewer lease deals are stagnating as more retailers are proceeding with their existing lease plans.\nThe very strong pace of auto sales reported in the prior Beige Book period appears to have softened to merely strong growth as the current Beige Book period draws to an end in August. In Pennsylvania, July was reported as a record month for statewide auto sales. However, sales appeared to be backing down during the first two weeks of August. One contact suggested that dealers sometimes begin running out of inventory at this time of year. New Jersey contacts reported that year-over-year growth rates of auto sales moderated throughout this Beige Book period, following very high rates reported during the prior Beige Book. Dealers remain very optimistic for continued strong sales levels through 2015.\nFinance\nThird District financial firms have continued to report slight increases in total loan volume since the last Beige Book. Demand increased most for consumer credit lines, such as credit cards and auto loans. Demand for home mortgages and home equity lines continued to grow, but the gains were slower, and some contacts reported falling demand for refinancing loans. Reports of demand for commercial and industrial loans were mixed. The market for commercial real estate appears to have changed little. Banking contacts generally reported ongoing steady improvement in credit quality and their loan portfolios, but they continued to warn of competition leading to an increase in risk taking. Customers have a \"strengthening sense of stability\" and greater optimism, according to several banking contacts. In particular, capital spending by businesses has picked up a bit; however, enough caution remains to constrain much new hiring.\nReal Estate and Construction\nThird District homebuilders have reported little change in sales overall since the last Beige Book period, although results are mixed across the District. A New Jersey builder reported another weak month in July but noted a slight pickup in August. In Pennsylvania, a north-central builder credited shale gas money for prompting greater-than-normal numbers of contract signings in July and August. \"First-time homebuyers are nonexistent,\" according to a south-central homebuilder who reported that this August is worse than last year. Residential real estate brokers reported continued slight improvements in sales this period on a par with the prior Beige Book period at the beginning of this summer season. However, on a year-over-year basis, most major markets remain somewhat weaker. Central Pennsylvania is an exception with slight increases reported for existing homes sales in the Harrisburg area. Declines in the Greater Philadelphia area were smaller than during the last Beige Book period; declines in the Jersey Shore area were greater. A major Philadelphia-area broker expressed little change in activity from the last Beige Book period, reiterating that sales were definitely doing better than they were earlier in the year and that higher-priced homes were selling slowly but all other homes were moving quickly. Brokers remain optimistic for further improvement in 2015.\nNonresidential real estate contacts reported that growth in construction activity and in leasing activity have changed little from the slight pace seen in the previous Beige Book period. Construction activity continues to be greatest for industrial/warehouse building projects, which get snapped up quickly when built on spec. An architecture and engineering firm reported that this has been a good summer. Contacts also reported improved leasing activity in southern New Jersey for small offices as well as industrial buildings. However, firms reported few signs of rents strengthening in most office markets and cited continued weak growth in service-sector employment.\nServices\nThird District service-sector firms have continued to report moderate growth in activity since the last Beige Book. About one-third of all firms reported increases in new orders and sales. Although fewer firms this period reported increases, many firms reported that their current lull or slowdown is seasonal. Several large service companies reported generally steady growth and a greater sense of economic certainty for themselves and their clients. Some staffing contacts in New Jersey and Pennsylvania reported that they are adding new clients, and that firms are hiring to grow their businesses, not just replacing staff. Staffing firms were upbeat about prospects for the remainder of the year. Over three-fourths of the service-sector contacts reported expectations that growth trends will remain positive over the next six months.\nTourist areas in the District benefited from great weather conditions throughout most of the summer. Accordingly, most contacts reported modest gains overall. For some areas, including the Pennsylvania Dutch area and much of the shore, visitation was up from a year ago. Two Lancaster hotel operators experienced their highest occupancy rates since 2008 and their highest average daily room rates since 2006. A Delaware shore hotel operator had \"one of its best Julys ever, and best month of August, too.\" Traffic was reported as down in Atlantic City because of the struggling casinos, and in a few parts of Ocean County, the rental market is still below pre-Sandy levels; however, most of the southern Jersey Shore communities experienced strong summer bookings. Despite greater numbers of tourists, spending at restaurants and shops in tourist areas continues to be soft as households are watching their overall budget. Tourism contacts remain generally positive regarding prospects for the fall.\nPrices and Wages\nOverall, Third District contacts reported little change to the steady, slight pace of price level increases, similar to other recent Beige Book periods. Less than one-third of the manufacturing firms reported an increase in their input costs--a smaller fraction than in the prior Beige Book period. The percentage of firms reporting higher prices for their own products also fell. About one-fourth of the service-sector firms reported an increase in prices paid and received--slightly fewer than last period. Auto dealers reported little change in pricing. Brokers continued to report slight overall increases in home prices. Some contacts continued to report tight margins. Several homebuilders reported increasing difficulty finding specialty trade contractors. Overall, contacts among service-sector companies reported little change in labor costs. Generally, contacts reported that hiring remains cautious--occurring when necessary for replacement or for some incremental growth; however, some staffing firms noted more hiring for expansion than during the previous Beige Book period.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nSeptember 3, 2014\nThe Second District's economy has continued to expand at a moderate pace since the last report. Prices of finished goods and services remain generally steady, while businesses continue to report moderate upward pressure on input prices. Labor market conditions continue to improve: Overall, business contacts report some pickup in hiring, and employment agencies describe the job market as strengthening. Service sector firms report that growth has picked up slightly since the last report, while manufacturers say that growth has moderated somewhat. General merchandise retailers report that sales were mixed in July but improved in early August; auto dealers report that sales were mixed but generally steady. Tourism activity has continued to show strength since the last report. Home sales and rental markets were steady to stronger, with inventories still low but rising. Commercial real estate markets have been mixed. Finally, banks report that household loan demand has leveled off but that demand from commercial borrowers continues to grow; they also note little change in credit standards and ongoing declines in delinquency rates across the board.\nConsumer Spending\nGeneral merchandise retailers say that sales were roughly on plan since the last report with some improvement noted in recent weeks; selling prices have remained steady overall. One major retail chain indicates that sales improved moderately and were generally on plan in July and thus far in August. Retail contacts in upstate New York note that sales were generally flat in June and July but have picked up in early August, with the pickup attributed to strong back-to-school demand. Most retail contacts portray inventories as being in good shape, though one upstate mall characterizes them as on the high side. Prices are mostly described as steady.\nAuto dealers across upstate New York report mixed results. Buffalo area dealers report that new vehicle sales increased in July but that sales of used vehicles remained soft. Conversely, after a strong spring season, Rochester area dealers say that new vehicle sales weakened in July and remained flat in early August. Auto dealers note that both wholesale and retail credit conditions remain in good shape.\nTourism activity has strengthened further since the last report. Business at Broadway theaters continued to show strength in July and the first half of August, with both attendance and overall revenues up roughly 13 percent from a year earlier. Hotel occupancy rates remained elevated in New York City and have picked up across much of upstate New York--in particular, in the Buffalo, Rochester and Albany areas--in July. Consumer confidence in the region was mixed again in July: The Conference Board's survey showed confidence rising to the highest level seen so far this year in the Middle Atlantic region (NY, NJ, PA), whereas Siena College's survey of New York residents shows confidence retreating, after climbing for three straight months.\nConstruction and Real Estate\nThe District's housing markets have been mixed but a bit firmer, on balance, since the last report. New York City's rental market has continued to strengthen, with rents rising at a moderately brisk rate, while the city's co-op and condo market has been generally stable. Across much of the District, including New York City, home resale activity has receded somewhat, while the inventory of available homes has risen slightly but remains low; selling prices are flat to up slightly. One homebuilding contact in northern New Jersey notes that the tone of the market is fairly positive for multi-family (mostly rental) construction, and that developers are building more ahead of demand. In contrast, single-family developers are reluctant to build any significant inventories of new homes. A contact in New York City notes that there is a good deal of new development in the pipeline and expects sales and closings to pick up in the months ahead; this contact also sees a good deal of new construction in the planning stage--largely condos in Manhattan and rental apartments in Brooklyn and Queens.\nCommercial real estate markets have been mixed since mid-year. Manhattan's office market has continued to tighten, with availability rates slipping to a 5-1/2 year low and rents up 5 percent to 10 percent from a year ago. Across the rest of the region, however, office markets have been stable to slightly softer: in Long Island availability rates have held steady near a 7-year low, whereas in northern New Jersey, Westchester and Fairfield counties, and across upstate New York they have been steady at high levels. Office rents have been steady to up slightly. Industrial markets have been steady across most of the District, though availability rates have edged down in northern New Jersey, and asking rents have risen rapidly in Long Island and particularly in Brooklyn and Queens. Finally, Manhattan's retail vacancy rate has edged up while rents remain flat; in Long Island and northern New Jersey, however, the market for retail space has shown signs of firming slightly.\nOther Business Activity\nManufacturing firms in the District report some moderation in growth from the brisk pace noted in the last report, whereas service-sector firms indicate a pickup in growth. Manufacturers express increasingly widespread optimism about the near-term business outlook. Service-sector firms report that increases in input costs remain fairly widespread; among manufacturers, such price pressures increased slightly but remain fairly subdued. The vast majority of both manufacturing and service-sector contacts continue to report that selling prices remain flat.\nThe labor market has shown further signs of strengthening since the last report. Manufacturers continue to add workers, on balance, and considerably more plan to increase than to reduce staffing levels in the months ahead. A growing proportion of service firms say they are hiring, though there has been little change in the proportion that say they are raising wages. One major New York City employment agency reports that hiring activity has continued to improve gradually, while another reports more widespread strengthening and notes increased wage pressures across the board. A growing proportion of workers are said to be switching jobs for increased pay. One trucking industry analyst reports that the industry is doing well but cites a chronic shortage of drivers and notes that this has intensified somewhat in recent months.\nFinancial Developments\nSince the last report, small to medium-sized banks across the District report increased demand for commercial mortgages and commercial & industrial loans, but they report that demand for consumer loans and residential mortgages has leveled off. Bankers also report that demand for refinancing continues to decline. Credit standards are reported to have tightened for commercial & industrial loans, but remain unchanged across other loan categories. Respondents report no change in spreads of loan rates over cost of funds for their residential mortgage business and a narrowing of spreads for all other loan categories--particularly commercial mortgages. Finally, bankers report a further decrease in delinquency rates in all loan categories, but most notably for consumer loans.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nSeptember 3, 2014\nAccording to reports from businesses across the Sixth District, economic activity increased modestly from July to mid-August. Regarding the outlook, most firms continue to be optimistic and expect higher growth over the remainder of the year.\nRetailers noted sales had increased from their year-earlier level and automobile sales continued on their upward trend. Reports from contacts in the travel and tourism sector remained upbeat. Residential brokers and builders cited that sales of existing and new homes were ahead of last year's levels. Contacts also indicated that inventory levels were mostly down and home prices continued to rise on a year-over-year basis. Commercial real estate firms reported that demand continued to improve and construction activity grew modestly, on balance. With the exception of motor vehicle producers, manufacturers generally noted a decline in new orders and production compared with the previous reporting period. Bankers reported mixed results regarding financing conditions as they remain cautious about residential lending but competitive in their commercial lending. Businesses indicated modest increases in hiring across much of the District over the reporting period. Firms cited relatively stable wage growth, while input cost pressures were described as benign.\nConsumer Spending and Tourism\nAccording to District merchants, retail sales weakened slightly since the last report, though they remained above their year-earlier level. Retailers indicated that margins remained tight. Back-to-school sales got off to an early start but have been dominated by heavy promotional activity and discounting. Once again, several contacts reported that a strong housing market in their area had boosted retail sales. The outlook among District retailers is a bit more guarded than in our last report but most businesses anticipate sales will improve through year end. District auto dealers noted that sales were ahead of their year-earlier level; as in the broader retail sector, promotional activity was strong.\nReports from travel and tourism contacts were positive. Hospitality contacts in Georgia, Florida, and Louisiana saw increased occupancy and daily room rates in July compared with the same period last year. Reports indicated that theme park attendance and ticket sales early in the summer were softer than expected as family vacations were delayed because of the addition of winter makeup days at the end of the school year. However, activity picked up to anticipated levels as the summer progressed. Mississippi casino gaming revenues increased compared with a year ago. Industry contacts expect business and leisure travel to exceed forecasts for the remainder of 2014.\nReal Estate and Construction\nMany District brokers reported that home sales had increased from their year-earlier level. The majority of brokers indicated that inventory levels remained flat or declined on a year-over-year basis. Contacts continued to note that home prices were ahead of their year-earlier level. However, the outlook among brokers worsened somewhat from previous reports as most expect home sales to remain flat or decline slightly over the next three months.\nReports from District builders remained fairly positive. Most indicated that recent activity either met or exceeded their plan for the period. The majority of builders noted that construction activity and new home sales were ahead of year-ago levels. Half of builders reported that inventories of unsold homes were down from a year earlier. The majority of contacts continued to see modest home price appreciation. The outlook for new home sales and construction activity remains positive.\nDemand for commercial real estate continued to improve since the last reporting period. Contacts indicated that absorption and rent growth across property types remained positive. Contractors noted that apartment construction remained fairly strong and that the level of construction activity across other property types had picked up modestly. Half of contacts reported no change in backlogs from their year-earlier level, while the remaining half indicated their backlog had increased relative to a year ago. The outlook among District commercial real estate firms also remains positive.\nManufacturing and Transportation\nDistrict manufacturers indicated that the pace of growth had slowed over the reporting period. Contacts cited declines in new orders and production compared with the previous reporting period. Purchasing agents noted longer wait times for materials ordered from their suppliers. Finished inventory levels were reported to have increased somewhat. The outlook among manufacturers for higher production improved slightly from the previous reporting period.\nReports from district transportation firms were mixed. Trucking companies noted strong freight volumes; however, driver shortages and tight trucking capacity continued to negatively affect the industry. Air cargo experienced slight increases in tonnage led by a rise in international freight. District rail contacts cited double-digit increases in domestic coal volumes as export coal volumes declined, and shipments of petroleum products nearly doubled from their year-earlier levels. Increased capital expenditures on rail infrastructure and rail car capacity were also noted.\nBanking and Finance\nBankers reported that they were well capitalized and had plenty of money to lend. However, banks continued to be cautious with regards to residential lending. Availability of credit to homebuyers, particularly first-time homebuyers, remained limited as rigorous underwriting standards continued to slow down the approval process. Contacts reported a decrease in mortgage loan production due to difficulties associated with the Qualified Mortgage Rule. Lender competition for commercial loans continued to be fierce. Consumer credit availability improved since the previous report. Auto loan demand remained very strong over the reporting period.\nEmployment and Prices\nEmployment levels picked up modestly across most of the region; however, businesses still mentioned difficulties in finding qualified workers, which seem to be both intensifying and broadening across skills and occupations. In addition to trucking, engineering, construction, and information technology positions, contacts increasingly reported difficulty filling mid-level positions such as analysts and clinicians.\nMost contacts continued to cite relatively stable annual wage growth in the 2 percent to 3 percent range. However, there were some reports of rising offer wages and ongoing upward wage pressure for some high-skill, low-supply positions. Overall, however, businesses continued to report relatively benign input-cost pressures. Only a few companies noted plans to increase prices over the remainder of the year and expressed confidence that any increases would stick. According to the Atlanta Fed's survey on business inflation expectations, unit costs are expected to increase 2.0 percent over the next 12 months.\nNatural Resources and Agriculture\nGulf Coast refineries have experienced record-high utilization rates over the summer as a result of refining, refitting and capacity expansions, increases in both domestic and foreign demand, and access to lower-cost crude oil. Energy firms expect sustained growth in the coming months, yet continue to monitor volatile global events because of their potential to affect crude oil supply and energy prices.\nParts of Georgia, Florida, and Alabama experienced abnormally dry to moderate drought conditions over the reporting period, while the rest of the District ended the period drought free. The USDA designated several counties in the Florida Panhandle as primary natural disaster areas due to damages and losses caused by excessive rain earlier this year. Lower corn prices benefited livestock and poultry producers that rely on corn for feed. Pulp exports were robust as a result of increased demand for low-end paper products from emerging markets.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nSeptember 3, 2014\nThe Eleventh District economy grew at a moderate pace over the past six weeks. Reports on manufacturing activity were largely positive, without the scattered reports of weaker demand noted in the last report. Retail and automobile sales strengthened, and demand for nonfinancial services was stable or improved. Both home sales and commercial real estate leasing activity remained solid. Demand for oilfield services remained robust, and agricultural conditions improved. Prices increased modestly or held steady, as did employment levels. Outlooks remained optimistic.\nPrices\nMost responding firms said prices increased slightly or held steady since the last report, with an uptick in the share of firms raising prices. Retailers and food producers noted continued price increases for meat and dairy and were beginning to see rising prices for vegetables. Ticket prices and fees moved up across the airline industry, while fuel costs decreased. Lumber, cement and brick producers reported increases in selling prices, largely due to increasing input costs. Scattered reports of selling price increases came from other manufacturers as well. Prices for accounting services were at high levels, with firms saying that they have been able to hike rates up over the past year with very little pushback. Legal fees were flat at average levels, and loan pricing was unchanged at competitive levels.\nThe price of West Texas Intermediate crude oil fell since the last report, as did the price of natural gas. Gasoline and diesel prices also fell over the reporting period.\nLabor Market\nEmployment at most firms increased or held steady, with some continued reports of difficulty in finding skilled workers. Reports of hiring were slightly less widespread than in the prior reporting period and came from airlines, auto dealers, some high-tech and transportation manufacturers, and manufacturers of construction materials (such as metals, lumber, and brick). Some construction-related manufacturers reported a shortage of truck drivers, with one contact noting they cannot compete with the wages offered in the energy sector and another saying the company is sponsoring commercial driver's license training in an effort to fill necessary positions. Retailers noted flat employment at existing stores but a couple of contacts noted continued hiring for new stores. Energy contacts continued to report a very tight labor market.\nReports of upward wage pressures were roughly as prevalent as in the last report. Staffing services firms noted that wage pressures remained strongest for skilled workers. Upward wage pressures were reported across the manufacturing sector, from semi-skilled positions in construction-related manufacturing to high-skilled positions in high-tech manufacturing. Energy industry contacts continued to note upward pressure on wages and bonuses.\nManufacturing\nMost manufacturers noted an increase in demand since the last report and outlooks were nearly unanimously positive. Primary and fabricated metals producers noted broad-based improvement in demand, with one contact saying that demand resulting from highway, commercial building, and energy-related work was particularly robust. Demand reports from lumber, cement, glass, and brick manufacturers were mixed but all contacts noted that business was up from a year ago.\nContacts in high-tech manufacturing reported that demand grew at a good pace over the past six weeks. Demand for semiconductors from the auto and industrial sectors was particularly strong, and one contact noted that there was some increase in demand from computer manufacturers that may be related to the termination of support for the Windows XP operating system.\nFood producers said demand was flat over the reporting period but up slightly from a year ago. Chemical producers reported higher production rates. Refinery utilization rates increased and lower oil prices and a wider spread between domestic and international oil prices helped boost refiner margins in recent weeks. Outlooks of refiners and chemical producers remained positive.\nRetail Sales\nRetail sales increased over the reporting period, but reports on the pace of growth were mixed; stronger growth was seen in stores benefiting from back-to-school shopping while food price inflation likely hampered grocery sales growth. According to three national retailers, demand in Texas continued to slightly outperform the nation as a whole. One contact noted that demand in areas of Texas with more energy-related activity was growing faster than in the rest of the state. Contacts' outlooks were positive, with growth expectations for 2014 versus 2013 ranging from low- to mid-single digits.\nAutomobile sales increased at roughly the same pace as during the last reporting period. Contacts noted that July was a great month for the industry; one auto dealer said it was their best month ever. Demand was up relative to a year ago. Contacts' outlooks for the rest of the year were good, with one contact expecting growth in the second half of the year to be better than in the first.\nNonfinancial Services\nNonfinancial services firms reported demand was flat to up from six weeks ago, and all were optimistic in their outlooks for the months ahead. Demand reports from staffing firms were mixed, although contacts noting an increase said it was broad-based across sectors, with particular strength in direct hires for engineers, IT, and science positions. Demand for legal services was flat, although contacts said health care was a new bright spot. Two legal contacts anticipate increased work from energy-related projects and another noted additional compliance work for banks.\nTransportation service firms said overall cargo volumes increased since the last report. Changes in shipping cargo volumes were mixed but notable growth was seen for steel. Railroad contacts reported an increase in year-to-date cargo volumes versus the same period a year ago. One contact noted that motor vehicle, lumber, metallic ore, and crushed stone volumes rose markedly in the western part of the U.S. over the reporting period. Small-parcel cargo volumes increased in July for the fifth consecutive month, with growth driven by retail trade (led by e-commerce) and wholesale durables.\nAirlines reported that passenger demand was flat over the reporting period and up from a year ago. Domestic demand has been stronger than international demand, and one contact noted a large increase in corporate demand.\nConstruction and Real Estate\nHome sales grew at a steady to slightly slower pace since the last report, and sales were generally even with last year's levels. New home prices continued to rise, in part due to low inventories of finished lots and high construction costs, and contacts noted decreased affordability for entry-level buyers. Apartment demand remained strong, and contacts noted increases in occupancy rates and solid rent growth. Contacts said multifamily construction remained at elevated levels, and overall outlooks were optimistic.\nDemand for commercial real estate remained solid. Office leasing activity was steady, and according to one contact construction activity slowed in Houston but increased slightly in Dallas. Demand for industrial space was strong, particularly in Dallas where leasing activity among mid-size tenants picked up. Outlooks remained generally positive.\nFinancial Services\nLoan demand remained soft but increased slightly from the last report. Credit-funded oil and gas and other commercial and industrial projects contributed to the uptick. Residential and commercial real estate loans and small business lending demand remained fairly stable. Mortgage lending grew only slightly, as credit conditions remained notably tight. Loan quality improved, and interest rates on loans remained low. Deposit volumes continued to grow despite deposit rates staying near zero percent. Compliance costs from federal- and county-level regulations were noted as increasingly burdensome by multiple contacts. Outlooks were more positive than at the time of the last report, in light of mounting evidence of a strengthening Texas business climate.\nEnergy\nDemand for oilfield services remained robust. Growth in Texas drilling activity over the reporting period was concentrated outside of the major basins. Margins for oilfield service providers were largely unchanged. Geological service firms continued to see strong demand. Outlooks for the rest of the year remained optimistic and were largely unchanged from the prior reporting period.\nAgriculture\nThe severity of District drought conditions eased over the reporting period, particularly in the Texas Panhandle and southern New Mexico. Texas' cotton crop was mostly in fair to good condition and harvesting started in some areas. Most crop prices declined over the past six weeks due to expectations of very high U.S. corn, cotton, and soybean production. Domestic demand for beef remained solid despite continued record-breaking cattle prices. Some cattle producers have started to rebuild their herds after the sharp liquidations that took place over the past few years, but progress has been slow because of historically high cattle prices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nSeptember 3, 2014\nThe Tenth District economy grew modestly in July and early August, and contacts remained optimistic about future growth. Consumer spending increased modestly with slightly higher sales reported by retailers and auto dealers, while restaurant and tourism contacts experienced moderate growth. Manufacturing growth slowed somewhat yet remained positive, and expectations for future activity remained solid. Construction activity was stronger, and was expected to continue to expand at a modest pace. Bankers reported steady loan demand, as well as stable loan quality and deposit levels. Crop prices, along with farm income expectations, were lower due to improved growing conditions and elevated crop production levels. Energy-sector activity increased, with firms noting a modest rise in oil well drilling. Wage pressures increased slightly since the last survey period, particularly for some skilled trade positions. Prices grew modestly, and were expected to rise at the same pace going forward.\nConsumer Spending\nConsumer spending increased modestly in July and August, although contacts in some industries were slightly less optimistic about future sales growth than in previous surveys. Retail sales edged higher and store inventories fell sharply. Several retailers noted stronger sales of home improvement and household items. Expectations for future retail sales remained solid, with inventory levels expected to stabilize. Auto sales increased slightly and were modestly above year-ago levels, but the rate of expected future sales growth slowed mildly. Contacts said mid-sized cars and small SUVs sold particularly well. Auto inventories fell slightly and were expected to continue to decrease. Restaurant sales grew moderately, although future activity was expected to remain steady. Tourism-related activity continued to rise, with conditions considerably better than a year ago. Tourism contacts expected solid activity heading into the early fall months.\nManufacturing and Other Business Activity\nGrowth in District manufacturing activity slowed somewhat, but expectations remained positive. Production growth eased at both non-durable and durable goods-producing plants, particularly for food and metals producers. Growth in shipments and new orders also moderated, as did order backlogs, and employment levels fell slightly in August. Expectations for future factory activity rose slightly and remained solid. Manufacturers' capital spending plans decreased slightly, but were still above year-ago levels. Transportation, professional, and high-tech firms reported fairly stable sales growth from the previous survey, and expected growth to edge higher in coming months. Several transportation contacts also mentioned continued high demand for construction products. Meanwhile, growth in wholesale trade fell back, with further easing expected.\nReal Estate and Construction\nDistrict real estate activity expanded modestly in July and early August, supported by increased construction and stronger sales activity. Residential home sales edged up, with sales of low- and medium-priced homes remaining more robust than sales of higher-priced homes. Home prices increased further, and inventories rose slightly compared to the previous survey period. Residential real estate contacts expected home prices and sales to grow modestly and inventories to decrease slightly over the coming months. Housing starts increased slightly, and sales of construction supplies continued to increase at a moderate pace. Residential construction activity was expected to expand at a modest pace with stronger anticipated sales, starts, and traffic of potential buyers. Commercial real estate and construction activity strengthened further, with lower vacancy rates and increased sales and absorption; expectations were for moderate sales growth over the next few months.\nBanking\nBankers reported steady overall loan demand, stable loan quality, and unchanged deposit levels relative to the previous survey. Respondents reported a minor decrease in demand for commercial real estate loans, and demand for consumer installment loans was somewhat softer. Most respondents reported steady demand for agricultural loans. Demand for commercial, industrial and residential real estate loans was slightly weaker compared to the previous survey. Most bankers indicated loan quality was unchanged compared to a year ago, and a majority of bankers expected loan quality to remain the same over the next six months. Credit standards remained largely unchanged in all major loan categories. In addition, deposit levels stayed constant.\nAgriculture\nImproved growing conditions and the potential for record crop production this fall depressed prices and lowered farm income expectations since the previous survey period. The majority of the District's corn and soybean crops were rated in good condition but improved yields may not offset the effect that recent price declines will have on income. District farm income remained well below year-ago levels even with strong profits in the livestock sector due to rising cattle and hog prices. Demand for farm operating loans rose further but loan-to-value ratios remained relatively conservative. Still, some bankers reported loan repayment rates had weakened since last year and also noted a rise in loan renewals and extensions. Despite lower farm income, cropland values generally held steady during the growing season while strong demand for high-quality pasture supported modest gains in ranchland values.\nEnergy\nDistrict energy activity edged higher in July and early August. Drilling activity rose modestly, particularly for oil wells, and expectations on activity levels remained solid for the upcoming months. Crude oil rig counts reached their highest levels in seven years, while natural gas rig counts remained steady but low. Oil prices eased in early August, which contacts attributed to unchanged global supply and fewer supply threats in the Middle East. Despite slightly lower prices, local producers did not expect drilling plans to be negatively affected. Natural gas spot prices slid to the lowest level this year in the midst of mild summer temperatures and steady supply; however, prices remain higher than a year ago. Most energy contacts expected oil and natural gas prices to fall slightly through the coming months, but indicated capital expenditure plans remained solid.\nWages and Prices\nOver the reporting period, prices rose modestly in most industries, and wage pressures increased slightly. Retail prices continued to increase moderately, and most retailers expected prices to continue to move up at a similar pace in the coming months. Raw materials prices in the manufacturing sector grew slightly, while manufacturers' selling prices maintained their slight growth rate from the previous survey period. Transportation input and selling prices rose modestly, and firms expected input prices to rise further in the near future. Restaurant menu prices continued on their moderate upward trend, reflecting rising food costs. Construction materials prices moved slightly higher and builders expected prices to continue to rise. Wage pressures were slightly higher in most industries. Many contacts reported difficulty in finding qualified workers across a range of skill levels and industries.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nSeptember 3, 2014\nThe Fifth District economy strengthened further in recent weeks. Manufacturing advanced moderately as shipments and new orders accelerated, and executives were upbeat about further improvement in business conditions. Retail sales grew moderately, although shoppers remained conservative in their spending. At non-retail services firms, the pace of revenue growth was modest. Tourism strengthened, with an increase in group bookings. Lending volumes rose, with stronger demand for mortgage loans, and competition among lenders was stiff. Commercial real estate lending increased in several states, although there were few reports of new construction. There were some reports of upward pressure on interest rates. Residential real estate sales improved modestly, although inventory and prices were little changed. Commercial real estate activity generally strengthened, with mixed reports on vacancy rates. Rental rates were little changed in most locations, while commercial real estate sales prices varied across the District. In agriculture, some crop prices decreased, while input prices were unchanged. Planting and harvesting continued on schedule. In energy markets, coal production was unchanged and prices declined. Demand for both temporary and permanent employees rose slightly in recent weeks. Wage growth slowed in the manufacturing and service sectors, according to our most recent surveys. Prices of manufactured finished goods and raw materials grew at a slower rate, and prices in the service sector, including retail, moved up more rapidly.\nManufacturing\nManufacturing activity improved moderately in recent weeks. According to our latest survey, shipments and new orders grew at a faster rate and inventories of finished goods and raw materials rose at about the same pace as in our last report. Several North Carolina manufacturers reported steady order volumes in recent weeks, while two Virginia producers stated that shipments and new orders increased slightly. A manufacturer of electrical products located in South Carolina reported that sales had recently increased and he was upbeat about the future. Additionally, an executive at a pipe manufacturing facility in Maryland said that orders and shipments were up slightly from the previous month. Several manufacturers reported greater optimism about future business conditions. According to most contacts prices of raw materials and finished goods rose at a slower pace. In contrast, an executive at a Carolinas packaging corporation stated that input prices decreased, and output prices remained stable.\nPorts\nPort activity strengthened further since our last report. Volume and traffic through District ports were considerably greater year over year, with double-digit gains in imports. Some of the increase was attributed to diversions from the West Coast during labor negotiations. In addition, the peak import season appears to have shifted earlier this year. Consumer goods such as apparel, auto parts, and plastic products were import leaders. Furniture imports were flat according to one source. A port official noted that ship capacity has become very tight, driving up prices for smaller importers. Export leaders were soybeans, grains, corn, lumber, forest products, and auto parts, and for one port, cars.\nRetail\nRetail sales grew moderately faster in recent weeks despite generally restrained spending by consumers. A representative of retailers in central Virginia commented that consumers seemed to be thinking, \"It's nice, but is it necessary?\" The manager of a discount store at the Virginia shore reported flat sales in recent weeks, and a West Virginia grocer said his market was soft. Further, a building supply executive said that consumers were less optimistic than a month ago. In contrast, a South Carolina chain grocer stated that sales had increased and that he was remodeling some of his stores. Most auto dealers reported stronger sales growth in recent weeks, although a couple reported a slightly slower pace. A West Virginia dealer attributed his softer sales to layoffs of coal workers in his area. Retail prices increased more rapidly since our last report.\nServices\nRevenues at non-retail services firms rose modestly in the last four weeks. An executive at a financial services firm in central Virginia commented that his clients were \"somewhat sanguine about prospects,\" and an accountant at a business-to-business firm reported more new contracts. In contrast, a CFO at a healthcare organization said that demand for elective services remained soft, and resources have been managed to match the volume. In trucking, an executive reported that business was steady at typical levels, with some upward movement in contract and spot market pricing. He said that his firm was seeing a continued shift toward more \"dedicated\" agreements, in which customers were locking in rates for future shipping. Prices in the service sector rose slightly faster compared to a few weeks ago.\nDistrict tourism strengthened during July and August, particularly group bookings for business and reunion events. A Baltimore hotelier said autumn sporting events were driving advance bookings. In Virginia Beach, transient bookings softened, while group reservations increased for family retreats, association events, and some military events. Hotel bookings were also strong at resorts in the mountainous areas of the District, where a contact reported a very strong start to his fiscal year, owing in part to well-attended local events. Some room rate increases were reported.\nFinance\nReports on loan volumes were mostly positive in recent weeks. Demand for residential mortgages strengthened somewhat. Firms in South Carolina and West Virginia reported increased mortgage demand, and a North Carolina lender stated that loan activity had improved. In contrast, a banker in central Virginia reported a slight decrease in mortgage demand over the last few weeks. Refinance lending was unchanged in Virginia and increased slightly in West Virginia. Demand for auto loans strengthened in West Virginia. Financial contacts in Maryland, North Carolina, and South Carolina reported that commercial lending was up. Additionally, loan volumes increased in Virginia, where demand was buoyed by some new construction projects in Northern Virginia and Richmond.\nAccording to several bankers, competition for loans remained stiff. For example, a West Virginia banker characterized business lending in the state as originating more from a \"take away game\" than from new loans. Additionally, an auto dealer in Maryland remarked that competition was strong for consumer credit, especially for buyers with high credit scores. Another Maryland banker said that used car financing tightened slightly but was still available and affordable. Some slight upward pressure on interest rates was reported in Virginia and West Virginia. Lastly, credit standards were largely unchanged with the exception of Virginia, where some terms were relaxed.\nReal Estate\nDistrict housing markets improved modestly since our last report, particularly in August. A Charlotte agent stated that closed sales and pending sales were up year over year, while a Northern Virginia Realtor reported above-average buyer traffic. A broker in Washington D.C. said that summer sales had picked up slightly from the slump caused by an unusually harsh winter. District-wide, home prices were generally flat and average days on the market appeared little changed in recent weeks, with higher-end homes continuing to sell more quickly than homes at other price points. Existing home inventories were mostly flat, although there were scattered reports of more homes coming onto the market. A Northern Virginia broker reported an increase in absorption of single-family inventories. Contacts indicated that they saw no change in the level of multi-family construction.\nCommercial real estate activity strengthened moderately over the past several weeks. Commercial brokers in many areas of Virginia and South Carolina reported steady leasing activity, while Realtors in Charlotte and Charleston, West Virginia said leasing slowed; a contact in Roanoke indicated no change. Vacancy rates decreased according to Realtors in Richmond and Charleston, South Carolina, while contacts in Virginia Beach, Raleigh, Charlotte, and Roanoke stated that vacancy rates were unchanged. Realtors in parts of Virginia, West Virginia, and North Carolina reported that rents stabilized, and landlords were staying close to list prices on rentals, with fewer concessions and incentives. A slight uptick in rents was reported in Charleston, South Carolina. Comments on the supply of Class A office space were mixed. Brokers in Virginia Beach, Raleigh, and Charlotte reported an increase in commercial sales; however commercial sales prices varied across the District. The amount of construction anchored by grocery stores and restaurants increased in Richmond and Virginia Beach, and a source reported additional distribution center construction in Charlotte.\nAgriculture and Natural Resources\nPrices received by farmers dropped for some crops since our last report. For example, cotton prices decreased in the last six weeks and corn prices fell year over year. However, farmers reported no change in input prices in recent weeks. A Virginia producer reported completion of summer soybean planting and barley harvesting, while corn harvesting has begun in South Carolina. A sod farmer commented that he expects high demand and tight supply to end soon.\nCoal production was unchanged since our last report, and exports of metallurgical and steam coal weakened. In addition, coal prices declined modestly in the past six weeks.\nLabor Markets\nThe demand for workers rose slightly in recent weeks. In Maryland, contacts from the manufacturing, financial services, technology, and construction industries indicated increases in hiring, including some previously outsourced positions. A source in the District of Columbia stated that job growth continued, but at a slightly slower pace than in prior weeks. A community developer in North Carolina reported some staff growth and a high volume of applications for open positions. A South Carolina staffing firm representative noted an increase in hiring, including for temporary and temp-to-permanent jobs. However, some hardware merchants reported cutbacks in employee hours. A manufacturer in North Carolina said finding skilled labor remained a problem; however, an in-house training program was almost complete. Finally, some call centers in North Carolina had difficulty filling open positions. Wage reports were little changed on balance. According to our most recent surveys, manufacturing employment eased slightly and the average workweek lengthened; employment in the service sector strengthened. Average wage growth in the manufacturing and service sectors slowed, particularly wage growth in the retail sector.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nSeptember 3, 2014\nThe Ninth District economy grew moderately since the last report. Increased activity was noted in consumer spending, tourism, construction, commercial real estate, professional services, manufacturing, and energy. Agricultural conditions were mixed, while activity was steady in mining and down in residential real estate. Labor markets continued to show signs of gradual tightening. Overall wage increases were moderate, and prices were generally level.\nConsumer Spending and Tourism\nConsumer spending increased moderately. A Minneapolis-area mall reported slightly higher recent sales compared with a year earlier; summer items were largely sold out. A restaurant chain reported recent same-store sales up about 8 percent compared with a year ago. Several new chain restaurants were moving into Rapid City, S.D. Recent vehicle sales were solid in many parts of North Dakota, with brisk sales continuing in the western part of the state. Auto dealers in rural areas were concerned about a potential drop in sales activity if crop prices remain relatively low.\nSummer tourism activity was above year-ago levels. According to officials, tourism in northwestern Wisconsin has been solid since mid-June after a slow start; tourism was above year-ago levels in western North Dakota. Summer tourism activity in the Upper Peninsula of Michigan was about the same as last year, according to an official. Hotel and motel occupancy was up from a year ago during the early part of the summer season in western South Dakota; however, in recent weeks, some tourism businesses observed slower activity relative to last year.\nConstruction and Real Estate\nCommercial construction activity increased. Compared with a year ago, the value of commercial permits issued in July in Bismarck, N.D., increased significantly, but industrial permits were relatively flat. Commercial permits in Billings, Mont., more than doubled in value in July from a year earlier. In Sioux Falls, S.D., the value of July commercial permits increased significantly from a year ago. Residential construction increased from last year. The value of July housing permits increased in Bismarck from a year ago, primarily due to multifamily building. July single-family residential building permits in Billings increased 67 percent in value from last year, but multifamily building was down. The value of July residential permits in Sioux Falls increased 24 percent from the same period last year. However, in the Minneapolis-St. Paul area, the value of July residential permits decreased 8 percent compared with July 2013. Based on a Minneapolis Fed mid-August survey of Ninth District contacts, a large majority of respondents from the construction sector thought sales revenue would increase over the next four quarters.\nActivity in commercial real estate markets increased since the last report. A real estate analytics firm noted that Minneapolis-St. Paul office, retail, and hotel vacancy rates dropped in the second quarter from the first quarter of 2014. According to the mid-August survey, half of the respondents from the real estate sector expect increased sales revenue over the next four quarters, while 29 percent expect a decline. Residential real estate market activity decreased since the last report. In the Sioux Falls area, July home sales were down 15 percent, inventory increased 9 percent, and the median sales price increased 5 percent relative to a year earlier. July home sales were down 6 percent from the same period a year ago in Minnesota; the inventory of homes for sale increased 12 percent, and the median sales price rose 4 percent. The Minneapolis-St. Paul multifamily vacancy rate increased in the second quarter from the first quarter of 2014.\nServices\nActivity at professional business services firms increased since the last report. According to the mid-August survey, respondents from the professional services sector experienced increased sales activity over the past four quarters and expect increased sales activity over the next four quarters. Professional services respondents also expect increased profits and productivity over the next four quarters.\nManufacturing\nDistrict manufacturing continued to increase since the last report. A manufacturing index released by Creighton University (Omaha, Neb.) fell slightly from the previous month in July for Minnesota and the Dakotas, but remains at a level consistent with expansion in activity. About two-thirds of manufacturers responding to the Minneapolis Fed's mid-August survey reported that their sales increased over the previous four quarters, and more than half expect continued growth over the next year. In Minnesota, a heating, ventilation, and air conditioning manufacturer and a custom precision manufacturing machine producer recently announced capacity expansions.\nEnergy and Mining\nActivity in the energy sector grew briskly since the last report. Mid-August oil and gas exploration activity increased from a month earlier. North Dakota oil production jumped 2 percent in June from the previous month to a new record. Regulators in North Dakota recently approved a 150 megawatt wind turbine project. Mining activity held steady since the last report. July production at Minnesota iron ore mines increased from June, but was down slightly from a year earlier. Since the last report, a copper-nickel mining and processing operation in the Upper Peninsula made its first ore shipments.\nAgriculture\nAgricultural conditions were mixed since the last report. Most of the District's corn and soybean crops were in good or excellent condition in mid-August, with strong yields forecasted. Livestock and dairy producers continued to benefit from higher output prices and lower feed costs. A majority of lenders responding to the Minneapolis Fed's second-quarter (July) survey of agricultural credit conditions reported lower farm incomes compared with the previous quarter. Relative to a year earlier, prices received by farmers in July were lower for corn, soybeans, and wheat; prices increased for hay, cattle, hogs, poultry, eggs, and milk. A mildew outbreak in North Dakota may reduce sunflower yields.\nEmployment, Wages, and Prices\nLabor markets continued to tighten gradually since the last report. A recreational vehicle manufacturer will add 100 new employees, and an industrial equipment manufacturer announced plans to hire more than 30 new workers. A snack food manufacturer in a rural area has hired 60 foreign workers with seasonal work visas in order to fill open positions. A job-placement firm noted increased demand recently for workers across a number of industries. According to the mid-August survey, over half of all respondents expect to keep the same number of full-time employees on staff over the next 12 months, while about a third anticipate increased employment.\nIn contrast, an agribusiness firm recently announced that it will cut about 170 information technology jobs and outsource the work to a company overseas, a fast-food products company recently cut 66 jobs, and a medical device firm announced 40 job cuts.\nOverall wage increases were moderate since the last report. According to the mid-August survey, the pace of wage increases over the next 12 months is expected to remain generally the same as during the preceding 12 months. Also, some trucking firms in the District noted that they raised wages over the past few months to attract drivers.\nPrices were generally level, with some exceptions noted below. A construction contractor noted that construction costs are expected to increase 6 percent in the Minneapolis-St. Paul area over the next 12 months. Mid-August Minnesota gasoline prices were down about 15 cents per gallon both from mid-July and from a year earlier. Slight gains in some metals prices were noted since the last report, except for copper prices, which decreased slightly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nSeptember 3, 2014\nThe economy in the Fourth District expanded at a moderate pace during the past six weeks. Manufacturers reported accelerating business activity. Demand for nonresidential construction services strengthened, while purchases of new and existing homes leveled off. New motor vehicle sales grew at a robust pace; retailers and operators of hospitality venues saw higher year-over-year revenues. Since our previous report, coal production and shale gas activity were little changed, freight volume grew at a moderate to strong rate, and the demand for business credit moved higher. Consumer demand for auto loans remains strong.\nOn net, payrolls showed a mild increase. Many companies would like to add workers, but they are unable to find qualified candidates. Staffing firms reported little change in the number of job openings and placements. Upward pressure on wages is being felt mainly by the construction and freight transport industries. Input and finished goods prices were stable, apart from increases for metals, agricultural products, and diesel fuel, and a decline in coal prices.\nManufacturing\nReports from District factories indicated that new orders and production grew at a moderate pace since the latter part of the second quarter. Companies seeing the strongest demand are linked to the food, motor vehicle, and oil and gas industries. A few manufacturers attributed stronger demand to customers completing inventory adjustments. Year-over-year revenues are generally higher. Our contacts are optimistic in their outlook, with a majority projecting strong demand for the remainder of the year. Steel shipments dipped slightly since our last report due to seasonal factors, though one contact described demand for value-added industrial steel products as strong. Fourth-quarter steel shipments are projected to be better relative to the third quarter, even on a seasonally adjusted basis. Auto production at District assembly plants for the first seven months of this year was more than 9 percent higher as compared to the same period in 2013.\nCapital expenditures are in line with budgeted amounts for the fiscal year. Companies considering an increase to their capital budgets as the year progresses reported that the additional monies will be used mainly for capacity expansion and process automation. A growing number of manufacturers reported rising prices for raw materials, especially metals and agricultural products. Several noted that the increases are beginning to impact their profitability. Higher materials prices were passed through to customers with little pushback. We heard numerous reports about new hiring for managerial, professional (engineering and IT), and production positions. On the production side, there is a growing trend to hire on a temporary or part-time basis until the worker demonstrates that he or she can perform the job. The boost in hiring has put little upward pressure on wages.\nReal Estate and Construction\nSales of new and existing single-family homes have leveled off since our last report. Year-to-date purchases through July were slightly lower compared to a year ago. Several homebuilders noted that their construction backlogs are strong at this time due to a sales surge in the spring, but they are uncertain about activity several months down the road. Single-family construction starts across the District are on a gradual upward trend and are ahead of year-ago levels. New-home contracts were spread across all price-point categories. New-home pricing was fairly stable; any increases were attributed to rising development costs, including for lots. Year-to-date selling prices of existing homes trended slowly higher and are above those seen in 2013.\nNonresidential builders reported strong pipeline activity during the past couple of months, and a majority indicated that the level of activity has picked up from year-ago levels. Inquiries are markedly higher and backlogs are growing, in many cases extending into 2015. The hesitancy that was seen earlier in the year on the part of customers to commit to a project has diminished. Market demand is broad based, with contractors becoming less dependent on non-commercial projects. Most builders are fairly optimistic in their outlook, but they remain concerned about labor issues and tight margins.\nBuilders are projecting modest increases in materials costs, mainly around 2 to 3 percent. The highest price increases are expected for drywall, steel products, softwood, plywood, and diesel fuel. Many general contractors (GCs) reported that they are looking to increase their payrolls, but it is very difficult to find qualified craft-workers. Some GCs have been increasing wages and upgrading benefit plans as a means of attracting and retaining skilled workers. Subcontractors are pushing through rate increases to cover rising construction costs (including labor) and to widen their margins. GCs reported a declining number of bids from subcontractors, which they believe is attributable to inadequate capacity on the part of their subs.\nConsumer Spending\nSpending at retail outlets and hospitality venues during June and July was generally higher as compared to the early part of the second quarter. Revenues showed a modest increase relative to the same time period in 2013. There is some consensus that even though consumers are growing more confident, their discretionary spending is still relatively weak. Back-to-school items are doing well. A few retailers observed that while their brick and mortar sales have stalled, on-line purchases have risen significantly. Hotel operators told us that occupancy rates are rising and consumers are more accepting of higher prices. Fourth-quarter revenues are projected to be higher, with expected year-over-year percent gains in the low-to-mid single digits. We heard several reports about higher food prices continuing to put upward pressure on restaurant prices and difficulties associated with passing these cost increases through to consumers. Otherwise, vendor and shelf prices held steady. Hotel operators are investing significant monies in upgrading their properties, and some retailers are increasing capital budgets allocated for their e-commerce operations. Retail payrolls are stable.\nNew motor vehicle sales continued to increase at a robust pace. Year-to-date purchases through July were up 6 percent compared to 2013. Sales of SUVs and trucks picked up during the past few weeks. Some contacts believe that a stronger construction industry is responsible for rising truck sales. With model-changeover time approaching, dealers are seeing some buildup of new car inventory. Used-car purchases showed a modest increase month-over-month and year-to-date. Looking forward, dealers believe that the level of sales will remain elevated, although the pace of sales growth might slow somewhat. The use of incentives has picked up, especially for less popular models. We heard a report about dealers needing to be more adept at using technology to attract younger buyers. Demand for service technicians is growing, but dealers are having difficulty finding qualified applicants.\nBanking\nDemand for business credit expanded at a moderate pace over the reporting period. Demand was strongest for commercial real estate loans, C&I lending to manufacturers and energy producers, and from healthcare providers. While little change in interest rates was reported, pricing competition remained keen. Consumer credit demand was roughly stable on net. Applications for auto loans remain very strong, while households made slightly less use of HELOCs. A seasonal uptick for boat and RV loans was noted. Residential mortgage activity was flat. Although purchase transactions dominate mortgage applications, several bankers saw an increase in refinancings. Most of our contacts reported a slight decline in delinquency rates across loan categories. No changes were made to loan-application standards during the past six weeks. Core deposits held steady or showed modest growth, with increases coming mainly from commercial customers. On balance, banking payrolls held steady. New hires were mainly in the areas of compliance and risk management; however, in response to reduced traffic at branches, payrolls there are being reduced and some jobs are being changed from full- to part-time, especially those that are considered entry level.\nEnergy\nYear-to-date coal production across the District is consistent with prior-year levels, with no material change in overall production levels anticipated in the near term. A decline in the output of thermal coal (sold mainly to domestic utilities) has been offset by increased production of metallurgical coal, much of which is exported. Spot coal prices remain depressed. Activity in the Marcellus and Utica shales is at a high level. During the first half of 2014, the number of producing wells in Pennsylvania\u2019s Marcellus rose by almost 10 percent compared to the second half of 2013, and the amount of gas produced increased by over 14 percent. We heard a report about Ohio\u2019s Utica shale production remaining below its potential until additional gas transport and processing infrastructure is completed. Wellhead prices for natural gas have declined slightly, while oil prices were steady. Little change was seen in equipment and materials prices, aside from an increase in diesel fuel. Oil and gas producers are feeling some upward pressure on labor costs.\nFreight Transportation\nFreight volume expanded since our last report, with several contacts describing the pace of growth as moderate to strong. Although demand is fairly broad based, shipments of consumer durables (including motor vehicles) and energy-related commodities and materials stand out. The near-term outlook is favorable; however, several freight haulers are concerned about a capacity shortage. At this time, cost pressures are limited to labor--wages, recruitment, and retention. Some of these rising costs are being passed through to higher shipping rates. Fuel surcharges remain in place. Hiring is for replacement and to a lesser degree, adding capacity. Although most fleets would like to add capacity, they are having difficulty finding qualified drivers. Year-to-date capital spending is in line with or slightly ahead of projections. Firms that are ahead of projections are typically using the monies to add capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nSeptember 3, 2014\nThe economy of the Eighth District has expanded at a modest pace since the previous report. Retail activity has improved modestly. Recent reports of planned activity in manufacturing and services have been positive on net. Residential real estate market conditions have remained weak and commercial real estate market conditions have been mixed since the previous report. Lending activity at a sample of District banks has increased slightly or remained stable. Finally, wages and employment levels have grown modestly, while prices have increased moderately.\nConsumer Spending\nAnecdotal reports from retailers indicated modestly improving conditions. Roughly 40 percent of the retailers surveyed anticipate third-quarter sales to be similar to a year ago, and 40 percent anticipate higher or somewhat higher sales. The majority of respondents report that third quarter sales are on pace to meet or exceed expectations. The outlook for fourth-quarter sales among retailers was also positive. Roughly half of contacts expect fourth quarter sales to be at least somewhat higher than the same period last year, while a third expect sales to be similar to the same period last year.\nAnecdotal reports from auto dealers were also positive. About half of the auto dealers surveyed anticipate third-quarter sales to be similar to a year ago and the other half expect higher or somewhat higher sales. The majority of auto dealers reported that more low-end cars have been sold relative to high-end cars. Half of the contacts reported that their inventories are too high, but most others reported that inventories are at their desired levels. Contacts anticipate stable or improved sales in the fourth quarter compared with a year ago.\nManufacturing and Other Business Activity\nReports of planned manufacturing activity since the previous Beige Book have been positive on net. Several manufacturing companies reported plans to add workers, expand operations, or open new facilities in the District. Producers of steel, pet food, plastics, lighting products, consumer goods, and industrial appliances plan to hire additional employees and expand operations in the District. In contrast, firms that manufacture tools and light machinery reported plans to lay off workers and close facilities. Reports from auto parts manufacturers were mixed.\nRecent reports of planned activity in the District's service sector have also been positive on net. Firms in healthcare, finance, retail, transportation, and telecommunications services reported new hiring and expansion plans. In contrast, firms in food, information technology, and news media services announced plans to lay off employees.\nReal Estate and Construction\nHome sales decreased in the Eighth District on a year-over-year basis. Compared with the same period in 2013, July 2014 year-to-date home sales were down 3 percent in Louisville, 4 percent in Little Rock, 6 percent in Memphis, and 4 percent in St. Louis. Residential construction declined in the majority of the District's metro areas. July 2014 year to date single family housing permits decreased in the majority of the District metro areas compared with the same period in 2013. Permits decreased 14 percent in Louisville, 29 percent in Little Rock, and 1 percent in St. Louis. Permits showed no change in Memphis.\nCommercial and industrial real estate market conditions in the District have been mixed. Contacts in Louisville reported weak demand for downtown office space, while contacts in St. Louis reported increasing demand for office space and a scarce supply of commercial real estate space. Contacts in Memphis reported stable office vacancy rates and a decrease in both retail and industrial vacancy rates. Commercial and industrial construction activity improved throughout most of the District. Contacts in Louisville reported the return of large-scale construction with two new retail projects in the area. A contact in Little Rock reported a new industrial facility under construction in southwest Arkansas. Contacts in Memphis reported the redevelopment of an uptown building into mixed-use space, and contacts in St. Louis reported construction of a large industrial building on a speculative basis.\nBanking and Finance\nA survey of District banks showed that overall lending activity during the past three months was unchanged to slightly higher. For commercial and industrial loans, credit standards eased slightly over this period, creditworthiness of applicants improved modestly, demand was stronger, and delinquencies were largely unchanged. For prime residential mortgage loans, credit standards remained basically unchanged, creditworthiness of applicants improved moderately, demand was unchanged to somewhat lower, and delinquencies were largely unchanged. For credit cards, both credit standards and creditworthiness of applicants showed no change during the period, demand was moderately stronger, and delinquencies were unchanged. Finally, for auto loans and other consumer loans, credit standards eased slightly, creditworthiness of applicants improved slightly, demand increased slightly, and delinquencies decreased slightly.\nAgriculture and Natural Resources\nAs of mid-August, around 73 percent of the District corn, rice, and sorghum crops was rated in good or excellent condition. In contrast, only 56 percent of District pasturelands was rated in good or excellent condition. District farmers will likely produce close to 9 percent less corn in 2014 than in the previous year. However, District rice, cotton, and sorghum production will be 34 percent, 17 percent, and 11 percent higher than last year, respectively. District coal production for July 2014 was about 10 percent higher than in July 2013. Coal production year-to-date is 1.3 percent higher than the corresponding period a year-ago.\nEmployment, Wages, and Prices\nA survey of Eighth District businesses indicated that, over the past three months, employment levels and wages have grown at a modest pace while prices have increased moderately compared with the same period last year. Sixty-one percent of contacts reported that employment levels have stayed the same relative to the same period a year ago, while 31 percent reported a slight increase and 8 percent reported a slight decrease. Sixty percent of contacts reported that wages have stayed the same, while 37 percent reported a moderate increase and 2 percent reported a slight decrease. Finally, 62 percent of contacts reported that prices have stayed about the same relative to a year ago, while 31 percent reported an increase and 7 percent reported a decrease.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nSeptember 3, 2014\nEconomic activity in the Twelfth District continued to improve moderately during the reporting period of early July through mid-August. Overall price inflation remained quite modest, and wage pressures were well contained on net. Contacts indicated that retail sales growth ticked up. Demand for business and consumer services increased moderately. Manufacturing activity was mixed. Agricultural conditions were good in the District overall. Activity in real estate markets advanced, although growth in the residential sector slowed somewhat. Loan demand increased moderately.\nPrices and Wages\nPrice inflation overall remained quite modest. Contacts noted that vigorous competition, including from online vendors, restrained overall retail price increases for nonfood and grocery store food products. Continued minimal price inflation for most food items blunted the effect of larger price increases for meat and dairy items. Some contacts reported that casual dining restaurants passed through the cost increases that resulted from higher minimum wages to their menu prices. In some areas, building supply prices increased. Final sales prices of Internet and digital media services have not changed so far this year and are not expected to change for the rest of the year.\nIn general, wages continued to increase at a modest pace. However, skilled construction workers experienced more-pronounced wage gains, as did certain technical employees in the computer industry. In addition, some contacts noted upward pressure on salaries for entry-level positions in the financial industry. In most areas, wage changes for lower-skilled workers--beyond the increases that resulted from higher minimum wages--were slight, but some contacts from faster-growing areas reported difficulty filling these positions, resulting in larger wage increases.\nRetail Trade and Services\nRetail sales growth ticked up since the previous reporting period. Contacts reported that consumers appeared more optimistic about the recovery. Sales of digital games and consumer smart-connected devices and wearables accelerated. Manufacturers have positive expectations for the computing device market, with plans for improvements in hardware and software, as well as new product launches. Auto dealers in Idaho noted that reductions in fuel prices spurred sales of pickups and large sports utility vehicles in recent weeks.\nDemand for business and consumer services increased moderately. Businesses continued to invest in cloud services and security. Sales in the quick-service segment of the restaurant industry--coffee and doughnuts--increased relative to earlier in the year. Contacts reported that hotel vacancy rates in southern California declined and room rates rose. Advance bookings for the fall appear somewhat stronger than a year ago. Visitor volume in the first half of 2014 in Las Vegas was up over the same period a year earlier; contacts there cited strength in convention attendance as opposed to in tourism.\nManufacturing\nDistrict manufacturing activity was mixed during the reporting period of early July through mid-August. Demand for semiconductors strengthened, partially due to robust orders from other countries. Sales of finished steel products increased over a year earlier. Steel manufacturing capacity utilization during the last three months was at the highest level since 2008, reflecting strengthening demand from West Coast nonresidential builders. However, new orders for commercial aircraft in the first six months of this year were down from the same period in 2013. In addition, demand for finished wood products used in home building was relatively weak during the reporting period, and capacity utilization in this sector was relatively low. Aerospace manufacturing contacts noted that increasing tensions and broadening sanctions against Russia may reduce titanium supplies. Greater demand for composite materials from the aerospace, automotive, marine, and energy sectors as they substitute away from older materials may increase competition for limited supplies of these inputs.\nAgriculture and Resource-related Industries\nContacts reported good agricultural conditions in the District overall. Excellent cotton and grain harvests are expected. Produce supplies are somewhat constrained due to the drought in California, and prices of some products, including grapes and nuts, are high. Growers in California were able to tap underground aquifers this year but are concerned about water sources next year should the drought continue. Contacts reported a spike in growers' shipping costs due to the diversion of locomotives to the Midwest to haul oil and gas rail cars to refineries in Texas. Construction activity in China and Japan sustained demand for timber as housing activity in the United States slowed.\nReal Estate and Construction\nReal estate activity advanced, but growth in the residential sector has slowed since the start of the year in many areas. Sales trends were mixed. Some contacts reported a slower overall pace of transactions, while others reported a pickup, especially for mid-priced homes. Prices increased in most areas, but generally at a slower pace than earlier in the year. Inventories of homes for sale were normal to somewhat elevated in selected areas. Contacts in Hawaii and Oregon reported rising rents and cited high home prices as a spur to demand for apartments. Residential construction activity for multifamily projects picked up. New and expanding medical practices boosted absorption rates for office space. In contrast, retail vacancy rates increased in some areas.\nFinancial Institutions\nContacts reported that credit availability was good, and overall loan demand increased moderately since the previous reporting period. Demand for consumer loans, including auto loans, unsecured credit, and home equity loans, improved slightly. Contacts expect demand to pick up further as consumer debt levels decline and owners regain equity in their homes. Demand for commercial real estate loans increased moderately. Some contacts reported strong demand for construction loans. Contacts reported that continued uncertainty on the part of small businesses regarding health-care costs is tempering their loan demand. Competition among lenders for customers with high-quality credit is intense. Credit quality improved since the previous reporting period, and loan delinquencies were low. Private equity financing in the Internet and digital media sector in June was at its highest level since the beginning of the recession.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nSeptember 3, 2014\nGrowth in economic activity remained moderate in July and August, and contacts maintained their optimistic outlook for the rest of the year. Consumer and business spending, manufacturing production, and construction and real estate activity all increased moderately. Credit conditions continued to improve. Cost pressures increased some, but remained modest. Corn, soybean, hog, and cattle prices were lower, while milk prices were higher.\nConsumer Spending\nGrowth in consumer spending picked up to a moderate pace in July and August. Retailers reported noteworthy sales increases for apparel and lawn and garden items, but cited weaker growth at grocery stores. The relatively mild weather resulted in below-average sales of items such as summer-related toys and cooling appliances. Promotional activity scaled back some, but remained high, as clearance sales have been effective at eliminating excess inventories. Retail contacts noted that the cost of further intensifying promotions outweighed any potential benefits. Light vehicle sales increased, particularly for mid-size sedans and crossover vehicles. Activity in auto service and parts departments remained high as dealerships continued to address the spate of recent recalls.\nBusiness Spending\nBusiness spending continued to grow at a moderate pace in July and August. Inventories remained at comfortable levels for most manufacturers and retailers. Capital expenditures and spending plans both increased. More contacts reported capital expenditures to support capacity expansion, particularly in the auto and construction industries, and contacts increased their outlays on structures while maintaining spending levels on industrial equipment and information technology. The pace of hiring slowed slightly, though hiring plans ticked up. Demand remained strong for skilled workers, particularly for those in professional and technical occupations and skilled manufacturing and building trades. Shortages of skilled workers were reported in the manufacturing, construction, transportation, IT, and healthcare industries. Contacts again mentioned expanding internal training programs to address worker shortages and an increased willingness to pay higher wages and bonuses. In the construction industry, contractors were renting specialized equipment in place of hiring new workers. Demand for lower-skilled workers picked up some, with a staffing firm reporting increases in billable hours in the trade, transportation, and utilities industries.\nConstruction and Real Estate\nConstruction and real estate activity increased over the reporting period. Residential construction expanded at a moderate pace in both the single- and multi-family markets. Builders continued to note that activity varied widely by neighborhood, with most of the strength concentrated in high-income urban areas. Single-family home sales increased, while condominium sales weakened somewhat. Contacts were optimistic that sales would gain momentum in the fall, as continuing increases in home prices and residential rents signal solid underlying demand. Nonresidential construction also expanded at a moderate pace, led by demand for industrial and office buildings. Contacts again reported that automotive supply manufacturing plants were a particular source of strength. Commercial real estate activity increased broadly, as vacancies ticked down and rents rose. Leasing of industrial buildings, office space, and retail space all increased.\nManufacturing\nManufacturing continued to grow at a moderate pace in July and August. The auto industry remained a source of strength for the District. Demand for steel increased further. However, capacity utilization in the steel industry is still low by historical standards, and a contact noted that some capacity designated for nonresidential construction remains offline due to continued weak demand from this market segment. Steel service center inventories remained a bit low, but contacts expected to rebuild them over the next two months. Most specialty metal manufacturers reported improving order books, though a few were disappointed by second-quarter sales. Demand for heavy machinery picked up some on net, as higher demand for construction machinery overshadowed weakness for agricultural and mining machinery. Contacts noted that growth in farm machinery sales, in particular, has slowed, with dealers offering discounts on purchases of equipment for which there had been waiting lists in recent years. Moreover, there were reports of excess inventories of used farm equipment and layoff announcements at farm machinery plants in the District. Manufacturers of construction materials reported steadily increasing production and shipments, and a contact expected strong demand over the third quarter. A utility company reported that weather-adjusted energy usage was higher than a year ago at this time.\nBanking and Finance\nCredit conditions improved modestly in July and August. Business lending increased, with contacts noting continued growth in demand for the financing of equipment and commercial real estate from small and middle-market businesses. In addition, both small and middle-market businesses increased their utilization of credit lines. Growth in leveraged lending was relatively flat, with pricing and structure little changed from the prior reporting period. A banking contact noted that some corporate clients were shifting toward traditional and leveraged bank loans and away from high-yield debt to satisfy their funding needs. Banking contacts also continued to cite competitive pressures on terms and pricing for traditional and leveraged business lending, particularly from nonbank financial institutions willing to take on higher credit risk. Consumer loan demand increased moderately over the reporting period, with contacts noting an increase in credit card lending, continued growth in auto lending, and a slight uptick in new mortgage originations.\nPrices and Costs\nCost pressures increased over the reporting period, but remained modest overall. Energy prices remained elevated. Steel prices were higher in spite of increased imports, as a large share of these imports remains at the docks due to customers\u2019 unwillingness to pay elevated shipping surcharges. Retail prices were up slightly as contacts reported decreasing the generosity of sales promotions. Meat and dairy prices also rose, though contacts did not report price pressures for other grocery items. Overall, wage pressures were modest, but a number of contacts again reported wage pressures for skilled workers. In addition, a staffing firm reported that pay rates increased for staffing and professional positions. Non-wage labor costs were little changed.\nAgriculture\nCorn and soybean production in the District should exceed last year\u2019s levels. Although much of the District recently weathered a dry spell, cool temperatures helped reduce the stress on crops. Nonetheless, crops in the northern parts of the District may not fully mature before the dates of normal first frosts. With national records expected for the corn and soybean crops, prices moved down from the prior reporting period. To avoid selling crops for lower prices than in recent years, farmers have explored options for storage and livestock feeding. Higher milk prices helped the livestock sector stay profitable even though hog and cattle prices slipped. Ethanol prices eased, but production remained profitable.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nSeptember 3, 2014\nPrepared at the Federal Reserve Bank of Philadelphia and based on information collected on or before August 22, 2014. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts indicated that economic activity has expanded since the previous Beige Book report; however, none of the Districts pointed to a distinct shift in the overall pace of growth. The New York, Cleveland, Chicago, Minneapolis, Dallas, and San Francisco Districts characterized their growth rates as moderate; Philadelphia, Atlanta, St. Louis, and Kansas City reported modest growth. Boston reported that business activity appeared to be improving, and Richmond reported further strengthening. Philadelphia, Atlanta, Chicago, Kansas City, and Dallas explicitly reported that contacts in their Districts generally remained optimistic about future growth; most of the other Districts cited various examples of ongoing optimism from specific sectors.\nGeneral consumer spending grew in most Districts at rates ranging from slight to moderate, with few changes in the pace of growth compared with the last Beige Book. Most Districts reported a continued expansion of auto sales, noting record-high levels for several markets within the Philadelphia and Dallas Districts; however, in some parts of the New York and Philadelphia Districts sales began to fall back from their relatively high levels. Tourism activity was reported to have increased across much of the nation, with many Districts reporting higher hotel booking and occupancy rates.\nActivity among nonfinancial service sectors improved overall. District reports on manufacturing were mixed--divided almost evenly into one of three characterizations of the sector's activity: expanding, contracting, or unchanged. Among Districts reporting on their firms' near-term expectations, the manufacturing outlook remained generally upbeat, with New York, Philadelphia, Richmond, and Atlanta reporting increased optimism.\nSince the previous Beige Book, residential real estate activity, particularly sales of existing homes and construction of new homes, generally expanded or held steady in about half of the Districts. About half of the Districts also reported some growth in construction and in sales or leasing of nonresidential properties.\nOverall, loan demand rose in eight Districts and held steady in one. Credit standards were largely unchanged. Six Districts reported improving credit quality, falling delinquency rates, or both.\nReports regarding farm products were mixed; for some crops, high anticipated harvests have put downward pressure on prices and expected farm incomes. Generally, oil and gas production and demand for related activities continued to edge up from already high levels, while total coal production mostly held steady.\nTrends in employment, wages, and prices were relatively unchanged in the Federal Reserve Districts, with greater wage pressures reported in sectors where shortages of skilled labor persisted.\nConsumer Spending and Tourism\nMost Districts reported some growth in consumer spending with a pace of growth characterized as ranging from slight to moderate. Compared with the last Beige Book, the Chicago District noted a pickup in growth; Philadelphia indicated somewhat slower growth; and merchants in the Atlanta District reported that sales had weakened slightly. San Francisco contacts suggested that consumers appeared more optimistic about the recovery, New York reported mixed consumer confidence, and Cleveland and Richmond indicated that consumers were being conservative in their discretionary spending. Strong sales were noted for clothing and apparel in Boston and Chicago; household and home improvement categories in Boston and Kansas City; electronics in San Francisco; and back-to-school items in New York, Philadelphia, Cleveland, Atlanta, and Dallas. Cleveland also noted that some retailers have seen a significant rise in online shopping.\nSince the previous Beige Book, auto industry contacts in most reporting Districts have noted continued expansion, with sales at high levels. In the Philadelphia District, Pennsylvania dealers claimed statewide record auto sales in July, as did an auto dealer in Dallas. However, sales in Pennsylvania began to back off their highs in August. Likewise, New York reported mixed results from some upstate auto dealers. Cleveland, Chicago, Kansas City, and San Francisco noted increased sales of SUVs and pickup trucks. Some Cleveland contacts attributed rising truck sales to a stronger construction industry, while contacts in San Francisco cited a decline in fuel prices as a factor. Inventory levels were mixed among reporting Districts, declining slightly in Kansas City, remaining at or above desired levels in St. Louis, and building up in Cleveland.\nTourism activity increased in all reporting Districts. Hotel occupancy rates remained high or rose in the Boston, New York, Philadelphia, Cleveland, Atlanta, and San Francisco Districts. San Francisco reported that strength in visitor volume in Las Vegas was due more to convention attendance than to tourism, and Richmond cited group bookings for business and reunion events as sources of strength. Most reporting Districts indicated optimism about future activity levels, with Boston, Richmond, and San Francisco reporting strong advance hotel bookings through the fall.\nNonfinancial Services\nOn balance, nonfinancial services have grown since the previous Beige Book. The Boston District reported strong demand for software and information technology services, with contacts attributing this strength to continued economic recovery and robust demand for software products. New York, Philadelphia, and San Francisco firms reported moderate growth, and providers of professional business services in Minneapolis reported increased activity. Richmond, St. Louis, and Dallas reported modest growth in services, and Kansas City reported stable sales growth for professional and high-tech services firms. Conditions for staffing services were generally positive across reporting Districts. Staffing activity generally increased in Boston, and staffing contacts in Philadelphia noted increases in new clients and firms hiring to grow their businesses. Dallas reported mixed demand from staffing firms, noting strength in engineering, information technology, and health-care positions but flat demand for legal services.\nDistricts reporting on transportation services generally noted growth. Cleveland, Atlanta, and Dallas reported moderate to strong freight volumes. Richmond contacts attributed some recent growth in port activity to ships diverted from West Coast ports and to an early arrival of the peak import season. Kansas City transportation firms reported stable sales growth and continued high demand for construction products. Cleveland noted that amid broad-based demand strength, shipments of consumer durables and energy-related commodities and materials stood out. Dallas cited notable growth in shipping volumes for steel. Contacts from New York, Cleveland, and Atlanta mentioned driver shortages or difficulties finding qualified drivers, and contacts in Cleveland, Richmond, and Atlanta noted concerns about capacity for various types of transportation.\nManufacturing\nSince the last Beige Book period, the Cleveland, Richmond, and Dallas Districts reported that manufacturing activity has expanded; New York, Atlanta, Minneapolis, and Kansas City indicated that their growth rates had moderated somewhat. San Francisco cited mixed reports from a variety of contacts. Boston, Philadelphia, and Chicago reported continued growth.\nWithin manufacturing, growth was reported across a broad base of sectors. Increases in auto production or derived demand for steel and other related products were cited by Philadelphia, Cleveland, Chicago, and Dallas. San Francisco cited increases in steel capacity utilization over recent months. Cleveland cited slightly lower steel shipments because of seasonal factors but indicated underlying demand was strong. Construction was cited as a source of increased demand by manufacturing contacts in the Philadelphia, Chicago, Minneapolis, and Kansas City Districts. Chicago reported that demand for heavy machinery picked up some on net, as higher demand for construction machinery overshadowed weakness for agricultural and mining machinery. Firms in the Boston District reported strengthening demand for semiconductors, while San Francisco reported that demand for semiconductors strengthened in part because of robust orders from other countries. With the exception of motor vehicle producers, manufacturers in the Atlanta District generally reported weakness in new orders and shipments. Manufacturing associated with the energy sector was cited as a continued source of growth by Philadelphia, Cleveland, and Dallas.\nContacts in most Districts expressed optimism about the near-term outlook for manufacturing growth. Moreover, in the New York, Philadelphia, Richmond, and Atlanta Districts, optimism reportedly increased in comparison with the previous reporting period. Boston and Cleveland reported that current capital spending is roughly in line with earlier plans. Kansas City indicated slightly diminished capital spending plans, but the outlook remained solidly positive across contacts.\nReal Estate and Construction\nBarely half of the Districts reported stable or growing residential real estate activity related to the construction of new homes and sales of existing houses. New construction and existing home sales generally grew modestly; market conditions tended to vary by metropolitan area and by neighborhood within metropolitan areas. Boston, New York, and Dallas reported high levels of ongoing multifamily construction projects; Chicago reported a moderate pace of growth, and San Francisco noted a pickup in activity.\nA little over half of the Districts reported some degree of growth in nonresidential real estate activity, with increased construction, leasing, or both tied to steady or falling vacancy rates and to rent increases. None of the Districts reported a decline in overall activity, although New York and St. Louis described activity as mixed. In addition to traditional office space, certain Districts reported increased demand for specific projects: Boston noted demand for construction in the hospitality sector, Philadelphia cited industrial and warehouse projects, Richmond noted distribution centers, and St. Louis reported new retail and mixed-use projects as well as new industrial facility construction.\nBanking and Finance\nOverall, banking conditions continued to improve from the prior Beige Book period. Loan volumes increased in nearly all reporting Districts, led by moderate gains in the San Francisco District and modest gains in Chicago. Philadelphia, St. Louis, and Dallas noted slight gains; Kansas City reported steady demand. Lending volumes rose in Richmond and appeared to increase, on net, in New York and Cleveland.\nAuto lending was the category most often cited as growing. The Cleveland and Atlanta Districts reported very strong auto loan demand, while Philadelphia, Richmond, Chicago, St. Louis, and San Francisco also noted growth in this category. In addition, Philadelphia, Chicago, and St. Louis reported growth in credit card borrowing. San Francisco also noted a slight increase in unsecured consumer credit. New York and Cleveland reported that overall consumer loans had leveled off, while consumer installment loans were described as somewhat softer in the Kansas City District. Philadelphia and San Francisco reported increasing usage of home equity lines of credit, while slightly less usage was reported in the Cleveland District.\nDemand for business credit expanded in most reporting Districts. Commercial and industrial (C&I) lending increased in the New York, Cleveland, Richmond, Chicago, St. Louis, and Dallas Districts; reports from the Philadelphia District were mixed. Cleveland reported that demand for C&I loans was greatest from manufacturers, energy producers, and health-care providers; Dallas also noted demand related to energy projects. Commercial real estate lending exhibited slight to moderate growth in the New York, Cleveland, Richmond, Chicago, and San Francisco Districts; Philadelphia and Dallas reported no change; and volumes in the Kansas City District decreased slightly.\nDemand for residential mortgages was less robust; only the Philadelphia, Richmond, Chicago, and Dallas Districts reported increases (which were typically only slight), and New York, Cleveland, St. Louis, and Kansas City reported no change or slight decreases. Cleveland did note some increase in refinancing loans, as did Richmond; however, New York and Philadelphia reported continued declines in this loan category.\nThe Philadelphia, Dallas, and San Francisco Districts reported that credit quality improved further, while New York and Cleveland stated that delinquency rates fell across all loan categories. A survey of St. Louis District banks showed improved creditworthiness of applicants and unchanged or slightly lower delinquencies for several loan categories.\nCredit standards remained generally unchanged in most Districts. Bankers in the Atlanta District reported that they were well capitalized but remained cautious about residential lending and fiercely competitive over commercial lending. Contacts in the Richmond and San Francisco Districts described intense competition among lenders for customers with high-quality credit. Philadelphia and Cleveland also reported heated competition. However, according to Atlanta District contacts, standards remained especially rigorous for first-time homebuyers.\nAgriculture and Natural Resources\nFarming contacts in many Districts have reported record-high crop yields, resulting in declines in market prices for cotton, corn, soybeans, and other agricultural commodities. The lower prices have resulted in lower expected incomes for some crop producers while reducing feed costs for some livestock producers. Dallas reported that historically high cattle prices have slowed the efforts of cattle producers to rebuild their herds. Chicago reported that hog and cattle prices have slipped during this Beige Book period; however, higher milk prices have helped the livestock sector stay profitable. Atlanta, Dallas, and San Francisco reported some drought-related disruptions. San Francisco reported higher shipping costs among growers because locomotives were being diverted to the Midwest to haul oil and gas rail cars to refineries in Texas.\nActivity in the energy sector was generally positive. Oil and gas production and related activities continued to edge higher from already high levels, and total coal production was mostly steady. The Atlanta, Minneapolis, Kansas City, and Dallas Districts reported modest to brisk growth in activities related to oil production (refining, exploration, drilling, rigging, and oil field and geological services). Producers in the Kansas City District indicated that slightly lower oil prices have not negatively affected drilling plans. In contrast, coal production was reported to be relatively stable in the Cleveland and Richmond Districts; St. Louis pointed to modest growth. Richmond reported a modest decline in coal prices, and Cleveland described spot coal prices as remaining depressed. In addition, Cleveland indicated that activity in the Marcellus and Utica shale fields was continuing relatively unchanged at a high level.\nEmployment, Wages, and Prices\nLabor market conditions, as measured by hiring trends, were reported to be relatively unchanged from generally modest rates in most Districts; however, contacts in nearly all Districts reported difficulties finding certain types of skilled labor. Contacts cited shortages of skilled information technology workers in the Boston District, of truck drivers in New York, and of construction workers in Atlanta. Employment agencies in New York described the job market as strengthening, and some Dallas contacts noted that the labor market remains very tight in the energy sector. Contacts in Cleveland, Richmond, and San Francisco also mentioned challenges finding qualified workers. Staffing contacts in Philadelphia reported that some of their clients are hiring to grow their businesses.\nGenerally, Districts reported little change in wage pressures, which were commonly characterized as slight or modest. Richmond was an exception, reporting that wage growth slowed in the manufacturing and service sectors. Stronger wage pressure was reported for specific categories of skilled workers. In particular, Atlanta, Chicago, Dallas, and San Francisco noted greater wage pressure for jobs in energy, construction, trucking, manufacturing, engineering, information technology, finance, and health care, among others. Some general contractors in the Cleveland District reported that they have increased wages and upgraded benefit plans as a means of attracting and retaining skilled workers.\nOverall, price pressures remained largely unchanged. Input prices were described as modest, stable, or benign in reports from Boston, Cleveland, Atlanta, and Kansas City. Chicago noted that prices fell for corn, soybeans, hogs, and cattle but rose for milk during the current Beige Book period. San Francisco cited higher building supply prices, Minneapolis cited higher prices for some metals, and Chicago noted that energy prices generally remained elevated. Cleveland District contacts in the manufacturing and freight transportation sectors noted some ability to pass higher input prices through to customers with little pushback. By contrast, only a few companies in the Atlanta District noted plans to increase prices over the remainder of the year and expressed confidence that any increases would stick.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nSeptember 3, 2014\nBusiness activity appears to be improving in the First District. A greater fraction of retail and manufacturing contacts cite year-over-year sales or revenue increases than in the last couple of rounds and outlooks are positive. Software and IT services and staffing firms also report strong and/or increasing activity. Commercial and residential real estate markets are largely unchanged since the last report. While some contacts cite difficulty filling skilled positions, most responding firms are neither adding to nor subtracting from headcounts to any substantial degree. With the exception of staffing firms, respondents say wages are steady. Prices, too, are reported to be steady with very few exceptions.\nRetail and Tourism\nRetailers contacted for this round report comparable-store sales changes ranging from down 1 percent to up 7 percent year-over-year. Spending on clothing, household items, and home improvement categories is said to be good. Prices remain steady and inventory levels are well controlled. Some selective hiring is planned. These retailers expect to achieve their 2014 goals of low single-digit sales increases. Their outlook for the U.S. economy ranges from \"mixed\" to an expectation of moderate growth--one retailer characterized its outlook as \"neither bullish nor bearish.\"\nBoston-area hotels continue to do very well. Occupancy rates averaged 92 percent in July, and revenues were up 9.5 percent from July 2013, mainly because the average price per room was up. Advance hotel bookings are strong through the fall. Through July, Boston restaurant revenues were up 6.9 percent from January-July 2013. Business travel remains strong and leisure travel is up 2 percent year to date, which contacts indicate is a large increase for this market segment. Year to date through July, traffic at Logan Airport was up 4.5 percent. Contacts expect 2014 travel to best 2012 and 2013 records.\nManufacturing and Related Services\nOf the dozen manufacturing firms contacted this cycle, only one reports declining sales and two report exceptionally strong sales growth versus the corresponding period a year earlier. The firm reporting a decline in sales attributes it to an exceptionally strong period a year earlier. One of the companies reporting exceptional growth was a semiconductor manufacturer, with 15 percent year-over-year sales growth in the second quarter; this is considered high even for this highly cyclical business. The other strongly growing company is a computer systems vendor who sells largely to the Defense Department; this contact said that clarity about the Federal budget had released significant new spending. Two firms that sell equipment to semiconductor manufacturers report strengthening sales, but a third is facing a \"lull\" in orders and expects them to pick up in the first half of 2015.\nOnly one contact, a manufacturer of semiconductor equipment, reports layoffs over the last year. Of the remainder, one reports a small reduction in headcount, four cite no change, and the rest are increasing employment, although no one reports large-scale hiring. A typical comment came from a maker of electrical equipment, who says their hiring is \"cautious.\" Many firms, including those with strong sales growth, indicate they want to do more with less or \"keep headcount growth below sales growth.\" Firms continue to cite problems finding skilled engineers.\nAll but one contact indicates that prices are stable on both the selling side and the input side. The exception is a producer of milk products who reports that the price of raw milk increased dramatically on account of increased exports, raising U.S. retail prices of milk products. Half the contacts report declining inventories. The contact in the semiconductor industry with sharply higher sales also reports an increase in orders that they are unable to fill on time or at all; they are increasing capital spending to reduce bottlenecks. Most firms report increased capital spending more or less in line with earlier plans.\nOutlooks are positive. Even the semiconductor manufacturing firm that laid off workers in the first half of the year expects strong sales growth in the first half of 2015. A manufacturer of toys has a mixed outlook; this contact says high-priced products are not selling well because consumers are cautious.\nSoftware and Information Technology Services\nFirst District software and information technology services contacts generally report strong demand through August, with year-over-year revenue increases mostly ranging from 7 percent to 20 percent and quarter-over-quarter increases in the mid-single-digits. Contacts attribute this growth to continued macroeconomic recovery, a rebound in the manufacturing sector, and robust demand in the marketplace for software products. By contrast, one contact producing healthcare software reports slight year-over-year decreases in revenues, which he attributes to the expiration of federal stimulus money for health records software. Most firms have added to headcount in the last year, with positions concentrated in sales, research and development, and marketing. Wages are generally flat; however, one firm awarded merit-based increases in the 3 percent to 4 percent range. Selling prices have held constant. Looking forward, while New England software and IT contacts remain concerned about cost implications of the Affordable Care Act, weakness in the Chinese economy, and the overall macroeconomic environment, they continue to be optimistic, expecting a steady rate of growth through the next few months.\nStaffing Services\nNew England staffing contacts generally cite increased activity since their last reports in May. While one firm supplying workers to the healthcare sector saw a dip in billable hours from June to early July, strong growth in July and August is putting them back on track. On a year-over-year basis, revenue growth is in the 4 percent to 20 percent range. Only one contact continues to report year-over-year revenue declines in the New England region, attributed primarily to client mix. Labor demand is reportedly strong in the information technology, software, aerospace, nursing, electronics, and legal industries. Supply is largely unchanged since May, with continued shortages of high-end technical workers such as software developers, Java programmers, computer engineers, mechanical design engineers, and quality assurance managers. Maintenance and ambulatory nursing positions are also reportedly difficult to fill. By contrast, one contact notes that entry-level IT workers are plentiful. To attract high-skilled workers, staffing firms continue to expand their social media outreach efforts and invest in technological innovations such as mobile compatibility and website development. Both bill and pay rates have increased, with one contact expecting continued upward pressure on wages through the coming months. Contacts express concern about increased health insurance costs as a result of the Affordable Care Act and the extent to which they will be able to pass these additional costs on to their client base. Despite this challenge, New England staffing contacts are increasingly optimistic, expecting year-over-year revenue growth in the high-single-digit range in coming months.\nCommercial Real Estate\nCommercial real estate activity appears mostly steady across the First District. Contacts in Hartford, Portland, and Providence all describe office leasing activity as slow, but the slowness is attributed to typical seasonal patterns. In Providence, lack of suitable industrial space remains a problem in light of healthy demand for space in that sector. In Hartford, interest is expected to be fair-to-strong in a set of downtown commercial structures that were recently (or will soon be) placed for sale, including three well-leased office towers, and there is the sense that an increasing number of owners want to cash in on robust investor demand for commercial real estate. In Portland, retail sector sales and leasing are strong, helped in part by some large national chains that are adding locations in the area, and strong investment demand across property types in recent months has pushed commercial property prices up by 10 percent from a year ago. In Boston, market conditions are largely unchanged since the previous report. Downtown leasing activity held steady, and office leasing demand appears to be strengthening along the Route 128 corridor. However, despite rising profits, most existing firms are not expanding their space needs and some recent lease renewals resulted in reduced footprints. Contacts continue to be impressed by the amount of capital pouring into commercial real estate (as well as into multifamily structures) in the greater Boston area, with prices that reflect highly optimistic expectations. Also in Boston, construction activity remains strong in the hospitality and multifamily sectors, and speculative office construction remains limited.\nThe outlook is uncertain for Rhode Island, where the outcome of the closely contested gubernatorial election is seen as holding some upside potential for growth in the state via improved business sentiment. Independently, a contact sees a risk of increase in the vacancy rate for class A office space in downtown Providence. In Hartford, economic growth is expected to fall short of the national pace, likely resulting in flat leasing activity, but the commercial real estate lending environment appears to be loosening up some. In Boston, contacts expect moderate economic growth and a continuation of current trends, including strong investor demand. While one Boston contact sees a risk of overbuilding in the hotel and multifamily sectors, the city's office sector is not seen as facing a similar risk.\nResidential Real Estate\nClosed sales of single-family homes in June were mixed across the First District compared to June 2013. Sales declined in Massachusetts and Vermont, increased in Connecticut and Maine, and remained unchanged in Rhode Island. (Contacts in New Hampshire were unavailable.) Median sales price changes also varied by state, increasing only in Massachusetts, declining in Rhode Island and Vermont, and holding steady in Connecticut and Maine compared to June 2013. For Massachusetts, this is the fifth consecutive month of year-over-year declines in sales of single family homes and for greater Boston it is the sixth consecutive month of year-over-year declines. Contacts in Massachusetts say the ongoing decline in sales and rise in sales price are driven primarily by a shortage of inventory, with little change in consumer demand. Indeed, Massachusetts inventories have been trending down for more than two years on a year-over-year basis and median sales prices have risen for more than a year and a half. With only 5.5 months of supply, Massachusetts was considered a sellers' market in June (a market is considered balanced when 7.5 to 8.5 months of supply are available). By contrast, Maine is experiencing an increase in inventory and contacts are hopeful that availability will keep the fall market strong. Connecticut contacts cite low inventory of starter homes. Respondents in all five states express concern over student debt levels, believing they will continue to weigh on housing markets for the foreseeable future.\nRelative to a year earlier, June condominium sales were higher in Maine, Connecticut, and Vermont and lower in Massachusetts. The median condo sales price increased over the same period in three of those four states; in Connecticut, the median sales price was unchanged.\nSentiment in the First District is generally positive, with expectations of continuing improvement. However, multiple contacts say expectations need to realign to a \"new market norm.\" These contacts say that both buyers and sellers in New England housing markets must adjust to price increases that are well below previous high rates and begin to look at a house as shelter rather than as \"a piggy bank.\"\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nJuly 16, 2014\nThe Tenth District economy expanded modestly in late May and June, and most contacts anticipated stronger growth in the months ahead. Consumer spending rose modestly, with retailers, auto dealers and restaurant contacts reporting slightly higher sales and tourism contacts reporting sharply stronger activity. District manufacturing activity continued to expand, while transportation and wholesale trade contacts noted moderately higher sales. Residential and commercial real estate activity strengthened further, while construction activity ticked up with modest additional gains expected in the coming months. Bankers reported steady overall loan demand, improved loan quality and a slight increase in deposit levels. Crop prices dropped for wheat, corn and soybeans, while cattle and hog prices continued to rise. District energy activity picked up as the number of active oil rigs expanded and natural gas rigs held steady. Prices for raw materials and finished goods rose slightly since the last survey, and wage pressures remained modest outside of some skilled trade positions.\nConsumer Spending\nConsumer spending rose modestly in late May and early June, and contacts were increasingly optimistic about future sales growth. District retail sales continued to increase, but at a slower pace than during the previous survey period. Retail sales were well-above year-ago levels, and retail contacts anticipated robust sales in the months ahead. Several retailers noted stronger sales of home improvement and building materials, while sales for men's apparel were weak. Automobile sales picked up slightly, with mid-sized cars and SUVs selling particularly well. Automobile sales remained higher than a year ago, and contacts expected strong growth in the coming months. Restaurant sales increased slightly, with sales remaining considerably higher than a year ago. Expectations for future restaurant sales moderated somewhat but still remained solid. District tourist activity improved markedly, in part due to seasonal summer increases, with conditions considerably better than the previous year. Tourism contacts expected stronger activity to continue throughout the summer and early fall months.\nManufacturing and Other Business Activity\nDistrict manufacturing activity expanded modestly, although the pace of growth slowed somewhat compared to the previous survey period. Production fell slightly at non-durable goods-producing plants, while production increased for the majority of durable products, except for machinery which decreased considerably. Growth in new orders and employment moderated in June, while order backlogs rose. Expectations for future factory activity remained steady at generally solid levels. Manufacturers' capital spending plans continued to rise and remained higher than a year ago. Wholesale trade and transportation firms reported moderate sales growth from the previous survey, particularly for construction products, while growth in professional and high-tech services activity eased. Wholesale trade, transportation, professional, and high-tech firms anticipated higher future sales activity in coming months. Reduced government spending continued to impact several high-tech firms in the area.\nReal Estate and Construction\nDistrict real estate activity increased moderately in late May and June, while construction activity rose slightly. Residential home sales expanded modestly, particularly for low- and medium-priced homes which continued to outsell higher-priced homes. Residential home inventories continued to decline, and home prices increased further. Residential real estate contacts expected additional improvement in the coming months, with moderately higher sales and prices. According to builders and construction supply contacts, construction activity continued to expand, although at a slower pace than during the previous survey period. Sales of construction supplies increased moderately, and housing starts were flat. However, builders anticipated starts and buyer traffic to increase modestly in the months ahead. Mortgage activity picked up slightly, but remained lower than a year ago as a decrease in refinancing activity continued to weigh on overall activity. Commercial real estate activity strengthened further, with lower vacancy rates and increased sales, construction and absorption. The commercial real estate market was expected to expand moderately over the next few months.\nBanking\nBankers reported steady overall loan demand, improved loan quality, and a slight increase in deposit levels. Respondents reported a minor decrease in demand for residential real estate loans. Most respondents reported steady demand for commercial real estate loans, agricultural loans, and consumer installment loans. Demand for commercial and industrial loans was relatively steady with a slight decrease compared to the last survey. Bankers reported improving loan quality compared to a year ago, and all bankers expected the outlook for loan quality to either improve or remain the same over the next six months. Credit standards remained largely unchanged in all major loan categories. In addition, respondents reported a minor increase in deposits.\nAgriculture\nHeavy summer storms in June improved soil moisture for developing crops and pastures but also caused some wind, hail and flood damage. Wet fields delayed the winter wheat harvest in Oklahoma and Kansas, and yields depended on the extent of drought, freeze and hail damage. Despite expectations of a poor wheat harvest in much of the District, wheat prices fell since the last survey period. The corn and soybean crops were in good condition overall, and improved growing conditions led to a drop in prices for both crops. Cattle prices continued to rise, but feeder cattle prices have recently increased much faster than fed cattle prices and narrowed margins for feedlot operators. The cumulative effect of reduced piglet numbers due to the swine virus and strong export demand for pork supported further gains in hog prices, even though pork production forecasts were raised due to heavier dressed weights and higher than expected slaughter in the second quarter.\nEnergy\nDistrict energy activity ticked up in late May and June. Business activity held steady, drilling increased slightly, and expectations for the coming months strengthened further. The number of active oil rigs increased, while natural gas rigs remained basically unchanged. Crude oil spot prices spiked in late June as a result of geopolitical conflicts in the Middle East threatening supply, but have come down somewhat as the threat has weakened. Natural gas spot prices have moderated slightly since the last survey period, but remained above year-ago levels. Energy contacts expected oil and gas prices to stay near current high levels, and contacts reported an increase in planned capital expenditures. Several producers commented on increased drilling costs due to advancing technology, which is currently being offset by high oil prices.\nWages and Prices\nPrices grew at a slightly slower pace in most industries, and wage pressures were modest. Retail prices moderated somewhat but still increased over the previous survey period. The pace of growth slowed slightly for manufacturing raw materials and selling prices, but contacts expected further increases in future months. Transportation input prices were flat, and fewer firms raised selling prices, while restaurant menu prices continued to rise due to elevated food costs. Construction materials prices were slightly higher in June, and most builders expected further increases. Wage pressures were modest in most industries, with the exception of manufacturing in which almost half of manufacturing contacts reported raising wages more than normal to attract or retain some workers. Some contacts continued to report a short supply of workers, particularly for drivers, construction, high-tech, and skilled positions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nJuly 16, 2014\nEconomic growth in the Second District has continued at a moderate pace since the last report. Prices of finished goods and services continue to be stable, and businesses report moderate upward pressure on input prices. Manufacturers report a further acceleration in business activity, while service sector firms report steady, moderate growth. Labor market conditions continue to improve: manufacturers indicate that they have stepped up hiring activity since the last report, while service-sector firms continue to expand staff at a moderate pace. Both general merchandise retailers and auto dealers report that sales were quite robust in May but pulled back somewhat in June. Tourism activity has been increasingly brisk since the last report. Housing markets showed signs of leveling off, while commercial real estate markets strengthened slightly. Finally, banks report increased loan demand--particularly on commercial mortgages--little change in credit standards, and increasingly widespread declines in delinquency rates across all segments.\nConsumer Spending\nGeneral merchandise retailers say that sales were robust and generally ahead of plan in May but mixed in June. While retail contacts in upstate New York note that sales were steady to stronger in June, two major retail chains and a number of other contacts note that business pulled back in June. Retailers generally attribute the strong sales in May to pent-up demand, after a long spell of unseasonably cool and wet weather; one major chain characterizes the pullback in June as a return to more normal levels. Retail contacts generally portray inventories as being in good shape. Prices are mostly steady, though one contact describes the pricing environment as a bit more promotional than a year ago.\nAuto dealers in both the Rochester and Buffalo areas report that new vehicle sales increased strongly in May and were well ahead of comparable 2013 levels, but note signs of slowing in June. Auto dealers note that both wholesale and retail credit conditions remain in good shape, and they express optimism about the near-term outlook for sales.\nTourism activity has generally been increasingly robust since the last report. With more Broadway shows running through the early summer than in a number of years, revenues and especially attendance at Broadway theaters strengthened further in late May and June. Manhattan hotels saw exceptionally brisk business in May: revenue was up nearly 7 percent from a year earlier, and the occupancy rate reached a record high of 94 percent. Hotel occupancy rates also strengthened in the Albany area in May, but softened slightly in the Buffalo-Niagara Falls area. Consumer confidence in the region was mixed in June. The Conference Board reported a pullback in the Middle Atlantic region (NY, NJ, PA), whereas Siena College's June survey of New York residents shows confidence increasing for the third straight month.\nConstruction and Real Estate\nThe District's housing markets have been generally stable since the last report. Across both New York and New Jersey, existing home sales were down nearly 10 percent from a year ago in May, as the number of homes on the market declined; prices were reported to be flat to up slightly. Contacts in the Buffalo-Niagara region indicate that housing demand remains brisk, but that sales activity continues to be constrained by a dearth of available homes. One industry contact in New Jersey notes that the inventory of available new and existing homes remains low, as a large number of distressed properties remain off the market.\nNew York City's co-op and condo market remains robust, with prices up moderately from a year ago in Manhattan and Brooklyn. Sales volume was up moderately from a year ago in Manhattan and up briskly in Brooklyn. In Queens, both prices and sales volume retreated from high levels, reflecting a pullback in new development, which was quite robust in 2013. The inventory of available homes moved up in Manhattan but remains quite low; one contact remarks that some of the apartments recently being put up for sale are priced unrealistically. Inventory levels in Brooklyn remain exceptionally low. Apartment rental markets appear to have leveled off, as rents in Brooklyn and Manhattan have been flat in recent months. A contact in northern New Jersey notes that multi- family construction has increased strongly, while single-family construction has remained subdued.\nCommercial real estate markets were mixed but, on balance, somewhat stronger in the second quarter. Office availability rates fell to multi-year lows in New York City and Long Island, but rose to multi-year highs in the Rochester and Buffalo areas; rates were little changed at high levels (near 20 percent) in northern New Jersey and Westchester & Fairfield counties. Asking rents for office space were flat across most of the District, except in Manhattan, where they continued to trend up and have risen nearly 10 percent over the past year. Office construction activity has been brisk in Manhattan but remains subdued across most of the District. Industrial availability rates were mostly steady to down slightly, with asking rents on industrial space rising on Long Island but mostly flat across the rest of the District. Finally, retail vacancy rates in Manhattan continued to trend up at mid-year; still asking rents continue to rise and are up roughly 8 percent from comparable 2013 levels.\nOther Business Activity\nThe labor market has continued to strengthen since the last report. A growing proportion of manufacturers say they have added workers in recent weeks, and, as has been the case for a number of months now, somewhat more service firms say they are expanding than reducing employment. Moreover, considerably more contacts in both sectors say they plan to expand than shrink their workforces in the second half of the year. A major New York City employment agency reports that hiring activity has continued to advance gradually--hiring in the financial sector has slowed slightly, though this contact notes that there continues to be strong demand for IT workers and growing demand for human resource professionals. Wages and salaries, for the most part, remain stable.\nManufacturing firms in the District report a further acceleration in activity since the last report, whereas service-sector firms indicate steady, moderate growth. Manufacturers report that input price increases have broadened somewhat, while service-sector businesses report that they continue to be fairly widespread. However, the large majority of firms in both sectors say that their selling prices remain mostly stable and expect more of the same in the second half of the year.\nFinancial Developments\nSmall- to medium-sized banks in the District report continued increases in loan demand across all categories--especially commercial mortgages--since the last report. Bankers report ongoing declines in refinancing activity. Respondents indicate that credit standards were unchanged across all loan categories. A growing proportion of respondents indicate declining spreads of loan rates over cost of funds, with narrowing reported across all loan categories but especially in commercial mortgages. The vast majority of bankers--roughly four in five--indicate that average deposit rates were unchanged. Finally, bankers report increasingly widespread decreases in delinquency rates in all loan categories. Overall, more than 35 percent of respondents say delinquency rates have declined, while fewer than 5 percent say they have increased.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nJuly 16, 2014\nPrepared at the Federal Reserve Bank of Kansas City and based on information collected before July 7, 2014. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nAll twelve Federal Reserve Districts indicated that economic activity continued to expand since the previous report. The pace of economic growth was characterized as moderate in New York, Chicago, Minneapolis, Dallas, and San Francisco, while the remaining Districts reported modest expansion. Compared to the previous reporting period, Boston and Richmond noted a slightly slower pace of growth. Most Districts were optimistic about the outlook for growth.\nOverall consumer spending increased in every District. Retail sales grew modestly in most Districts, with increases that were generally similar to the previous reporting period. Vehicle sales remained stronger than non-auto retail sales, with Philadelphia, Richmond, Atlanta, and San Francisco indicating robust to very strong auto sales. Tourism activity expanded in all reporting Districts, with growth ranging from slight in Philadelphia to very strong in Boston. Hotel contacts described robust activity in the Boston, New York, Atlanta, and Minneapolis Districts, while Philadelphia and Richmond noted activity levels that were in line with seasonal norms.\nActivity in the nonfinancial services sector continued to grow across all Districts at a modest to moderate pace. Many Districts reported positive growth for professional and business services, including healthcare consulting, advertising, engineering, accounting, and technology. Overall, transportation activity rose at a moderate pace since the previous survey period. Broad-based demand for trucking and rail services across the Districts increased, and the Richmond District reported strong growth in port container traffic, with increases in both imports and exports. Manufacturing activity expanded in all twelve Districts. Contacts in the metal and auto industries generally reported positive growth, while manufacturers in the Philadelphia, Cleveland, Richmond, and Chicago Districts reported increased demand for their products from the energy sector.\nReports on real estate activity varied across the Districts. Many Districts reported low inventories and increasing home prices, but demand was mixed. Boston, New York, and St. Louis reported home sales were below year-ago levels, while Chicago noted a decrease in home sales since the last survey period. Home sales in other Districts remained steady or increased. Multi-family sales and leasing activity were robust in the New York and Dallas Districts. Residential construction rose for single-family homes in the Cleveland, Chicago, Kansas City, and San Francisco Districts, while New York, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco reported increases for multifamily construction. Commercial construction activity generally strengthened across the Districts, due to higher demand and low vacancy rates.\nLoan volumes rose across the nation, with slight to moderate increases reported in most Districts. Credit quality remained stable or improved slightly in most Districts, while San Francisco noted a slight decline. Credit standards were generally unchanged, although Richmond noted an easing of cost terms for well-qualified commercial and industrial borrowers, and Philadelphia and Chicago mentioned that competitive pressures were leading some financial institutions to take on higher credit risks.\nAmong Districts reporting on agriculture, heavy rains improved soil moisture levels in the Atlanta, Chicago, Minneapolis, Kansas City, and Dallas Districts, while drought conditions persisted in San Francisco. Most fall crops were reported in good or better condition, and expectations of higher production lowered crop prices. Profitability improved for livestock operators in the Atlanta, Minneapolis, and Kansas City Districts due to high cattle and hog prices. Oil production expanded in the Minneapolis, Kansas City, and Dallas Districts, while natural gas and coal production remained relatively steady in reporting Districts.\nLabor market conditions improved, as all twelve Districts reported slight to moderate employment growth. Several Districts continued to report some difficulty finding workers for skilled positions. Aside from higher wages to attract talent for these skilled positions, wage pressures remained modest in most Districts. Price pressures were generally contained, with most Districts reporting slight to modest price increases for both inputs and finished goods. Several Districts noted higher prices for meat, dairy products, construction materials, and some metals (namely steel, copper, and nickel).\nConsumer Spending and Tourism\nConsumer spending continued to increase at a moderate pace since the previous report, with generally modest growth among non-auto retailers and moderate to strong growth in vehicle sales and tourism activity. Most Districts reported modest retail sales growth since the last report, with slightly slower sales growth in the Boston and Atlanta Districts and faster sales growth in the New York, Dallas, and San Francisco Districts. Although wet weather continued to restrain sales in the Chicago District, New York noted an increase in sales due to pent-up demand as the negative effects from earlier adverse weather abated. Several Districts mentioned that higher meat prices were affecting consumer behavior. New York, Cleveland, and Chicago also reported higher levels of promotions or discounting. Sales were particularly strong for shoes and children's apparel in the Philadelphia District, furniture in the Atlanta District, home improvement and building materials in the St. Louis and Kansas City Districts, and low-end and mid-range technology goods in the San Francisco District. Contacts in the Philadelphia and Cleveland Districts reported higher planned capital expenditures for retail space.\nVehicle sales expanded in most Districts in the latest reporting period, and auto contacts were optimistic about auto sales in the months ahead. Most Districts reported that sales were above year-ago levels, with Dallas noting a return to pre-recession sales levels. Philadelphia, Richmond, Atlanta, and San Francisco reported robust or very strong auto sales growth, while most other Districts noted a more moderate pace of growth. Cleveland, Richmond, and San Francisco reported some softening in used car sales, while new car sales were stronger than used sales. Richmond mentioned that recent vehicle recalls were weighing on used car sales, while Chicago noted increased activity in service and parts departments due to recalls. SUVs sold particularly well in the Cleveland and Kansas City Districts.\nTourism activity increased across all reporting Districts, and most Districts' contacts were optimistic about future activity levels. Boston, New York, and Kansas City reported strong tourism activity, while Atlanta, Minneapolis, and San Francisco reported moderate tourism growth. Hotel occupancy rates were high in the Boston, New York, Atlanta, and Minneapolis Districts. Tourism activity rose slightly in the Philadelphia and Richmond Districts, with levels that were in line with seasonal norms. Philadelphia and Richmond also mentioned that many tourists were budget conscious. Dallas noted gains in domestic travel, but weaker demand from foreign travelers.\nNonfinancial Services\nNonfinancial services activity continued to strengthen since the previous survey period, with all Districts reporting steady or improving growth. Many Districts reported positive growth within the professional and business services sector. Specifically, Boston noted an increase in demand for consulting services (especially for healthcare) and advertising; Richmond indicated a rise in demand for accounting services; Minneapolis mentioned gains in engineering and architecture services; and San Francisco noted an increase in technology services. San Francisco continued to report a decline in activity in the food services industry. Conditions in the staffing services industry across the Districts were unchanged or improved modestly compared with the previous survey period.\nTransportation activity grew at a moderate pace in the most recent survey period. Minneapolis and Dallas reported high demand for rail services; in particular, Minneapolis mentioned increased volumes for grain, crushed stone, lumber, and wood, although rail shipments for petroleum, primary forest materials, and nonmetallic minerals decreased. Contacts in the Cleveland District reported strong and broad-based trucking activity, with shipments of construction and fracking-related materials particularly strong. Contacts in the Richmond District noted an increase in demand for freight trucking related to home improvement stores increasing inventories in advance of the Fourth of July holiday weekend. Port officials in the Richmond District saw robust growth in container traffic, led by exports of forest products, grains, soybeans, and auto parts, and imports of auto parts, apparel, and textiles. However, these contacts also noted that imports of housing-related products, such as furniture and appliances, had decelerated.\nManufacturing\nManufacturing activity expanded further in all twelve Districts since the previous survey period, with growth occurring across many subsectors. Manufacturing activity in the New York, Atlanta, Chicago, Minneapolis, and San Francisco Districts grew at a robust pace, while the manufacturing sectors in the Boston, Philadelphia, Cleveland, Richmond, St. Louis, Kansas City, and Dallas Districts increased at a more modest pace. Compared with the previous report, the pace of growth slowed slightly in the Boston, St. Louis, and Kansas City Districts, and increased in the Richmond District. Contacts in the Chicago, St. Louis, Minneapolis, Dallas, and San Francisco Districts reported generally positive activity within the metals sector. Philadelphia and Chicago noted improved growth in the aerospace industry since the previous survey period. Manufacturing in the auto industry generally strengthened, with Philadelphia, Cleveland, Richmond, Chicago, St. Louis, and San Francisco reporting increased activity; however, Minneapolis noted a moderation in the auto industry's demand for certain inputs. Manufacturers supporting the energy sector in the Midwest and Northern Appalachia reported stronger sales, specifically for metal-piping related products. Production of construction inputs was mixed, as Kansas City and San Francisco reported a decrease in production and Philadelphia, Chicago, and Dallas reported a slight increase. Boston, Cleveland, Atlanta, Kansas City, and Dallas were optimistic about the near-term outlook for overall manufacturing activity.\nReal Estate and Construction\nResidential real estate activity continued to vary by Federal Reserve District, reflecting generally low inventories and mixed levels of demand. Specifically, Boston, New York, Atlanta, Kansas City, and Dallas noted that residential home sales were constrained by low or dwindling inventories. Nevertheless, despite decreasing inventories, residential home sales in the Atlanta and Kansas City Districts rose at a slight to modest pace. Philadelphia, Cleveland, and Richmond also noted a slight to modest increase in sales since the previous survey period, while San Francisco reported that home sales in the recent reporting period were below year-ago levels. Boston, New York, Chicago, and St. Louis indicated that residential sales activity softened, with Chicago attributing some of this decline to an increase in prices. Home prices continued to rise across most of the Districts, especially within urban areas, but contacts in the San Francisco District noted a slightly slower pace of home price appreciation. New York and Dallas reported robust activity in multifamily sales and leasing.\nResidential construction activity generally increased across the Districts, with only St. Louis and Minneapolis reporting a decline in overall activity. Chicago and San Francisco reported increased construction of high-end urban single-family homes, and Cleveland and Kansas City continued to see growth in low- to medium-priced single-family construction. Cleveland and San Francisco reported that a shortage of vacant lots was holding back further growth in both single-family and multifamily construction; however, growth remained positive. New York, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco noted that multifamily construction activity increased since the previous survey period. Contacts in the Cleveland District reported that they were seeing greater willingness to finance multifamily projects.\nCommercial construction activity strengthened across most Districts. Cleveland and Atlanta reported increased commercial construction activity compared to a year ago, and Philadelphia, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco noted gains since the previous survey period. Boston and Richmond saw mixed commercial construction activity across their Districts since the previous report. Dallas indicated strong overall commercial real estate construction activity, and commercial real estate construction increased in the Minneapolis District compared with the previous report. Boston, New York, Richmond, Chicago, Kansas City, and Dallas reported tight commercial vacancy rates. Industrial real estate construction and leasing activity was strong in the Philadelphia and Chicago Districts.\nBanking and Financial Services\nOverall, banking conditions improved slightly from the previous reporting period. Nearly all reporting Districts indicated increasing loan volumes. Loan demand was strongest in the New York, Chicago, and Dallas Districts, where loan volumes rose moderately compared with the previous report. Loan volumes increased modestly in the Richmond, Atlanta, St. Louis, and San Francisco Districts, while Philadelphia and Cleveland noted a slight uptick. Commercial and industrial lending increased in the New York, Philadelphia, Cleveland, Richmond, Chicago, and St. Louis Districts. However, commercial and industrial lending decreased slightly in the Kansas City District. Commercial real estate lending exhibited slight to moderate growth in the New York, Chicago, Dallas, and San Francisco Districts. Growth in residential real estate loan volumes was mixed across the System. New York, Philadelphia, St. Louis, and Dallas reported growth, while Richmond, Atlanta, and Kansas City indicated slight declines in demand. Consumer lending increased in the New York, Philadelphia and St. Louis Districts, and construction lending expanded in the New York, Philadelphia, and San Francisco Districts. Most Districts cited stable or slight improvement in credit quality, while Dallas and New York reported moderate and strong improvement, respectively. San Francisco was the only District with a reported decline in credit quality. Bankers in the New York and Atlanta Districts reported decreases in delinquency rates for all loan categories, with rates reaching pre-recession levels in the Atlanta District.\nCredit standards remained generally unchanged in most Districts. Contacts in the Philadelphia District expressed a growing concern for loans with risky terms as a result of strong competition among banks to secure new loans. In addition, banking contacts in the Chicago District cited competitive pressure on structure and pricing for traditional and leveraged business lending, particularly from nonbank financial institutions willing to take on higher credit risk. Though Richmond indicated an easing of cost terms for well-qualified commercial and industrial borrowers, credit standards for mortgage lending were described as strict.\nDeposit volumes picked up in the Cleveland, Kansas City, and Dallas Districts, but declined in the St. Louis District. New York indicated declining spreads between loan rates and cost of funds, particularly for commercial mortgages. Bank contacts in the Philadelphia District reported growing confidence among both businesses and consumers, but also indicated that businesses continued to be cautious regarding most decisions.\nAgriculture and Natural Resources\nGrowing conditions varied with precipitation levels. Heavy rains improved soil moisture levels in the Atlanta, Chicago, Minneapolis, Kansas City, and Dallas Districts, though there were isolated reports of hail and flood damage. However, recent rains were too late to aid the development of the winter wheat crop and actually delayed the harvest in the Kansas City and Dallas Districts, leading to expectations for below-average yields. Persistent drought in the San Francisco District led some producers to curb new planting to conserve water for permanent crops. Despite late planting in many areas, most fall crops were reported in good or better condition, and expectations of strong production this year lowered crop prices. High cattle and hog prices, reflecting supply constraints and strong export demand, improved profitability for livestock operators in the Atlanta, Minneapolis, Kansas City, and Dallas Districts. Higher milk prices and low feed costs relative to last year also strengthened profit margins for dairy operators in the Minneapolis and San Francisco Districts. The Chicago District reported declines in milk and cattle prices compared with the previous survey period, though prices remained well above levels necessary to cover production costs.\nOil production drove growth in the energy sector, while natural gas and coal production generally held steady. Strong summer demand was expected to support elevated oil prices. Oil production expanded in the Minneapolis, Kansas City, and Dallas Districts, and crude oil inventories rose at Gulf Coast refineries in the Atlanta District. Natural gas production in the Richmond and Kansas City Districts remained relatively steady. Some contacts in the Kansas City District planned to increase capital spending, and also noted a rise in drilling costs due to advances in technology. Coal production in the Cleveland, Richmond, and St. Louis Districts, as well as iron ore output in the Minneapolis District, was little changed.\nEmployment, Wages, and Prices\nLabor market conditions continued to improve since the previous report, with all Districts reporting slight to moderate employment growth. Employers in the Philadelphia District remained cautious, and reported hiring for replacement and some incremental growth. Philadelphia and Atlanta reported more hiring for permanent positions since the last reporting period. Employers in the Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kansas City, and Dallas Districts reported difficulty finding workers for some skilled positions. In particular, a shortage of truck drivers was noted in the Cleveland, Richmond, Atlanta and Kansas City Districts, and skilled construction and craft workers were reportedly in short supply in the Cleveland, Richmond, Atlanta, Chicago, Kansas City and Dallas Districts. Cleveland and Dallas also noted that labor markets were tight in energy-producing areas.\nMost Districts noted that wage pressures remained modest outside of some skilled positions. New York, Philadelphia, Cleveland, Richmond, and Atlanta reported stable to slightly increasing wage pressures; in addition, Chicago indicated that wage pressures increased (though primarily for skilled workers). St. Louis, Minneapolis, and Kansas City reported modest wage pressures. Wage pressures in the Dallas and San Francisco Districts were moderately higher than in other parts of the country. Dallas noted that the strongest wage pressures within its District were in the energy and construction sectors, but reported modest upward pressure in other industries as well. San Francisco mentioned some upward wage pressure from rising minimum wages, and some contacts in the San Francisco District noted an increasing need to offer higher starting salaries to attract talent from competitors.\nPrice pressures were generally contained, with most Districts reporting slight to modest price increases for both inputs and finished goods. New York and Chicago reported upward pressure on costs; Richmond and Kansas City reported that prices of raw materials and finished goods rose at a slightly slower pace. Several Districts noted higher prices for meat, dairy products, construction materials, fuel, and some metals (namely steel, copper, and nickel). Contacts in the Boston, Cleveland, Atlanta, Kansas City, Dallas, and San Francisco Districts reported success in passing on higher input costs to customers in some instances.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nJuly 16, 2014\nThe Ninth District economy grew moderately since the last report. Increased activity was noted in consumer spending, tourism, commercial construction and real estate, professional services, manufacturing, and energy and mining. Activity in residential real estate and agriculture was mixed, while decreased activity was noted in residential construction. Hiring outpaced layoffs in most areas of the district. Wage increases were generally modest, while overall prices remained relatively level.\nConsumer Spending and Tourism\nConsumer spending increased modestly on net. Sales at a Minnesota-based apparel retailer were up slightly from a year earlier, while comparable sales in stores at a Minneapolis area mall were down slightly. A Minnesota-based food producer recently reported a slight decrease in sales. Meanwhile, a manager of a mall in Montana reported that recent sales were up about 7 percent compared with a year ago. An auto dealer in Montana noted that sales have recently picked up after a slow start to the year.\nTourism activity was up from a year ago. Some Montana tourism-related businesses noted an increase in reservations at campgrounds and for outfitting and guiding services during the early part of the summer. According to a survey conducted by the Minnesota state tourism office, 38 percent of respondents from lodging and camping properties expect summer occupancy to be higher than a year ago, while 13 percent expect decreases; the outlook was slightly more positive than last year's survey. During the first five months of 2014, occupancies in the tourist destination of Deadwood, S.D., were up 5 percent compared with a year earlier. Relatively strong hotel occupancy rates were reported in the Minneapolis-St. Paul area.\nConstruction and Real Estate\nCommercial construction activity increased since the last report. Several new commercial developments were planned across the District. A few examples include a medical office building planned in South Dakota, an industrial building in eastern North Dakota, a mixed-use development in Minnesota, and a natural resource processor in Montana. The value of May commercial permits in Billings, Mont., more than quadrupled from last year. However, in Sioux Falls, S.D., commercial permits in June were down from a year ago. Residential construction decreased from last year. In the Minneapolis-St. Paul area, the value of June residential permits decreased slightly compared with a year earlier. The value of permits issued in May decreased in the Bismarck, N.D., area from a year ago. The value of May single-family residential building permits in Billings was down from last year, but multifamily building was up. In contrast, the value of May residential permits in Sioux Falls increased more than 40 percent from a year earlier.\nActivity in commercial real estate markets increased since the last report. Several commercial real estate sales and leasing transactions were announced since mid-May. An office building in Minneapolis will be sold for a city record of $365 per square foot. Residential real estate market activity was mixed. In the Sioux Falls area, May home sales were down 7 percent, inventory increased 7 percent and the median sales price increased 4 percent relative to a year earlier. May home sales were down 10 percent from the same period a year ago in Minnesota; the inventory of homes for sale increased 3 percent and the median sales price rose 7 percent. However, in Eau Claire, Wis., May home sales were up 9 percent from the same period a year ago and the median sales price dropped 3 percent. May home sales increased relative to a year ago in the Bismarck area.\nServices\nActivity at professional business services firms increased since mid-May. Engineering contacts reported increased activity as a result of widespread flooding. An architect noted a slight increase in bidding activity since the last report. Trucking contacts reported increased demand due in part to rail capacity constraints.\nManufacturing\nGrowth in the manufacturing sector continued. Respondents to a June survey of purchasing managers by Creighton University (Omaha, Neb.) reported increased manufacturing activity in Minnesota and the Dakotas; the index for Minnesota reached its highest level since prior to the recession. Contacts from the metal forming industry reported that business growth in 2014 was faster than 2013's pace; demand from the auto sector moderated, while demand from other industries was up, with the notable exception of agricultural equipment, which fell. Contacts who produce capital equipment for manufacturers noted that demand for machinery was strong and that the market for used equipment had \"dried up.\"\nEnergy and Mining\nActivity in the energy sector remained strong, while mining was steady. Late-June oil and gas exploration activity decreased in Montana and increased in North Dakota from a month earlier. Oil production bounced back up after dipping during the extreme winter cold. Two new pipelines to carry oil from North Dakota were proposed. Falling corn prices have been a boon to ethanol producers, according to industry contacts. Output at Minnesota iron ore mines was roughly level with last year and was slightly below expectations. Activity was restrained in part because of the winter and a rail backlog, but demand from the steel industry also appears to have slowed. In contrast, exploration or permitting was under way for several planned nonferrous mines throughout the District.\nAgriculture\nDistrict crop producers made progress catching up on a late spring, but flooding due to heavy rains led to crop losses in some areas. Corn and soybean emergence rates were consistent with five-year averages, and most crops were in good or excellent condition. District producers planted fewer acres of corn and more soybeans this year, in line with expectations. The USDA forecasts solid harvests and a slight reduction in crop prices by the end of the year. Prices received by farmers fell in June from a year earlier for corn, soybeans, wheat, and hay; prices increased for cattle, hogs, poultry, eggs, and milk.\nEmployment, Wages and Prices\nHiring outpaced layoffs in most areas of the District. A number of business contacts noted increased difficulty finding qualified employees for open positions. In Minnesota, a call center was hiring 160 new workers, a bus manufacturer announced an expansion that will create over 150 new jobs, a pharmaceutical research firm is establishing a new facility that will create 100 new jobs, a safety equipment manufacturer was adding 100 jobs, and a financial services firm was expanding its information technology staff by 50 workers. However, a printing operator announced that it will close a facility in Minnesota, affecting 280 workers.\nWage increases were generally modest. For example, wages for manufacturing workers in District states were up about 1 percent for the three-month period ended in May compared with the same period a year earlier.\nOverall prices remained relatively level. End-of-June gas prices in Minnesota were slightly higher than prices in mid-May. Metals prices were generally flat since the last report, while lumber prices decreased slightly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nJuly 16, 2014\nReports on recent business performance in the First District display considerable variation both across and within sectors, but point to slow economic growth overall. Contacts in the retail sector report either slight declines in sales or modest increases. Tourism is enjoying very strong growth, while manufacturers report mixed results. Consulting contacts report moderate to strong growth, while commercial real estate reports are mixed across locations and sectors. Relative to a year ago, sales of single-family homes fell in May in four New England states, but contacts also report rising median home prices in two of these states. Output prices are mostly stable in the manufacturing sector, although some firms recently raised their prices, and in the consulting sector some large firms are enacting fee increases to cover rising wage and benefit costs. While manufacturers report no commodity price pressures, some retail contacts note price increases for some inputs. Some firms in the District are engaged in significant hiring and others are doing little to no hiring, largely in line with business performance. Barring pessimism among a few contacts and selected mention of downside risks, most contacts are at least cautiously optimistic about their near-term growth prospects, and respondents in the tourism, biotechnology, and healthcare consulting industries all describe the outlook as highly favorable.\nRetail and Tourism\nRetail contacts report year-over-year same-store sales growth ranging from small single-digit decreases to low single-digit increases. Some contacts report that consumers are still cautious, while others say that consumers seem more confident. Some indicate that vendor prices and input costs remain steady, while others report cost increases for paper products and for fuel and freight. Depending on the retailer, the outlook for their own business and for the U.S. economy ranges from \"challenging\" to \"steady\" to \"improving.\" The already-strong tourism sector continues to see very robust growth. Boston-area hotel revenues were up 13.2 percent in May from a year ago. Attendance at museums and other attractions is up 8.5 percent year-over-year for May. Tourism-related revenues for the 2014 summer season are projected to be 6 percent to 7 percent higher than in 2013, which was itself a record year.\nManufacturing and Related Services\nOf the nine manufacturing firms contacted in this cycle, only two report year-over-year declines in revenues. A maker of frozen fish products reports that demand is down because fish is expensive and also because competitors are underpricing them. A magazine publisher that relies heavily on advertising revenues reports that ad revenues have fallen 10 percent per year for a number of years because of the shift to digital media. Of the firms reporting revenue increases from a year ago, two had very slow growth. One of these, in the chemical industry, reports that its net revenue growth figure conceals wide variation across different product lines, including a year-over-year revenue decline of 9 percent for its largest line and an increase of 12 percent for its second-largest line. Across contacts, the first quarter's harsh winter had no lasting effects on inventories, which reportedly stand at moderate levels. Seven contacts report that they are making new hires, with headcounts increasing in line with individual firms' sales growth. A biotech firm plans to hire 1,000 workers this year, while a manufacturer serving the automobile and aerospace industries reports hiring mostly to replace departing staff. Firms report mostly stable pricing. Two contacts, both selling industrial parts, recently succeeded in putting price increases through to customers. Unlike in many previous reports, no contacts report having problems with commodity prices or supplies. All contacts reporting on investment activity indicate that investment is up over last year, although none of these contacts mention having revised their investment plans recently. With the exception of the magazine publisher, contacts have a positive outlook for the remainder of 2014, and the biotech firm contact is more optimistic than are contacts in such industries as bulk chemicals and automotive springs.\nSelected Business Services\nDemand for analysis, consulting, and advertising is up across the board, as most contacts perceive that the economy is resurgent. Healthcare consulting firms led with 5 percent to 10 percent revenue growth over a year ago. Economic analysis and government consulting firms report year-over-year revenue growth in the range of 1 percent to 4 percent. Advertising firms also report strong demand. According to contacts, wages at business services firms are up 2 percent to 5 percent over last year, while benefits increased at a slightly higher pace. Larger firms report little trouble passing compensation increases on to clients, but smaller firms see margins being squeezed amid fierce competition, coupled with rising wage and energy costs and perceived consumer reluctance to accept higher prices. Healthcare consulting firms and a few large analysis firms plan to increase employment by 5 percent to 10 percent this year. Government consulting and smaller strategy firms report flat headcounts and no plans to hire moving forward. Firms in consulting and advertising report that a tight market for their targeted hires pushed starting salaries up 5 percent to 10 percent over last year. Revenue growth predictions display a broad range, including negative values and a value of 10 percent, although all firms expect growth to improve moving forward. Healthcare consultants are especially optimistic in light of demand stemming from clients' need to comply with the Affordable Care Act. At the same time, government and healthcare consulting firms cite pending U.S. fiscal and regulatory policy decisions as key risk factors for clients.\nCommercial Real Estate\nReports from commercial real estate contacts across the First District are mixed. Leasing activity is down in Hartford in recent weeks, a fact attributed in part to usual seasonal patterns and in part to weak fundamentals. Office leasing activity is also down in Providence, while at the same time Rhode Island's industrial leasing market is tightening amid strong demand and limited inventory. According to a Portland contact, the city's tourism industry is booming, and three recently-opened hotels enjoy high occupancy rates. Also in Portland, strong office leasing is driven by growth of existing firms rather than by new firms, and investment demand is strong across industrial, multifamily, and medical properties. In Boston, office rents continue to display a modest upward trend, thanks to a lack of new inventory coming to market. A limited amount of speculative office construction is underway in Boston's Seaport District, but contacts foresee constraints on similar construction in the form of high costs and limited financing. A regional lender to commercial real estate saw a surge in loan volume in recent weeks, a fact the contact attributes to changes in business strategy. According to contacts, hiring in both Portland and Hartford--and hence added office demand--is held back by a scarcity of young, educated workers in these cities. Contacts expect that Boston will continue to see at least modest improvement in commercial real estate fundamentals moving forward, while contacts in Providence and Hartford point to uncertainty surrounding the outcomes of upcoming elections in their respective states as a factor that could restrain economic growth in the near-term. A Portland contact's outlook remains bullish.\nResidential Real Estate\nRealtors report steady foot traffic at open houses and multiple contacts insist that demand remains strong despite year-over-year declines in sales in May in four of five reporting states: Connecticut, Massachusetts, Rhode Island, and Vermont. In Maine, sales rose over the same period. To help explain the falling sales, realtors cite inventory shortages, perceived lack of job security, and economic uncertainty. Lack of inventory continues to hamper sales in Massachusetts, where listings have fallen on a year-over-year basis for 27 consecutive months. At the same time, contacts in that state report seeing increases in new listings in selected areas. Despite declining sales, the median sales price of single-family homes in May continued to rise on a year-over-year basis in Rhode Island and Massachusetts. For the same period, median sales prices were flat in Connecticut and down in both Maine and Vermont. Condominium sales in May are down relative to a year ago in Connecticut, Massachusetts, and Rhode Island, while Vermont contacts report increased condo sales over the same period. The median sales price for condos in May increased from a year ago in Connecticut, Massachusetts, and Vermont; by contrast, the median condo sales price fell in Rhode Island over the same period. Looking forward, contacts in both Maine and Connecticut note that they are busy with pending deals, while pending sales figures for June are below year-earlier levels in Massachusetts, Vermont, and even Connecticut. Nonetheless, realtors across the region are hopeful that closed sales numbers for June will show improvement from a year ago.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nJuly 16, 2014\nAggregate business activity in the Third District grew at a modest pace during this current Beige Book period, with few changes from the prior period. Auto sales continued at a very strong pace of growth. Service sectors maintained a moderate pace of growth overall, as did demand for transportation services, specifically. Nonauto retail sales and staffing services continued to rise at a modest pace, although there are signs that momentum is building for stronger growth in the remainder of the year. Manufacturers also reported an ongoing modest rate of increase in activity. Tourist destinations continued to report a slight rate of growth, hampered once more by the storms of the past winter that prolonged the school year for many throughout the mid-Atlantic states. Real estate sectors all reported slight overall growth for the current Beige Book period. Builders and brokers reported that residential construction and real estate sales were showing signs of slight increases off of the low levels seen in prior months. Relatively little change in the sector's slow growth rate was noted by contacts from commercial construction; however, contacts are optimistic for the near future as groundbreakings for the first wave of several large projects have recently occurred. Contacts reported a slight lull in leasing activity. Lending volumes continued to grow slowly over this period, and credit quality continued to improve. Some contacts suggest that credit risks are rising with heated competition for loans. Overall, contacts reported slight increases in wages, home prices, and general price levels, similar to the last Beige Book period.\nOverall, contacts anticipated moderate growth over the next six months. Moreover, they generally expressed greater confidence in the underlying economy than in recent periods from their own perspective and from that of their consumer and business customers. About one-third of all firms reported plans to increase employment and to make additional capital expenditures over the next six months. For smaller businesses, such plans are likely to be realized on a very incremental basis.\nManufacturing\nThird District manufacturers have continued to report modest increases in orders and shipments since the last Beige Book. Gains in activity continued to reflect demand from a broad base of sectors. Specifically, demand from the auto, aerospace, and energy sectors continued to rise, as did orders from China. Demand from Europe was seen as mixed by manufacturers. Several contacts mentioned some growth originating from residential construction, although they tended to focus on the demand for manufactured housing. Energy-related growth is particularly strong from demand generated by efforts to bring Marcellus shale gas to markets.\nExpectations among Third District manufacturers that business conditions would improve during the next six months became more prevalent with more firms expecting increases and fewer firms expecting decreases. Moreover, one-third of firms reported that they anticipate higher levels of employment and capital expenditures in six months--slightly more than during the last Beige Book period.\nRetail\nContacts have continued to report modest growth of retail sales in the Third District since the prior Beige Book period. Year-over-year sales comparisons were generally positive for both May and June--the best combined two-month result this year so far. For June, an outlets mall operator reported one of the best year-over-year sales results this year. Growth was highest for retailers of children's clothing and for shoes. Sales were off for the home furnishings category. This decline was attributed to the end of the tax refund season and interpreted as evidence that households will spend for the home when they have windfall income. Various contacts continued to report that smaller, family-run restaurants and retailers, especially in smaller market areas, are often still struggling to stay in operation. However, one contact noted a return of retail investment to strip center spaces that have been vacant since the recession. Contacts are generally optimistic that the recent retail sales gains will continue.\nAuto dealers continued to report very strong sales through May and reported further strengthening into June. Dealers repeated their emphasis on staying lean, with cautious incremental hiring, which is helping to generate ongoing profitability. Sales are expected to remain strong throughout the remainder of the year, according to dealers--exceeding 2013 by as much as 6 percent to 9 percent.\nFinance\nThird District financial firms have continued to report slight increases in total loan volume since the last Beige Book. While some growth was indicated in all broad categories, demand increased most for consumer credit lines, such as credit cards and auto loans. Home equity lines also grew, but gains were slower due to ongoing payoffs of prior balances by more cautious borrowers. Contacts reported continued demand for commercial and industrial loans joined by ongoing fierce competition to secure the business. The market for commercial real estate and home mortgages, especially refinancing, remains much softer than other lines. Most banking contacts continued to report steady improvement in credit quality and loan portfolios. However, heated competition among banks to secure new loans has led to increased warnings of \"too-risky\" loan terms. Overall, bankers expressed greater optimism for general economic growth--tending to report a growing confidence among businesses and consumers alike. One contact stated that this is the most optimistic he has felt since the recession began. However, cautious tendencies continue to dominate most business decisions.\nReal Estate and Construction\nThird District homebuilders reported little change in sales from the last Beige Book period when a general malaise had dampened hopes for a strong spring season; however, construction has picked up. A New Jersey builder reported that he had salvaged May with end-of-month contract signings and was seeing a little increase in sales activity in June but from very low levels. One Pennsylvania builder continued to report slow sales and cited the overall weakness in the resale market. Despite low sales, builders from both states stated that their construction crews were now pretty busy; the poor winter weather had held up most of their active jobs. Residential real estate brokers reported slight improvements in sales in June. Although May sales were still negative in most major markets on a year-over-year basis, a major Philadelphia-area broker reported doing significantly better than plan in June and expressed hope that he might yet end even for the year. The broker stated that at least part of the ongoing difficulty stemmed from the tightness of inventory of lower-value homes.\nNonresidential real estate contacts reported that growth in construction activity changed little from the slight pace seen in the previous Beige Book period; the growth of leasing activity dropped back to a slight pace from the more modest growth observed in the prior period. However, construction activity is expected to accelerate throughout the second half of this year and the first half of 2015 because several major projects have recently broken ground and more will do so in the third quarter. The market for industrial/warehouse space remains strong throughout much of the Third District and one contact thought there was finally some firming in demand for Class A office space in the Philadelphia market overall.\nServices\nThird District service-sector firms continued to report moderate growth in activity since the last Beige Book. A little over half of all firms reported increases of new orders and of sales. Demand has continued to increase at a moderate rate for truck shipping loads with capacity utilization levels approaching a tipping point that could spark sharp price increases and greater efforts to expand capacity. Staffing contacts continued to report a modest pace of growth; however, they were more upbeat as their activity included many new hires for permanent placements. Overall, the vast majority of service-sector contacts reported expectations that the growth trend will continue over the next six months.\nContacts from tourist areas continued to report a slight rate of growth overall. Prolonged school years in many districts reduced some tourist activity at summer's start from the mountains to the sea. Jersey shore contacts reported somewhat stronger activity as they complete their return to full capacity following Hurricane Sandy. Contacts along the Delaware shore communities reported somewhat flat activity compared with last year, but for many, 2013 was a banner year. Mountain resorts also reported somewhat flat activity for May and June compared with last year. Several contacts continued to report that maintaining tourist numbers has not translated into comparable sales gains for area restaurants and retailers. Many visitors are maintaining tighter budgets while on vacation. All of the tourism contacts remain generally positive for future growth.\nPrices and Wages\nOverall, Third District contacts reported little change to the steady, slight pace of price level increases, similar to other recent Beige Book periods. The percentage of manufacturing firms reporting an increase in their input costs rose from about one-fourth to about one-third. However, the percentage of firms that increased their product prices barely budged, while a greater percentage of firms reported decreasing their own prices. Overall, prices paid and received by service-sector firms changed little from last period, with about one-third of firms reporting increases. Auto dealers reported little change in pricing. Many contacts continued to report tight, or narrowing, margins. Homebuilders reported that costs have been relatively flat over the last three months. Brokers reported slight, steady overall increases in home prices. Contacts among service-sector companies reported little change in labor costs. One staffing company serving a growing metro area reported that the wage scales across multiple job codes for a major contract renewal were unchanged from two years ago. The contact stressed that there was \"no shortage of labor.\" Another staffing company contact from a smaller, growing metro area reported that wages were going up but that \"clients were nonplussed.\" Overall, contacts reported that hiring occurs when it's necessary for replacement and for some incremental growth, but firms are much more cautious about hiring to expand capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nJuly 16, 2014\nThe Eleventh District economy grew at a moderate pace over the past six weeks. Manufacturing activity continued to increase, although there were a few reports of weaker demand. Retail and automobile sales strengthened, and were above year-ago levels. Demand for nonfinancial services was stable or improved, while growth in loan demand slowed over the reporting period. Sales of single-family homes were flat to down slightly, but apartment, office and industrial leasing activity was strong. Demand for oilfield services remained robust, and agricultural conditions improved. Prices were unchanged or increased modestly at most responding firms, and employment held steady or rose slightly. Outlooks remained optimistic.\nPrices\nMost responding firms said prices held steady or increased slightly since the last report. Fabricated metals producers noted continued increases in selling prices and expect more in the next six months. Food producers said that selling prices had moved up due to rising input costs, especially for dairy and meat products. Retail prices rose slightly, while automobile selling prices were unchanged. A transportation service firm said rates were up slightly, partly due to rising fuel costs, and airlines said airfares and fees had moved up.\nThe price of West Texas Intermediate crude rose since the last report, while natural gas prices were flat. Gasoline prices moved up due to higher oil prices and the start of the summer driving season.\nLabor Market\nEmployment levels held steady or increased modestly and some contacts noted continued difficulty in finding skilled workers. Reports of hiring came from airlines, auto dealers, law firms, and manufacturers of brick, fabricated metals, food, high tech and transportation equipment. Retail sector employment rose, and one contact noted that hiring was in line with increasing sales. Staffing firms noted a slight increase in headcount, and an accounting firm noted growing success in hiring out-of-state talent. Energy contacts continued to report a very tight labor market and respondents in food manufacturing and retail industries reported difficulty finding workers in oil-producing regions. Shortages of labor in the housing sector continued, although one contact noted slight easing.\nReports of upward wage pressures were roughly the same as in the last report. Wage pressures remained strongest for skilled workers in the energy and construction sectors, but there were reports of modest upward pressures in some other industries, including airlines, high tech, fabricated metals, primary metals and transportation equipment manufacturing.\nManufacturing\nReports from manufacturers were mostly positive, although some firms noted weaker demand since the last period. Construction-related manufacturers said demand was stable or rose slightly. Lumber producers noted weaker-than-expected demand over the past six weeks, while a cement manufacturer saw strong demand in Houston and Dallas and two brick manufacturers noted increased demand in Austin and San Antonio. Fabricated metals manufacturers noted a broad-based increase in orders, and said that demand was up 10 percent from year-ago levels. Primary metals producers reported steady growth in demand.\nContacts in high tech manufacturing reported that sales were stable to slightly up since the last report, and inventories were at desired levels. Outlooks were positive, and forecasted demand for memory and logic devices for the remainder of the year was revised up from the last reporting period.\nTransportation equipment manufacturers said demand was flat to down compared to the last report, but they expect sales this year to exceed last year's levels. Food producers said demand growth remained flat over the reporting period, but overall sales were slightly above year-ago levels. Refinery utilization rates eased over the reporting period. Chemical production strengthened with the end of the spring maintenance season. Outlooks of refiners and chemical producers remained positive.\nRetail Sales\nRetail sales strengthened over the past six weeks. Contacts noted slightly stronger growth than the previous reporting period, and demand was above year-ago levels. According to one national retailer, demand in Texas continued to outperform the national average. Outlooks for the remainder of the year were optimistic.\nAutomobile sales increased since the previous report partly due to pent-up demand and partly due to the start of the summer selling season. Demand was up slightly year-over-year, and one contact noted that sales were finally back to pre-recession levels. Inventories varied by manufacturer, and were at desired levels. Outlooks for the third quarter and the remainder of the year were positive.\nNonfinancial Services\nDemand for staffing services held steady, although a few contacts noted increased demand for oil and gas workers. Outlooks were more optimistic than the previous report. Accounting firms reported a seasonal slowdown in demand, but activity remained at high levels. Outlooks were positive and contacts expect a pickup in demand for audit and advisory services in coming months. Demand for legal services increased slightly in the last six weeks. Real estate-related business continued to grow and corporate work edged up, but demand for litigation services was weaker than expected.\nTransportation service firms said overall cargo volumes increased since the last report and outlooks continued to be positive. Intermodal cargo volumes increased over the past month but were even with year-ago levels. Growth in small parcel shipments picked up, with demand growth led by online and personal and health care retailers. Railroad contacts reported notable increases in grain, crushed stone and lumber and wood volumes, while shipments of petroleum, primary forest materials and nonmetallic minerals declined.\nAirlines reported that passenger demand was flat to up since the last report. Demand for domestic travel remained solid, while demand for foreign travel, particularly to Europe and Asia was weak. Outlooks were unchanged, with one contact expecting this year to be stronger than 2013.\nConstruction and Real Estate\nSingle-family housing activity was flat to slightly down since the last report. Sales and buyer traffic held steady, but some contacts reported a seasonal slowdown in activity. Low inventories and higher construction costs continued to push up home prices. Contacts were optimistic that demand will remain strong this year. Robust apartment demand pushed up occupancy rates, and increases in rents were strong in several major metros. Construction activity remained brisk, and contacts are optimistic in their outlooks through year-end.\nOffice leasing activity remained solid and occupancy high during the reporting period. Rents continued to trend upwards, especially for Class A office space, and were above their pre-recession peaks in some markets. Office investment activity picked up in Dallas but slowed in Houston. Demand for industrial space was strong, with vacancy rates in Dallas and Houston near historic lows. Outlooks remained generally positive.\nFinancial Services\nLoan demand grew at a slightly slower pace compared to the previous reporting period. Commercial and residential real estate lending continued to grow, especially in Dallas, Houston and Austin, but one contact noted that regulations were limiting land development loans. Mortgage lending continued to increase at a modest pace, however, auto loan growth showed signs of cooling off. Small to medium-sized business lending fell slightly but remained at robust levels. Loan quality continued to improve and interest rates on loans remained low due to strong competition for borrowers. Deposit volumes increased more than anticipated, while deposit rates remained low. Softer growth during the reporting period has somewhat tempered outlooks.\nEnergy\nDemand for oilfield services remained robust in the Eleventh District. Growth in Texas drilling activity continued to be concentrated in the Permian Basin in West Texas, but southeast Texas saw an increase in drilling as well. Margins for oilfield service providers were up slightly in the Permian Basin and the Gulf of Mexico, but generally remained narrow. Geological service firms continued to see strong demand. Outlooks for the rest of the year were more positive than during the prior reporting period.\nAgriculture\nDistrict drought conditions eased over the reporting period. Widespread rains greatly improved prospects for row crops, especially cotton, but came too late to aid the Texas wheat crop, which is expected to be down 20 percent this year. Most crop prices declined over the past six weeks due to expected stronger U.S. production. Pasture conditions improved and cattle prices continued to set new historical highs. Domestic demand for beef remained very strong despite record prices, while international demand for cotton remained low.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nJuly 16, 2014\nOn balance, reports from Sixth District business contacts suggest that economic activity expanded modestly in June and early July. The outlook among businesses remained positive as most anticipate higher growth in the near term.\nRetailers noted that sales rose at a slightly faster pace relative to the previous report and vehicle sales grew solidly. According to travel and tourism contacts, the hospitality sector continued to experience robust activity. Reports on residential home sales were mixed with fewer brokers noting an increase in home sales relative to the previous report, while builders' reports remained fairly positive. Both builders and brokers indicated that home prices appreciated from a year ago. Commercial real estate contacts witnessed continued improvement in demand and increased construction activity. Manufacturers cited growth in new orders and production. Bankers noted improved loan growth since the previous report. Payroll employment grew at a modest pace across most of the District. Wages and input cost pressures remained stable overall.\nConsumer Spending and Tourism\nSince the last report, the consensus among District retailers was that sales growth picked up slightly with several merchants indicating that customers spent more money per visit to their establishments than earlier in the year. Strength in residential real estate sales was noted as positively impacting furniture stores and other retailers in high growth areas across the region. Auto sales continued to grow at a solid pace in June and early July.\nDistrict reports on tourism and business travel remained positive. Activity in Georgia and Florida was strong with high occupancy numbers at local hotels and resorts. Firms reported several tourism-related capital expenditure projects under construction, intended to stimulate travel to the area. Mississippi's casino gaming revenues in the first half of the year decreased compared with a year ago. Hospitality industry contacts expressed concerns that a rise in gas prices may adversely affect summer tourist activity.\nReal Estate and Construction\nFewer District brokers cited growth this period than in the previous report. Just over half of brokers indicated that home sales had increased from the year earlier level, down from nearly two-thirds in June's report. Most indicated that inventories either remained the same or declined on a year-over-year basis. The majority of contacts continued to report that home prices remained above last year's level. The outlook among brokers about future sales activity was less optimistic relative to our last report.\nOn the other hand, reports from District builders remained fairly positive. Most contacts felt that recent activity either met or exceeded their plan for the period. The majority of builders indicated that construction and new home sales were ahead of the year earlier level. Builders noted that the inventory of unsold homes remained unchanged from a year ago. The majority of contacts continued to report modest home price appreciation. The outlook among builders for construction and home sales was positive.\nDemand for commercial real estate continued to improve across most of the region. Absorption rates remained positive. Construction continued to increase at a modest pace from last year and most contractors noted that their current backlog was ahead of year earlier levels. Contacts indicated that apartment construction remained fairly strong and reported that the level of construction activity across other property types remained steady. The outlook among District commercial real estate contacts remained positive with most expecting activity to grow at a steady pace through the summer months.\nManufacturing and Transportation\nManufacturers indicated that activity sustained the solid pace of growth noted in the previous report. New orders and production continued to increase, supplier delivery times slowed as demand for inputs rose, and commodity prices were elevated. The outlook among purchasing managers for higher production over the next three to six months remained consistent with the previous report.\nTransportation activity in the District continued to expand since the last report. Rail contacts reported notable year-over-year growth in shipments of petroleum products, grain, machinery, and military and transportation equipment. Intermodal traffic remained robust. District ports noted strengthening in container traffic and break-bulk cargo, along with growth in shipments of autos and machinery. Contacts in trucking cited broad-based increases in freight volumes and tonnage.\nBanking and Finance\nBankers continued to report increased competition and aggressive rates and loan structures. Contacts noted loan growth was strong over the last couple of months, with some of that growth coming from increased credit line usage. Much of the borrowing was used to lower the cost of existing debt and to finance acquisitions. Banks continued to compete aggressively for quality borrowers, especially in small business lending. Mortgage demand, in general, was lower than last year. Applications for new home purchases made up a larger percentage of total mortgage applications as refinancing activity slowed. Some contacts cited an increase in demand for second mortgages and commercial development loans. Auto lending was characterized as strong and competitive in June and early July. Delinquencies were down and have returned to prerecession levels at many institutions.\nEmployment and Prices\nPayrolls across the District continued to expand in June and early July, but at a slow pace. The District's aggregate payroll growth was dragged down by notable payroll losses in Florida. That said, in the aggregate, manufacturing employment increased across the District. Contacts reported continued difficulty filling positions in trucking, construction, and for specific information technology positions. Staffing agencies noted that job placements were up modestly, while the flow from temporary to permanent employment rose slightly.\nWage growth remained in the 2-3 percent range, with the exception of some high-skill, low-supply fields. Growth in input costs was muted for most businesses, with reports of greater cost inflation for some higher demand services and commodity-related inputs, including trucking services, construction materials, and food. A growing number of contacts cited successful attempts to raise prices, though such increases reportedly required more negotiation than was typical pre-recession. According to the Atlanta Fed's survey on business inflation expectations, firms' unit costs were up 1.9 percent on a year-over-year basis in June. Looking forward, survey respondents indicated that they expected unit costs to rise 2.0 percent over the coming 12 months, on average.\nNatural Resources and Agriculture\nGulf Coast refineries continued to run at near record levels, as they have for much of 2014. Refineries continued to invest in storage capacity to accommodate increased crude oil inventories flowing to the Gulf Coast from the Cushing, Oklahoma hub. Regional exports of crude oil rose on a year-over-year basis. Energy firms expect continued strength in the sector and strong demand during the summer months.\nWhile much of Tennessee, southwest Louisiana, and the southernmost tip of Florida continued to experience abnormally dry conditions, most of the District was drought free. Some areas received excessive rain causing delays in production although recent, dryer weather conditions allowed planting to continue. Regional producers benefitted from higher prices for many of their agricultural products, lower costs for feed and fertilizer, and fuel costs leveling off. Recent record-high prices in cattle and hogs were attributed both to growing international demand and to domestic supply constraints.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nJuly 16, 2014\nThe Fifth District economy grew modestly since our last report. Manufacturing conditions improved on balance in recent weeks. While shipments increased at a slower pace, the volume of new orders rose slightly. Retail sales growth slowed since our last report. In contrast, revenues and customer demand increased at non-retail services firms. Tourism was at normal seasonal levels. Reports on consumer borrowing varied in recent weeks, while commercial lending improved. The District's housing market strengthened modestly. Commercial construction differed by category and location. In agriculture, crops damaged by late winter weather have been replanted. Natural gas production increased and coal production leveled off since our last report. Employment in the District increased modestly, with strong demand for skilled and semi-skilled labor and limited wage pressures. Prices of manufactured finished goods and raw materials rose more slowly, according to our latest survey. Service sector prices also increased at a slower pace while retail prices moved up slightly faster.\nManufacturing\nManufacturing conditions improved on balance in recent weeks. According to our latest survey, the volume of new orders rose slightly, shipments grew at a slower rate, and inventories of finished goods and raw materials remained constant. A food manufacturer in North Carolina stated that production has been at full capacity, and sales have risen in the past month. A pipe manufacturer in Maryland said both shipments and new orders increased. According to a valve manufacturer in West Virginia, new orders, shipments, and backlogs increased due to the robust energy industry. Another West Virginia contact stated that automotive manufacturing is doing well and the chemical industry is strong. In contrast, a producer of industrial equipment components reported a slowdown with fewer shipments and new orders. Additionally, a packaging materials company manager reported reduced shipments, although new orders rose slightly. Most producers were optimistic about future business conditions. Prices of raw materials and finished goods rose at a slower pace, according to our most recent survey.\nPorts\nPort officials reported robust growth in container traffic since our last report, with very good volumes moving through the District's three largest ports. Transfers of heavy machinery and autos remained strong. Both imports and exports increased, with forest products, grains, soybeans, and auto parts leading among exports. Key imports were auto parts, apparel and textiles. Imports of housing-related products, such as furniture and appliances, decelerated. Officials reported some diversions from the West Coast as shippers used East Coast ports to avoid potential labor issues during contract negotiations.\nRetail\nRetail sales growth slowed since our last report. A grocery contact in North Carolina said his revenue growth was seasonal and related to events such as graduation and Memorial Day. An executive at a South Carolina grocery chain reported an increase in prices, particularly for meat. According to the president of a Maryland chain discount store, sales at his business as well as at other nearby stores have fallen in the last few weeks. He remarked, \"People are meeting their needs first, then their wants.\" A large auto dealer said that the massive vehicle recalls have recently begun to have a slight adverse effect on sales of used cars at his business. However, customer traffic remained up and new car sales were strong. Other car dealers also reported solid new car sales. Retail prices rose slightly faster.\nServices\nRevenues and customer demand increased in recent weeks at services firms, according to most sources. An accounting firm in Maryland was receiving more proposals for audit work. In addition, an executive at a national freight trucking firm reported a spike in demand for shipping as home improvement stores stocked up for Fourth of July sales. He also noted an increase in contracts for future shipping. In contrast, a North Carolina hospital official reported that the facility continued to prepare for Affordable Care Act changes, with little change in already soft volumes. Price growth slowed in the service sector.\nTourism contacts reported normal seasonal activity, with many late bookings as tourists looked for deals. According to a Washington, D.C. source, the inflow of tour buses was at typical summer volumes. In South Carolina, a hotel executive said occupancy was steady at a high level. A contact on the outer banks of North Carolina said that visitor traffic was up seasonally, but not above a year ago. New air-taxi service there is expected to increase tourism. A hurricane hitting the area on the Fourth of July holiday weekend had only a minor impact. A manager at a Virginia hotel chain reported that bookings were on pace with a year ago and room rates rose in July. Rates elsewhere were mostly unchanged.\nFinance\nReports on consumer borrowing varied in recent weeks, while commercial lending improved. Growth in residential mortgage demand slowed across most of the District. However, a lender in North Carolina reported a slight acceleration in demand, and a West Virginia banker reported modest growth in the northern part of the state due to economic growth at natural gas sites. Refinance lending declined in Virginia and West Virginia, with a West Virginia lender stating that the Qualified Mortgage rules have complicated and slowed down the lending process. Demand for consumer loans edged up in North Carolina, Virginia, and West Virginia. Commercial and industrial loan demand was strong in North Carolina and Virginia. A banker in Richmond said lending had increased for apartments, condos, health care centers, and shopping centers. Small business lending was starting to bounce back in Charlotte, according to a banker there. Another North Carolina banker reported strict mortgage standards, but an easing of cost terms for well-qualified commercial and industrial borrowers. A loan officer in West Virginia echoed that mortgage standards remained tight, adding that regulatory scrutiny was intense. Credit quality strengthened according to contacts in North Carolina and West Virginia.\nReal Estate\nThe District's housing market improved modestly since the last report. A Northern Virginia broker reported normal buyer traffic, but expects a seasonal slowdown in the next few weeks. A Realtor in South Carolina saw steady demand for mid-range homes. However, demand declined for entry level homes. Home prices rose across the board in Asheville, Charlotte, Columbia, and Raleigh. In Northern Virginia, Maryland, and Washington, D.C., larger price increases were reported for higher-end homes compared to other types of homes. Housing inventory varied according to contacts, with mild growth in Fairfax, Myrtle Beach, and Washington, D.C., while a broker in Charlotte reported a slight decline. Single family residential construction increased moderately since the last report in Raleigh and Charlotte; real estate contacts in Washington D.C. reported no change. In contrast, a Realtor in Myrtle Beach observed a decline in sales and construction. Multifamily new construction and leasing remained strong.\nRealtors in Richmond, Virginia Beach, Raleigh, Columbia, and Charleston, South Carolina reported an uptick in commercial construction, while contacts in West Virginia and Washington, D.C. saw little change. A broker in Maryland said that medical construction had stopped. Grocery-anchored retail construction remained strong across the District. Commercial retail contacts reported solid leasing in Virginia Beach, Richmond, Columbia, and Charleston, South Carolina. Demand for retail space in Washington D.C. was flat. Industrial leasing demand weakened in West Virginia and Raleigh, but strengthened in Charleston, South Carolina. Office leasing was robust in Charlotte and Charleston, South Carolina. Most Realtors reported no change in vacancy rates, except in the Carolinas, where contacts in Charlotte, Raleigh, and Charleston noted a slight decrease across sub-markets. Reports on rents varied. Contacts said that commercial sales edged up in Raleigh, northern Virginia, Richmond, and Columbia. Commercial sale prices increased in Charleston, South Carolina and Virginia Beach.\nAgriculture and Natural Resources\nReplanting of crops due to extended winter weather was completed and wheat harvesting finished up in the Carolinas, according to an agriculture contact. Overall, fertilizer prices remained steady, while agricultural chemical prices and crop seed prices increased slightly. Some agribusiness owners reported lower commodity prices compared to last year. However, a sod company reported higher prices as planting and harvesting increased due to high demand and low inventory. Cotton prices stabilized, according to sources, while seafood prices rose.\nCoal production leveled off since our last report, while prices rose due to lower inventories and falling year-over-year production. Natural gas output increased slightly in the past six weeks, while prices were unchanged.\nLabor Markets\nEmployment increased at a moderate pace in recent weeks. A North Carolina staffing manager reported an increase in demand for manufacturing and warehouse semi-skilled workers, such as fork lift operators. Contacts noted growth in jobs across many sectors in the Asheville region and in the Research Triangle of North Carolina. In Virginia, skilled manufacturing and construction workers, welders, truck drivers, and engineers were in short supply. Although demand there increased for workers in construction, hospitality, and recreation, many jobs were only part time. In contrast, a contact at a staffing agency in Maryland said that demand weakened slightly in recent weeks. Reports on wages were also mixed, with little wage pressure in Maryland and Virginia, while wage increases were reported in Raleigh, Charlotte, and Asheville. According to our latest surveys, manufacturing employment rose at a slightly slower pace while average wage growth eased and the workweek lengthened. Employment in the service sector increased at a faster pace, and wages rose more quickly at non-retail service firms while wage growth slowed at retail establishments.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nJuly 16, 2014\nThe Fourth District's economy expanded at a modest pace during the past six weeks. New orders and production at District factories grew slowly. Demand for construction services increased slightly compared to earlier in the second quarter. Year-to-date sales of new cars were up moderately from a year earlier, while retailers saw higher same-store revenues compared to a year ago. Since our previous report, coal production and shale gas activity were little changed, freight volume continued to strengthen, and the demand for business and consumer credit moved slightly higher.\nOn net, payrolls showed a mild increase. Staffing firms provided mixed reports. Job openings were found mainly in energy, healthcare, and IT. Upward pressure on wages is being felt by the construction and freight transport industries. Input and finished goods prices were stable, apart from increases for some metals and agricultural products and a decline in coal prices.\nManufacturing.\nReports from District factories indicated that new orders and production were stable or grew at a modest pace during the past six weeks. Strongest demand came from the motor vehicle, oil and gas, and residential construction markets. We heard comments about domestic markets gaining traction, while European sales showed only slight gains. Finished goods inventories decreased since our last report: Several manufacturers noted that the change was in response to rising demand; others cited a rise in raw material prices as a reason to keep inventories low. Our contacts are cautiously optimistic about the domestic outlook, and they project a modest rise in demand relative to current levels in the coming months. Steel shipments grew slightly since our last report, with a further gradual improvement anticipated through year's end. Year-to-date auto production (through May) at District assembly plants is 8 percent higher as compared to 2013. An original equipment manufacturer (OEM) told us that his company's projection for 2014 sales of autos and light trucks industry wide has been revised upward to 16.3 million units.\nCapital expenditures are in line with budgeted amounts for the fiscal year. Those intending to increase capital budgets as the year progresses reported that the additional monies would be used for productivity enhancements or research and development. There is concern about the negative impact on capital spending due to the elimination of the 50 percent accelerated depreciation rule. Raw material prices were largely unchanged. However, several manufacturers reported a rise in metal prices (copper, nickel, and steel), which they successfully passed through to customers. Hiring of production workers continued to pick up, but the net gain in payrolls is small. Wage pressures are contained.\nReal Estate and Construction.\nSales of new and existing single-family homes improved during the past six weeks, when compared to earlier in the second quarter. However, year-to-date purchases of new and existing homes through May were somewhat lower than in 2013. One builder pointed to a lot shortage, which may be a contributing factor to softer sales in his service area. Another builder is concerned about a lot shortage putting upward pressure on home prices. Single-family construction starts across the District are on a slow upward trend and slightly ahead of year-ago levels. New-home contracts were mainly in the move-up price-point categories. A few builders noted a small resurgence in interest from first-time buyers. There was little change in new-home pricing during the past six weeks, although some builders said that they are considering raising prices in the second half of the year. Existing-home prices are trending slowly higher. Homebuilders' outlooks for the remainder of 2014 varied widely.\nNonresidential builders reported little change in their pipelines during the past six weeks, while most said that activity is above year-ago levels. In general, our contacts are seeing an improvement in the number of inquiries and growing backlogs. Demand was strongest from the energy, housing (public and private), retail, and healthcare markets. Most builders are fairly optimistic in their outlook, but they remain concerned about labor issues and tight margins. One builder mentioned that rising margins contributed to a decline in his contract win rate.\nHomebuilders reported that banks remain reluctant to finance single-family tract development, while commercial developers indicated that banks and insurance companies are more willing to finance projects, including multifamily developments. Construction-material pricing is projected to rise 2 to 5 percent this year. Highest increases are expected for hardwoods, concrete, and steel. General contractors reported seasonal hiring, including college recruitment, is at a normal rate. Little additional hiring is expected for the remainder of the summer. Craft- workers are difficult to find and are driving up wages (general and subcontractors). Builders reported that a movement of trade workers among competing firms has picked up. They attributed the job changes to offers of higher wages, especially from oil and gas companies.\nConsumer Spending.\nRetail sales during May and into early June were consistent with or moderately higher than those seen earlier in the second quarter. Same-store revenues were generally higher than a year ago. One retailer attributed revenue growth to an ongoing effort to update her product mix, not increased foot traffic. Another observed that consumer confidence and her company's domestic sales are both exhibiting slow growth and that the total value of goods purchased by the typical consumer is on a decline. As a result, the industry is increasing the use of promotions. Retailers are hopeful that third-quarter revenues will be about 1 to 3 percent higher compared to a year earlier. We heard reports about a run-up in dairy and meat prices that is being partially offset by a decline in the prices of some other agricultural commodities. Food inflation this year is expected to be about 3 percent. Otherwise, vendor and shelf prices held steady. Several of our retail contacts noted that additional monies have been added to their capital budgets, mainly for brick-and-mortar projects. Payrolls are stable.\nThe number of new motor vehicles sold in May declined on a month-over-month basis. However, year-to-date sales through May were moderately higher compared to 2013. Consumer preferences shifted away from smaller, fuel-efficient cars to SUVs and crossover vehicles. New car inventory has increased since our last report. Used-car purchases have fallen off during the past couple of months, but year-to-date sales through May of used vehicles were stronger than for the same time period in 2013. The outlook by dealers for the summer season is positive, and they foresee a slight increase in unit volume year-over-year. Leasing continues to be a very popular alternative for potential new-vehicle buyers. We started to hear reports about dealers investing in showroom renovations and expansions that are not being mandated by OEMs. A need for service technicians is growing, but dealers are having difficulty finding qualified workers.\nBanking.\nDemand for business credit increased, but at a slower pace than earlier in the second quarter. Requests were strongest for commercial real estate loans. Some pickup was seen in C&I lending to manufacturers. Consumer credit demand was stable. Applications for auto loans remain strong, and households are making greater use of home equity products. Residential mortgage activity was flat. Purchase transactions dominated mortgage applications. Delinquency rates were stable. No changes were made to loan-application standards during the past six weeks. Core deposits held steady or showed modest growth, more so from commercial customers. Spreads between lending and deposit rates narrowed slightly, mainly from the lending side. On balance, banking payrolls were steady: hiring was mainly for staffing new branches or to work in regulatory compliance. We heard a couple of reports about staff cuts in mortgage business lines.\nEnergy.\nYear-to-date coal production across the District is consistent with prior-year levels, with no material shift anticipated in the near term. Spot prices for steam and metallurgical coal have declined. We heard a report that current pricing is less than optimal for producers, especially in Appalachia. As a result, some producers have idled or are considering idling operations. Activity in the Marcellus and Utica shales is stable but at a high level. Wellhead prices for natural gas have declined slightly, while oil prices were steady. Little change was seen in equipment, material, and labor costs.\nFreight Transportation.\nFreight executives characterized volume as good or strong and said that revenues are above year-ago levels. The freight backup attributed to the severe winter has been reportedly eliminated. Although strengthening demand is fairly broad based, shipments of construction- and fracking-related materials stand out. The near-term outlook for growth prospects is favorable. At this time, cost pressures are limited to fuel and labor (wage and regulatory). The former is covered through surcharges. Due to a driver shortage, some fleets are providing sign-on bonuses and are carefully monitoring their wage rates to ensure that they are in line with industry norms. We heard several reports about customers becoming more accepting of rate increases to cover higher labor costs. Hiring is for replacement and to a lesser degree, adding capacity. Although most fleets would like to add capacity, they are having difficulty finding qualified drivers. Year-to-date capital spending is in line with or slightly ahead of projections.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nJuly 16, 2014\nEconomic activity in the Eighth District has increased modestly since the previous report. Retail activity in the District has expanded at a modest pace. Recent reports of planned activity in manufacturing and services have been positive on net. Residential real estate market conditions have continued to deteriorate throughout the District, while commercial real estate market conditions have improved. Lending activity at a sample of small and mid-sized District banks has increased slightly. Finally, wage and employment levels have grown modestly, while prices have increased slightly.\nConsumer Spending\nThe retail sector experienced, on net, modest growth across the District with openings announced in the apparel, auto, and home and garden sectors, but these were accompanied by a few closures by both national and local retailers. Contacts noted that the retail furniture market remains soft in parts of the District. One major mall in the District saw slightly positive sales growth. Contacts reported good sales entering the summer months for hardware/lumber yards, retail establishments, and restaurants. Finally, some restaurants and businesses across the District saw historically large revenue during the World Cup festivities.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our previous report. Several manufacturing firms reported plans to add workers, expand operations, or open new facilities in the District, while a smaller number of manufacturers reported plans to reduce their workforces. Firms in auto parts, medical equipment, adhesive and sealant products, precious metals, electronic products, alcoholic beverage, and boat manufacturing plan to hire new employees and expand operations in the District. In contrast, firms that manufacture food and pharmaceutical preparations reported plans to lay off workers in the District.\nReports of planned activity in the District's service sector have been positive since the previous report. Firms in transportation; distribution; courier and express delivery; and business, engineering, communication, and hotel services reported new hiring and expansion plans in District states. In contrast, firms in health care, adjustment and collection, and media services plan to lay off employees. Contacts in Louisville reported that more restaurants are opening than are closing and that a major grocer expanded floor space.\nReal Estate and Construction\nSales of new and existing homes have decreased in the largest metro areas of the District. Compared with the same period in 2013, May 2014 year-to-date home sales were down 6 percent in Little Rock, 4 percent in Louisville, 5 percent in Memphis, and 11 percent in St. Louis. May 2014 year-to-date single-family housing permits decreased in the majority of the District metro areas compared with the same period in 2013. Permits decreased 25 percent in Little Rock, 17 percent in Louisville, 1 percent in Memphis, and 3 percent in St. Louis.\nCommercial and industrial real estate market conditions have improved, on balance, since the previous report. A contact reported weak demand for office space in the Louisville downtown area, but expected an increase in office space leasing activity because of recent employment gains. Contacts in Memphis noted strong retail leasing activity. A contact in Little Rock reported a stable and healthy industrial market. A contact in St. Louis reported tight market conditions in the industrial market and an increasing demand for new warehouse distribution centers with high ceilings and good multi-modal access. Commercial and industrial construction activity improved throughout most of the District. A contact in Memphis reported a commercial expansion in Shelby Farms Park. A contact in Louisville reported a new commercial development project in northern Kentucky. A contact in Little Rock reported a new office building under construction in Pinnacle Hills Promenade in Rogers, Arkansas. A contact in St. Louis reported an increase in commercial construction projects in north St. Louis County.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks increased 2.8 percent from mid-March to mid-June. Real estate lending, accounting for 72 percent of total loans, increased 1.4 percent over this period. Commercial and industrial loans, accounting for 16 percent of total loans, increased 4.7 percent over the period. Loans to individuals, accounting for 5.1 percent of total loans, increased 4.6 percent over the period. All other loans, accounting for 6.8 percent of total loans, increased 12.5 percent over the period. During this period, total deposits at these banks decreased 1.7 percent.\nAgriculture and Natural Resources\nAs of late June, District farmers had completed the corn, cotton, and rice plantings. In contrast, soybean and sorghum plantings were behind the 5-year average rate of progress in Tennessee, Arkansas, Mississippi, and Kentucky. Over 90 percent of the District's corn, cotton, rice, sorghum, and soybean crops were rated in fair or better condition. The winter wheat harvest was behind its 5-year average rate of progress for all District states. Year-to-date coal production in the District for May 2014 was 1.5 percent lower compared with the same time last year. However, District coal production for May 2014 was 0.3 percent higher than in May 2013.\nEmployment, Wages, and Prices\nBusiness contacts in the District indicated that wage and employment growth has been modest, while prices have increased slightly since the previous report. Contacts in the manufacturing sector throughout the District cited lack of skilled blue-collar and technical workers as a concern, in some cases limiting business expansion. Contacts in Little Rock and Louisville noted that wages are rising moderately for positions where the employment supply is limited. New hiring reports from Louisville were notably positive: A mall that will employ more than 1,000 employees is set to open, and an e-commerce retailer is filling more than 500 full-time jobs at its distribution center to meet growing demand.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nJuly 16, 2014\nGrowth in economic activity remained moderate in June and contacts maintained their optimistic outlook for the rest of the year. Consumer and business spending both increased. Growth in manufacturing production and construction and real estate activity was moderate. Credit conditions continued to improve. Cost pressures increased some, but remained modest. Corn, soybean, wheat, cattle, and milk prices were down, while hog prices were up.\nConsumer Spending\nConsumer spending increased in June, but the overall pace of growth remained modest. Reports were mixed, but in most cases, retail sales met or fell slightly below expectations. Retailers cited the abnormally wet weather and higher food and energy prices as factors likely restraining consumer spending; for example, a grocery contact noted that consumers were substituting toward lower quality cuts of meat in response to rising prices. Contacts also noted that the restrained consumer spending had led to increased promotional activity, crimping retail margins. In spite of the setbacks, contacts remained optimistic for the remainder of the year. Light vehicle sales rose as consumers continued to enjoy favorable incentives and credit conditions. Auto dealers reported that activity in service and parts departments increased because of vehicle recalls.\nBusiness Spending\nBusiness spending continued to grow at a moderate pace in June. Capital expenditures and spending plans continued to increase, with expenditures still concentrated on industrial and IT equipment. A number of contacts--especially automotive suppliers--again reported expanding capacity. Inventories remained at comfortable levels for most manufacturers and retailers, though some auto dealers reported that shortages of certain popular models were hindering sales. Hiring picked up and hiring expectations continued to increase, with the gains more pronounced in the service sector than in manufacturing. Demand remained strong for skilled workers, particularly for professional and technical occupations and skilled manufacturing and building trades. A number of manufacturing contacts reported investing in labor-saving equipment or employee training because of the challenge in finding skilled workers. In contrast, a construction contact noted that builders are unwilling to invest in training workers until demand is stronger.\nConstruction and Real Estate\nOverall, construction and real estate activity increased at a moderate pace in June. Both single- and multi-family residential construction expanded. Builders reported continued strength in high-income urban markets but a slight decline in new suburban contracts. Several contacts also indicated that improved credit conditions were making it easier to finance new projects. On a similar note, real estate contacts indicated that access to mortgage credit has improved. Nonetheless, home sales declined modestly over the reporting period, while rents and prices were somewhat higher. Both builders and realtors noted that higher prices and mostly stagnant incomes have weighed on affordability and held back a broader pick up in housing markets. Demand for nonresidential construction strengthened considerably, with contacts citing an increase in industrial, infrastructure, and retail projects. Commercial real estate activity continued to expand, as vacancies ticked down and rents rose. Leasing of industrial buildings, office space, and retail space all increased.\nManufacturing\nManufacturing production continued to grow at a moderate pace in June. The auto, aerospace, and energy industries remained a source of strength for the District. Steel service centers reported improving order books, as did many specialty metal manufacturers. In addition, a scrap metal contact noted large inflows from demolitions, which tend to be a leading indicator of future new construction. Manufacturers of construction materials reported steadily increasing production and demand. Demand for heavy and medium duty trucks grew moderately, as transportation volumes rose. Demand for heavy machinery continued to grow at a slow but steady pace, with some improvement noted by contacts in domestic and European markets. Construction machinery again was a positive while the global weakness in mining continued to weigh on demand. Contacts reported that lower demand and increasing inventories had led some heavy machinery producers to reduce capacity.\nBanking and Finance\nCredit conditions improved moderately from the prior reporting period. Equity market volatility decreased further, as did corporate financing costs for a number of District firms. Business lending increased, with contacts noting a pickup in demand for the financing of equipment and commercial real estate. Contacts also reported an uptick in leveraged lending for dividend recapitalizations and strategic acquisitions. Banking contacts continued to cite competitive pressure on structure and pricing for traditional and leveraged business lending, particularly from nonbank financial institutions willing to take on higher credit risk. Growth in consumer loan demand was steady over the reporting period, with an increase in applications for credit cards, continued growth in auto lending, and an uptick in mortgage originations and home equity lending.\nPrices and Costs\nCost pressures increased, but remained modest. Overall, industrial metals prices changed little, although contacts noted some increases in steel, copper, and nickel prices. Energy costs remained elevated. Competition put downward pressure on retail prices; with little change in wholesale prices, there was some compression in retail margins. Contacts again reported cost pressures for retail meat and dairy items, as wholesale prices for both remained elevated. In addition, a contact noted that shortages were driving up leather prices. Wage pressures increased, primarily for skilled workers. Non-wage labor costs were little changed.\nAgriculture\nThe District's corn and soybean crops made up ground after a late start to planting as favorable weather helped plants emerge more quickly than the five-year average. The consensus among contacts was that the corn and soybean crops were in excellent shape, but were unlikely to set records when harvested because of the late plantings. Corn, soybean, and wheat prices moved down during the reporting period. More farmers than a year ago took advantage of the spring rally in crop prices to lock in a profit on a larger portion of their expected harvest. Hog prices moved higher as disease affected supplies. Farmers received lower prices for milk and cattle, yet these prices remained well above levels necessary to cover the costs of production.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nJuly 16, 2014\nEconomic activity in the Twelfth District continued to improve moderately during the reporting period of mid-May through June. Overall price inflation remained quite modest, and wage pressures were well contained on net. Most contacts indicated that retail sales growth was unchanged from the previous Beige Book. Demand for business and consumer services ticked up. Manufacturing activity improved. Drought conditions contributed to reduced production of some fruits, vegetables, and livestock products. Activity in real estate markets advanced, although growth in the residential sector slowed somewhat. Loan demand increased overall.\nPrices and Wages\nPrice inflation overall remained quite modest, although the pace of food and energy price increases appeared to pick up. Food price inflation has risen, driven by higher price inflation for beef, pork, and dairy items, as drought conditions in California constrain supplies. A utilities provider expects an acceleration in natural gas and electricity prices to occur in the near-term. Contacts indicated that the prices of some raw materials used in construction rose further. A lumber manufacturer was able to pass higher costs through to higher prices for customers.\nMost contacts observed continued wage increases of 2-3 percent per year. However, in fast-growing regions, certain specialized positions for which the supply of qualified workers is scarce experienced much stronger wage gains. In addition, some contacts' firms have felt pressure to offer slightly higher starting salaries in an effort to attract talent from competitors. Several contacts pointed to rising minimum wages as a source of upward wage pressure.\nRetail Trade and Services\nMost contacts indicated that retail sales growth was unchanged since the previous reporting period. Sales of low-end and mid-range technology goods were strong, offsetting relatively weak sales of premium devices. Contacts noted that sales in the Internet and digital media sector increased as well, particularly for health and fitness e-books. An apparel retailer noted that inventories increased. In general, online retailers experienced strong sales and continued to put pressure on traditional brick-and-mortar retailers. Contacts observed robust demand for autos and home-related goods. Reports from auto dealerships pointed to strong sales growth for new cars, supported by aggressive financing for creditworthy borrowers. However, sales of used vehicles softened.\nDemand for business and consumer services ticked up. Technology service providers reported healthy overall conditions, as both small and large businesses continued to make investments in cloud services, big data analytics, and security. Several contacts noted ongoing weak demand for dining out, as reflected in declining same-store sales in the casual dining segment of the food service industry. The level of travel and tourism activity largely held steady or improved in most major District travel destinations.\nManufacturing\nDistrict manufacturing activity improved during the reporting period of mid-May through June. Demand for semiconductors strengthened and inventories declined. Utilization rates at electronic components factories ticked up, approaching rates associated with higher capital expenditures during past business cycles. Contacts observed strong production in the commercial aircraft industry due to a sustained backlog of orders. Contacts noted that many biotechnology manufacturers experienced positive revenue trends of late and that new orders were up compared with last year. A manufacturer of renewable energy equipment noted that capacity utilization edged up, but significant capacity remains available. Defense-related manufacturers indicated that capacity utilization rates declined and the pace of new orders slowed further. A metals fabricator reported that business conditions were largely stable. Steel manufacturers noted that capacity utilization rates at mills producing inputs for the auto industry have been over 90 percent. However, at mills producing inputs for the construction industry, including nonresidential, commercial, and infrastructure projects, capacity utilization rates have been lower, in the 60-65 percent range.\nAgriculture and Resource-Related Industries\nContacts indicated that drought conditions contributed to reduced production of some agricultural and resource-related goods. Contacts expressed ongoing concerns about water costs and availability. They also mentioned that it would be challenging for regulatory agencies to address issues related to pricing and prioritizing limited water supplies if low levels of rainfall and snowpack persist next year. Contacts observed reductions in herd sizes and plantings of annual crops, including tomatoes and rice. Most permanent crops, including nut and fruit trees, have not been affected yet, but some farmers may choose to reduce new plantings or remove less productive orchards. Farmers in Idaho anticipate high yields of grains, wheat, and potatoes this year. Dairy operations continued to benefit from low feed costs. Contacts noted that demand for logs slowed overall, as demand from Asian markets cooled.\nReal Estate and Construction\nActivity in real estate markets advanced, but growth in the residential sector has slowed since the start of the year. The rate of increase of home prices has slowed in many areas. Several contacts reported that, except at the very high end, the level of home sales also is down from a year ago. Residential construction activity picked up, especially for multifamily units and higher-priced projects. However, various contacts reported that activity has been constrained due to shortages of available lots, construction materials, and workers. Vacancy rates for commercial space were mixed. Some contacts reported low vacancy rates overall, while others pointed to high vacancy rates--particularly for retail space--in part due to transitions to online distribution. Private-sector commercial construction activity increased modestly in most areas but more robustly in the San Francisco Bay Area and Southern California. Contacts from Southern California and Hawaii also reported vigorous public-sector construction activity.\nFinancial Institutions\nLoan demand increased overall. Commercial real estate, home mortgage, and construction loan demand expanded modestly, although contacts noted that refinance volumes declined. Demand for auto loans held steady, but some contacts noted a decline in the credit quality of consumers. In most areas, business loan demand increased only slightly and remains relatively weak. Some contacts observed a stronger uptick in loan demand from smaller businesses. Contacts continued to note that the availability of commercial credit largely remained limited to the highest quality borrowers and that lenders are competing vigorously on rates and terms for such borrowers. Contacts reported robust venture capital and private equity financing in the District. Companies backed by venture capital are receiving ample funding.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nJune 4, 2014\nEconomic activity in the Second District has continued to grow at a moderate pace since the last report. Prices of finished goods and services remained generally stable, and businesses report modest upward pressure on input prices. Manufacturers report that business activity has picked up considerably in recent weeks, while service sector firms indicate a mixed performance. Labor market conditions have shown signs of firming across a broad range of industries, with scattered reports of labor shortages. Both general merchandise retailers and auto dealers report that sales have been steady to stronger since the last report. Tourism activity has strengthened, no longer held back by harsh weather. Housing markets showed further signs of improvement, while commercial real estate markets were generally steady. Finally, banks report fairly widespread increases in demand for loans--especially mortgages; credit standards are little changed, while delinquency rates are steady to down modestly.\nConsumer Spending\nGeneral merchandise retailers across most of the District report that sales rebounded strongly in April and early May, although weather has continued to be somewhat of a restraining factor in parts of upstate New York. Two major retail chains indicate that sales were mostly ahead of plan in April and the first half of May, with same-store sales running about 10 percent ahead of comparable 2013 levels, on average. One contact maintains that a surge in sales since mid-April corroborates that weather had been a major restraining factor. However, contacts at major malls in upstate New York report that sales were steady to down slightly in April and early May, as cold and rainy spring weather has continued to restrain shopper traffic. Retail contacts generally say that inventories are at satisfactory levels, that prices are mostly steady, and that the degree of discounting is little changed from a year ago.\nAuto dealers in upstate New York report that new vehicle sales continued to be strong in April and early May, while used car sales have been mixed. Rochester-area dealers indicate further strengthening, with April new vehicle sales up 17 percent from comparable 2013 levels and May sales comparably strong; used car sales are also seen as fairly robust. Buffalo-area dealers report more moderate gains of 5 percent from a year ago in new vehicle sales but also characterize them as strong; used vehicle sales, however, are described as somewhat soft.\nTourism activity has strengthened since the last report, in part reflecting improved weather. Both revenues and attendance at Broadway theaters picked up markedly in April and remained solid into early May, running roughly 20 percent ahead of comparable 2013 levels--partly driven by an increase in the number of shows. The average ticket price has remained roughly on par with a year ago. New York City hotels report that revenues picked up modestly in April but appear to be strengthening noticeably in May, with occupancy rates running well above 90 percent and room rates up 3-4 percent from a year ago. This understates the number of stays, as the inventory of hotel rooms has also increased over the past year. Hotel occupancy rates also strengthened in parts of upstate New York in April.\nConstruction and Real Estate\nThe District's housing markets have picked up since the last report, buoyed by improving weather; however, low inventories are said to be a restraining factor in some areas. Contacts in the Buffalo-Niagara region indicate that housing demand remains brisk, though an exceptionally low inventory of available homes has held back sales volume; bidding wars are reported to be fairly common for prime properties. More broadly, the number of existing homes on the market is lower than a year ago across both New York State and northern New Jersey. One industry contact in New Jersey reports that, while there remains a big overhang of distressed properties, the inventory of available new and existing homes is very low; builders are seeing improved activity and are increasingly optimistic, but remain reluctant to build inventory.\nNew York City's sales market remains robust--particularly in the outer boroughs. While sales volume has not kept pace with elevated 2013 levels, one contact surmises that the weather may have pushed the peak spring season back a couple months. A major appraisal firm reports that prices of Manhattan co-ops and condos have risen moderately this year and are now nearly back to their peak levels of 2008; this contact also notes that nearly half of all residential (apartment) sales have been all-cash deals, in part from foreign buyers. Selling prices for Brooklyn and Queens apartments continue to rise briskly. Manhattan's rental market, which had been flat, has shown signs of a modest pickup in recent months, while strong demand continues to drive up rents in Brooklyn and Queens. The inventory of available condos and co-ops across the city remains lean, except at the high end of Manhattan's market, where there has been a good deal of new development.\nCommercial real estate markets have been mixed but generally stable during the spring. Office availability rates remained elevated in the Westchester/Fairfield market and especially in northern New Jersey, but continued to edge lower in the New York City, Long Island and Westchester/Fairfield markets; in upstate New York, they rose modestly. Industrial availability rates have continued to edge down across most of the District.\nOther Business Activity\nThe labor market has strengthened further since the last report. A growing proportion of both manufacturers and service-sector firms say they have added workers in recent weeks, and considerably more business contacts plan to expand than reduce employment in the months ahead. Separately, two major New York City employment agencies report that hiring activity has continued to pick up, driven in part by the financial sector. One contact says hiring is stronger than it has been in six years. There continues to be a shortage of IT workers, while companies are also having increased difficulty finding other workers whose skills closely match the job description. While salary increases remain subdued, one employment agency contact notes that many candidates are getting multiple offers and that this may be starting to put some upward pressure on salaries.\nManufacturing firms in the District report widespread increases in activity since the last report, whereas service-sector firms overall report a mixed performance. Price pressures in the manufacturing sector remain subdued; in the service sector they are more widespread but also subdued. In general, business contacts plan to hike their selling prices modestly in the year ahead.\nFinancial Developments\nBankers report fairly widespread increases in loan demand across all categories--particularly residential and commercial mortgages. However, they continue to report declining demand for refinancing. Respondents indicate that credit standards remain unchanged across all loan categories. Banks indicate a decrease in spreads of loan rates over costs of funds for both residential and commercial mortgages, but report no change in other categories. More than twice as many contacts indicate an increase versus a decrease in the average deposit rate. Finally, bankers report that delinquency rates on loan portfolios are steady to declining slightly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nJune 4, 2014\nAggregate business activity in the Third District grew at a modest pace during this current Beige Book period. Most sectors resumed the pace of activity that was evident before the recent winter disruptions. Auto sales surged with \"phenomenal\" growth in April -- rebounding yet further from the winter slump, while general retail sales resumed a modest pace of growth. Demand for general services maintained a moderate pace of growth over the Beige Book period, and staffing services continued to maintain a modest pace. After partially rebounding in the previous Beige Book period, the residential construction and real estate sectors posted slight declines in contracts for new homes and sales of existing homes. Noncommercial real estate fared better: Construction maintained slight growth with several large groundbreakings yet to come, and contacts noted a slight uptick in activity for office leasing. Manufacturers reported a modest increase in activity. Tourist destinations reported slight growth during this shoulder season between snow and sun. Lending volumes continued to grow slightly over this period, and credit quality continued to improve. Overall, contacts reported slight increases in wages, home prices, and general price levels, similar to the last Beige Book period.\nOverall, contacts anticipated moderate growth over the next six months and continued to express confidence in the underlying economy. With regard to hiring and capital expenditure plans, firms are beginning to increase capital expenditures, especially to boost efficiency; some new hiring is occurring, but firms remain cautious.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported further modest increases in orders and shipments. The number of industries reporting gains has generally expanded since the last Beige Book, although some reports reflected seasonal trends, and some firms indicated that the growth reflected a run-up related to a backlog of orders resulting from the harsh winter weather. Firms associated with automotive sales reported continued strong growth. A few firms associated with homebuilding and other construction reported continued weakness, despite the return of warmer weather. Overall, both durable and nondurable goods industries have generally shown expansion. As demand and production have increased, nearly one-half of the firms reported a mismatch between their firm's labor skill requirements and skills in the labor supply. About one-third of firms reported labor shortages, and one-third reported job vacancies open longer than three months. Skilled production machinists and tool, plant, and system operators were identified as most important to these firms.\nOptimism among Third District manufacturers that business conditions will improve during the next six months has held steady since the last Beige Book and was evident across nearly all sectors. More than one-half of all firms anticipated increases in activity over the next six months; only about 15 percent reported expectations of lower activity. Nearly one-third of the firms reported that they anticipate higher levels of employment and capital expenditures in six months -- slightly less than during the last Beige Book period.\nRetail\nThird District retailers have reported continued improvement since the prior Beige Book period, with sales growing at a modest pace over the period. Year-over-year sales finished a little stronger than last year for April, although a March--April comparison (which eliminates the effect of Easter shifting between months) shows sales as relatively flat. Retailers continued to offer heavy promotions to move inventory, generating higher unit volume but lower unit pricing. Malls offered discounts from 30 percent to 50 percent. Early impressions for May were also good. An outlets mall operator reported that bus traffic was up 11 percent over this year, which represents a return of some consumers who have not made the trip since the recession began. Contacts mentioned a backlog of signed leases and rising lease activity. Retail development managers continued to describe great optimism for future deals in the remainder of 2014 and next year. New deals will mostly impact 2015.\nAuto sales surged further during this Beige Book period, rebounding further from the weak sales posted in the first two months of the year. Dealers reported \"phenomenal\" sales in April following a strong month in March. Auto dealers remain bullish for the remainder of 2014.\nFinance\nThird District financial firms have continued to report slight increases in total loan volume since the last Beige Book. Commercial and industrial loan volume grew moderately, and home equity lines grew modestly. Mortgages and consumer credit lending (other than credit cards) grew slightly, while commercial real estate lending was reportedly down slightly. The volume of credit card lending was up throughout most of the Beige Book period (partially a seasonal trend). Banking contacts in several markets indicated that real estate lending picked up after the long winter. In particular, they noted that in some markets long dormant residential projects were starting back up. Other contacts mentioned strong sales at a recreational vehicle dealer that may indicate stronger consumer confidence and that may bode well for ongoing discretionary consumer spending. However, many bankers in smaller markets continued to describe small restaurants and small businesses as struggling with permanent losses after the long winter. Nearly all contacts described the commercial and industrial loan market as very competitive. Most reported steady improvement in credit quality and little change in lending standards. Overall, most bankers remained guardedly optimistic for growth through the remainder of the year. Most see confidence building among consumers and businesses; however, most small businesses remain very cautious.\nReal Estate and Construction\nAfter weathering the cold winter slump followed by a little pick up in March, Third District homebuilders reported a renewed slowdown. The strong spring sales season -- for which many Third District builders had hoped -- did not materialize. Instead, builders reported that contracts for new homes were well below last year's levels and even further below their 2014 plan. This is also true for their local competitors, large and small. One Pennsylvania builder indicated a general malaise, citing less customer traffic, more competition from existing homes sales, and a resurgence of concern among potential buyers that they would be unable to sell their existing homes. Residential real estate brokers reported some improvement in May; however, April sales were uniformly negative in most major markets on a year-over-year basis. Sales have been \"doing quite well\" in Center City Philadelphia, but less so in the suburbs. Contacts cited ongoing financing difficulties, as many market participants have lost equity in their existing houses or are under water. In addition, student loans have contributed to lower household formation rates. Throughout the Third District, brokers expect sales to improve, but they no longer expect to recapture all of the \"lost\" sales from the first four months of the year.\nNonresidential real estate contacts reported little change in the relatively low level of construction; however, some activity for surveying and inspections has fully returned to normal since the earlier winter disruptions. Some developers continue to build and lease industrial/warehouse space on a speculative basis, as demand remains strong in this market. Most other markets require signed contracts. One contact noted a small uptick in leasing activity for office space since the last Beige Book. Most contacts describe activity as slow and steady. They remain optimistic that construction activity will accelerate somewhat, as several large projects are breaking ground this year.\nServices\nActivity among Third District service-sector firms has maintained a moderate pace of growth since the last Beige Book. Service-sector firms reported mostly moderate growth rates, with roughly 60 percent reporting increased sales and about half reporting increased orders. One central Pennsylvania staffing firm reported that firms are making faster hiring decisions. More responding firms have added full-time and part-time staff employees than have trimmed staff levels. Overall, the vast majority of service-sector contacts are optimistic that the growth trend will continue over the next six months.\nTourism destinations maintained slight growth during the shoulder season between winter ski and summer shore activity. The prolonged winter weather was reported to have helped the ski resorts. Now it is reported to have also increased cabin fever and demand for summer getaways along the shore. Contacts from Delaware and New Jersey shore communities reported increases in early bookings for the 2014 season. Increased demand for hotel rooms in Delaware's coastal county has outpaced the increased supply since last year. New Jersey contacts reported that there is greater preparedness to welcome tourists this year than last following Hurricane Sandy. In addition, some boat owners are bringing their boats back to the shore following recession belt-tightening.\nPrices and Wages\nOverall, Third District contacts reported little change to the steady, slight pace of price level increases, similar to other recent Beige Books periods. About three-fourths of manufacturing firms reported no change in prices paid and prices received. However, a slightly higher percentage of manufacturers reported higher prices paid and higher prices received, while slightly fewer reported lower prices paid and lower prices received. About one-third of the manufacturing firms reported increasing wages to address their specific skills mismatches. Auto dealers reported little change in pricing, and general retailers continued to report heavy promotions. Many contacts continued to report tight, or narrowing, margins. Homebuilders have been forced to push back against higher material prices and have met with some success. Labor costs have been up a bit, but pressures have eased as their demand has fallen. Brokers reported slight, steady overall increases in home prices. Contacts among service-sector companies reported little change in labor costs.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nJune 4, 2014\nThe economy of the Eighth District has grown modestly since our previous report. Reports from retailers and auto dealers in April and early May have been generally positive. Recent reports of planned activity in manufacturing and services have also been positive on net. Residential real estate market conditions have deteriorated, and commercial real estate market conditions have improved. Lending activity at a sample of District banks has improved modestly. Wage increases have been modest, and prices and employment levels have increased slightly.\nConsumer Spending\nReports from retail contacts about sales in April and early May were generally positive. Retailers generally noted that their current inventories were at desired levels. Restaurant contacts noted strong activity in that sector. A few non-restaurant retailers noted a decline in April sales this year relative to last year and stated that sales in April and the first half of May fell short of expectations. Contacts generally noted a positive economic outlook for the remainder of the spring season and the rest of 2014.\nTwo-thirds of auto dealers noted that, compared with the same time last year, sales increased in April and early May. One in four contacts reported decreased sales, and the remainder reported no change. Almost two-thirds of auto dealers reported no change in the mix of used-car versus new-car sales; one in four contacts reported more used-car sales, and the remainder reported more new-car sales. Similarly, almost two-thirds of contacts reported no change in the mix of high-end versus low-end vehicles; one in four contacts reported more low-end sales, and the remainder reported more high-end sales. Roughly three-fourths of contacts reported that their inventories were at desired levels, while the remainder reported that inventories were too high. The outlook for sales in the near future was mostly positive.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our previous report. Several manufacturing firms reported plans to add workers, expand operations, or open new facilities in the District, while a smaller number of manufacturers reported plans to reduce employment. Firms in auto parts, furniture, automobiles, pharmaceutical preparations, alcoholic beverages, aluminum products, freezers, machinery, apparel, rubber products, and dry polymer manufacturing plan to hire new employees and expand operations in the District. In contrast, firms that manufacture textiles, printing products, shoes, and television sets reported plans to lay off workers in the District.\nReports of planned activity in the District's service sector have been positive since the previous report. Firms in telecommunication, distribution, information technology, business consulting, and courier and express delivery services reported new hiring and expansion plans in the District. In contrast, firms in data processing, disability benefit application management, mortgage, transportation, and translation and interpreting services reported plans to reduce employment.\nReal Estate and Construction\nSales of new and existing homes have declined across most of the largest metro areas in the District. Compared with the same period last year, April 2014 year-to-date total home sales were down 12 percent in Little Rock, 5 percent in Louisville, 5 percent in Memphis, and 14 percent in St. Louis. Residential construction also has declined across the District. Compared with the same period last year, March 2014 year-to-date single-family housing permits decreased 26 percent in Little Rock, 17 percent in Louisville, 4 percent in Memphis, and 4 percent in St. Louis.\nCommercial and industrial real estate market conditions have remained steady or have improved since the previous report. A contact in northwest Kentucky noted a steady demand for high-quality industrial and retail space. Contacts in Memphis noted reduced vacancies in the retail real estate market and a steady demand for industrial space. A contact in Little Rock reported flat commercial market conditions. A contact in St. Louis reported improvement in industrial space leasing throughout the area. Commercial and industrial construction improved throughout most of the District. A contact in Louisville reported an increase in commercial projects in the downtown area, a contact in Memphis reported a new industrial construction project on the outskirts of the city, and a contact in Little Rock noted a new commercial construction project in North Little Rock.\nBanking and Finance\nA survey of District banks showed modest improvement in overall lending activity since the previous report. During this period, credit standards for commercial and industrial loans eased slightly and creditworthiness of applicants improved, while demand increased and delinquencies decreased moderately. Credit standards for prime residential mortgage loans tightened slightly and creditworthiness of applicants improved moderately, while demand was moderately weaker overall, with responses ranging from moderately stronger to substantially weaker. Also, delinquencies decreased moderately. Many respondents noted regulatory challenges in the mortgage market. Credit standards for credit cards eased slightly and creditworthiness of applicants remained unchanged, while demand was moderately stronger and delinquencies decreased slightly. Credit standards for auto loans and other consumer loans showed no change, and creditworthiness of applicants improved slightly for auto loans and remained unchanged for other consumer loans; demand increased slightly and delinquencies decreased.\nAgriculture and Natural Resources\nAs of mid-May, on average, corn planting across the District was about 81 percent complete and about 93 percent of the winter wheat crop was rated in fair or better condition. Coal production for April 2014 was 4 percent higher than in April 2013.\nPrices, Wages, and Employment\nA survey of Eighth District businesses indicated that, in the period since the previous report, wages grew at a modest pace while prices and employment levels increased slightly compared with the same period last year. Fifty-eight percent of contacts noted that wages have stayed the same, while 42 percent noted that wages have increased. Sixty-four percent of contacts indicated that prices charged to consumers have stayed the same, while 28 percent indicated that prices have increased and the rest noted that prices have declined. Finally, 63 percent of contacts reported that employment levels have remained the same, while 22 percent reported an increase and 15 percent reported a decline.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

/beige-book-reports/2014/2014-06-sf

"Beige Book Report: San Francisco\nJune 4, 2014\nEconomic activity in the Twelfth District continued to improve moderately during the reporting period of early April through mid-May. Price inflation and upward wage gains remained modest overall. Retail sales picked up a bit relative to the prior reporting period, while demand for business and consumer services was mixed across industries. Manufacturing activity edged up. Demand for agricultural and resource-related products increased, but various factors suppressed output. Housing market activity slowed in some areas, but commercial real estate conditions generally improved. Reports from financial institutions indicated that loan demand increased and credit quality remained strong.\nPrices and Wages\nPrice inflation remained quite modest for most final goods and services. Prices of raw materials used in construction rose slightly on balance. Restaurant industry contacts indicated that meat and seafood prices increased significantly. With cattle prices at record highs, the price of beef is projected to rise further through the second quarter. Food price inflation more broadly has picked up because of the drought in California.\nUpward wage pressures were limited overall, but contacts continued to observe relatively large increases in compensation for certain occupations. Contacts reported increased wage pressures in the construction industry as a consequence of shortages of qualified construction management personnel, particularly in fast-growing urban areas. Software developers and engineers continued to experience rapid compensation growth. Most firms expect wage gains of 2 to 3% in 2014.\nRetail Trade and Services\nConsumer spending was up slightly relative to the previous reporting period. Reports indicated that the pace of sales at some department stores was slow, prompting caution for inventory accumulation. Some retailers have announced strategic store closures in favor of online distribution. Contacts noted that demand for autos and home-related goods was relatively strong. Auto dealerships reported robust sales growth for new cars and more modest growth for used vehicles. On balance, contacts remained optimistic about growth prospects for consumer spending over the next 12 months.\nDemand for business and consumer services was mixed. Contacts pointed to healthy overall conditions in the technology services sector, as businesses throughout the economy expand their investments in software, security, cloud, big data, and mobile products. In the food services industry, monthly same-store sales and transaction counts declined further, although the declines in April were less severe than in the preceding three months. Providers of health-care services expect demand to increase as more individuals gain health insurance coverage through provisions of the federal Affordable Care Act. The level of Hawaiian travel and tourism activity dipped down in recent months relative to the same period last year.\nManufacturing\nDistrict manufacturing activity edged up during the reporting period of early April through mid-May. Demand for semiconductors improved modestly. Contacts expect utilization rates at semiconductor factories to rise during the second half of the year. Reports from the commercial aircraft and metals fabrication industries noted that production remained high due to sustained backlogs, although new orders have been coming in slowly. Many drug manufacturers experienced modest sales growth, driven largely by the introduction of innovative products rather than existing drugs. Defense-related manufacturers ratcheted down their sales outlook relative to the previous Beige Book, as the pace of new orders slowed. A manufacturer of renewable energy equipment noted that capacity utilization ticked up. A utilities provider reported increasing sales of electricity and natural gas to industrial customers, including manufacturers of wood products, aerospace parts, and refined metals.\nAgriculture and Resource-related Industries\nDemand for assorted fruits and vegetables and livestock products increased, but production in agricultural and resource-related industries was uneven across the District. Concerns about water costs and availability mounted in some areas. Contacts noted that drought conditions in California and Arizona led to reduced herd sizes and decreased plantings of annual crops, including tomatoes and rice. On the other hand, farmers in Idaho anticipated adequate water supplies and planted grains, hay, and potatoes ahead of schedule, expecting the level of plantings in 2014 to be similar to 2013. In general, dairy operations benefited from low feed costs. Pork production remained weak as a fatal virus swept through pig farms in some areas. Contacts noted that demand from China for fertilizer and logs was strong. Year-over-year crude oil production expanded robustly and outpaced demand growth.\nReal Estate and Construction\nDemand for homes stepped down, while activity in commercial real estate markets expanded. Home prices across the District continued to move up, although at a slower pace in parts of Arizona, Idaho, and Washington relative to the previous Beige Book. The pace of home sales slowed or declined in some areas as well, but most contacts expect sales to pick up later this year. Contacts indicated that severe weather conditions and low expected future growth of house prices were the most important factors holding back home sales on a national level. Reports on current construction of residential properties varied substantially across geographic areas, although the vast majority of contacts expect housing starts in their region to rise over the next 12 months. Commercial real estate activity improved, with lower vacancy rates reported in many areas. Contacts reported robust demand for large blocks of high-quality commercial space in the San Francisco Bay Area. In several regions, public infrastructure projects and a number of high-rise commercial construction projects have been announced or are under way.\nFinancial Institutions\nLoan demand increased overall, and most contacts noted that credit quality remained strong. Consumers exhibited solid demand for auto loans. New home mortgage and refinance activity was largely stable, but contacts noted that first-time homebuyers faced challenges qualifying for mortgages. Relative to a year ago, contacts noted that less creditworthy individuals have been applying for refinancing. A few contacts observed an uptick in loan demand from small businesses and increased loan growth at community banks. Lenders competed vigorously on rates and terms for high-quality borrowers, and contacts noted that some financial institutions relaxed underwriting standards in an effort to win new business or maintain existing relationships. The pace of initial public offerings remained high in the Internet and digital media sectors but slowed a bit in the broader technology sector. Reports indicated that the value and volume of private equity financing picked up.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nJune 4, 2014\nFifth District economic activity expanded moderately in recent weeks, and contacts reported an optimistic outlook. Conditions varied among manufacturers, however. Shipments increased mildly, while new orders grew at a slower rate and backlogs leveled off. Retail sales grew moderately. Non-retail service sector revenues increased at a measured pace since our last report, and several executives were upbeat about future prospects. Tourist destinations experienced normal strong bookings while transitioning to warm-season activities; room rates were generally unchanged. In residential real estate markets, there were reports of increased buyer traffic and improving sales of low to mid-priced homes. Commercial real estate activity grew moderately since our last report. Most contacts reported steady multifamily leasing, although they expressed some growing concern about over-supply. In agriculture, fertilizer prices remained stable, while chemical and farm equipment prices rose slightly. Coal production fell below year-ago levels, while natural gas production increased. Labor market conditions improved slightly. According to our most recent surveys, employment in the service sector ticked higher and wages increased at a slightly faster pace. Manufacturing employment and the average work week also picked up, and wages advanced more quickly. Prices of raw materials and finished goods rose somewhat more quickly, and prices in the service sector, including retail, also advanced at a faster pace.\nManufacturing\nManufacturing conditions varied by industry. Shipments rose mildly, while new orders grew at a slower rate and backlogs leveled off. In addition, finished goods and raw materials inventories increased slightly. A manufacturer of airflow measurement devices attributed his stronger orders to new product offerings and a recent rise in construction-related demand. A furniture manufacturer stated that orders and backlogs had increased. A few food manufacturers noted seasonal improvements in sales and production. However, declining sales were reported by producers of plastics, rubber, sealing devices, machinery, and textiles. A process engineering parts producer also indicated that demand decreased in the past few weeks. Further, a textile manufacturer said that sales declined in all categories in the last month. Manufacturers were generally optimistic about growth over the next six months, however. Prices of raw materials and finished goods rose at a faster pace, according to our survey.\nPorts\nPort traffic grew briskly since our last report. Diversions from the West Coast are expected to increase as shippers look to avoid interruptions during union contract negotiations there. Container traffic and auto parts traffic were robust. The Port of Virginia, which handles the largest share of grains on the East Coast, reported continued strength in containerized grains moving through the port. Imports and exports of autos remained strong at the Port of Baltimore, and container shipments bounced back after a weaker first quarter. Modest growth in imports of construction equipment is expected there. In contrast, agricultural equipment exports have slowed and are expected to flatten or decline in the months ahead.\nRetail\nRetail sales grew moderately since our last report. An executive at a chain of hardware stores in central Virginia reported that sales and customer traffic had risen, and he was able to pass price increases through to customers. The manager at a West Virginia sporting goods store said sales increased and customer traffic had picked up. In the Hampton Roads area of Virginia, a big box discounter indicated that sales were stable, although foot traffic had declined. A central Virginia retail representative noted that e-commerce has led to store downsizing, and product distribution is becoming key. Smaller stores have also become more focused on brand perception and customer service. Car dealerships near the D.C. beltway had slower sales, leaving excess inventory on the lot. Elsewhere in the District, auto sales remained strong. A transportation contact expects equipment purchases by trucking firms to rise soon as aging fleets are replaced and e-commerce expands. Retail prices moved up slightly faster in recent weeks.\nServices\nService sector revenues increased at a modest pace since our last report, with several executives reporting a positive outlook. An executive at an accounting services firm stated that more bid work was becoming available. According to a financial services professional, account balances were up and \"things are in pretty good shape.\" An executive at a national freight trucking firm said that business returned to normal levels as the weather improved. Hospital executives reported a recent decline in elective procedures; at a North Carolina facility, admissions fell in part because of Medicare changes. Prices in the service sector rose somewhat more quickly.\nTourism in the District was at robust seasonal levels, while room rates were generally unchanged. Mountain resort managers reported solid bookings as they converted to spring and summer activities. An executive on the Outer Banks of North Carolina said Memorial Day weekend was heavily booked. A hotel manager in Baltimore remarked that tourist and convention business was strong, and a West Virginia resort executive expects \"good growth\" this summer. A contact in Washington, D.C. said that the number of tourists had increased in recent weeks, and the re-opening of the Washington Monument in mid May was well-attended. An hotelier at a tourist destination in Virginia stated that competition had increased and he was advertising more strategically to keep his visitor counts up. Managers at West Virginia gaming facilities reportedly feared losing business because gambling has expanded in neighboring states.\nFinance\nOverall, consumer lending declined at a slower pace since our last report, while commercial lending grew modestly. Although residential mortgage bankers reported slightly weaker lending, a West Virginia banker said that lower rates may boost lending moving forward. According to bankers in Virginia and West Virginia, mortgage refinancing was significantly lower because the refinancing cycle is largely complete. These bankers also noted that loan volumes for home equity and lines of credit were also down slightly in both states. Interest rates were widely reported to be flat or lower. Credit quality was mostly stable with a few reports of improvement in West Virginia. Commercial lending grew across most of the District. A lender in Virginia noted a significant pickup in residential real estate, and modest growth in industrial and business expansion lending. In contrast, bankers in Maryland and West Virginia reported softening demand for commercial loans, and a lender in North Carolina expressed concern that there could be a bubble in multi-family construction in that market.\nReal Estate\nThere was slight improvement in the District's housing market since our last report, with increased buyer traffic and mild strengthening in sales for low to mid-priced homes. Home sales rose slightly in the Charlotte, Fairfax, Greensboro, Fredericksburg, and Richmond metro areas. In contrast, a broker in Myrtle Beach and another in Washington, D.C. reported flat sales. Most contacts said that home prices increased mildly. Housing inventory increased, but remained at low levels throughout the District. The absorption rate improved in the past few weeks. While buyers were generally described as cautious and conservative, brokers reported that multiple offers and sales above asking price had become more common. A Charleston, South Carolina Realtor stated that the market for mid-range homes was tight and the average \"days on the market\" was in single digits. New single family construction increased in South Carolina, North Carolina, and Virginia. A Washington, D.C. Realtor said that new home prices were rising faster than prices for existing homes.\nCommercial real estate activity grew moderately over the past several weeks. Rental rates were mostly stable, but some modest increases were also noted. Vacancy rates ranged from stable to slightly lower, with some pickup in absorption. A Charlotte, North Carolina Realtor said that office vacancy rates were low, while market fundamentals continued to recover and search activity increased. A commercial Realtor in Washington, D.C. reported that retail tenant allowances increased in the form of build-out dollars. The new development pipeline grew in Richmond, Virginia, with announcements of grocery-anchored projects, and mixed use construction plans moved forward in Washington, D.C. Multifamily housing construction remained strong throughout the District, and most contacts reported steady multifamily leasing activity, although there was some growing concern of over-supply.\nAgriculture and Natural Resources\nAgriculture contacts reported that fertilizer prices remained stable, chemical prices rose slightly, and farm equipment prices edged up. A South Carolina farmer said that delayed planting increased field days but did not affect his crop plans. Wholesale agribusiness executives reported that sales were at normal seasonal volumes.\nEnergy contacts stated that coal production fell below year-ago levels, and they expected a further decline in production over the next six months. Some plants closed, and coal prices rose slightly. Output of steam and metallurgical coal for export also declined year-over-year. Natural gas production rose steadily, with stable prices.\nLabor Markets\nOver the last several weeks, labor market conditions improved slightly. Demand increased for workers in manufacturing, distribution and warehousing, construction, and information technology. Employers continued to report difficulty filling highly skilled and upper level management positions. A Maryland staffing agent stated that those challenges were putting upward pressure on wages, while outside of those positions, wages were stable. A trucking firm reported recent wage increases for non-drivers and expected drivers' wages to also increase in the near future. In the energy sector, the number of coal workers declined, while the number of natural gas employees increased modestly. According to our recent surveys, employment in the overall service sector edged up, while wages increased at a slightly faster pace. In the retail subsector, growth in employment and wages strengthened. Manufacturing employment and the average work week also picked up, and wages advanced more quickly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nJune 4, 2014\nPrepared at the Federal Reserve Bank of New York and based on information collected on or before May 23, 2014. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nAll twelve Federal Reserve Districts report that economic activity expanded during the current reporting period. The pace of growth was characterized as moderate in the Boston, New York, Richmond, Chicago, Minneapolis, Dallas, and San Francisco Districts, and modest in the remaining regions. Compared with the previous report, the pace of growth picked up in the Cleveland and St. Louis Districts but slowed slightly in the Kansas City District.\nConsumer spending expanded across almost all Districts, to varying degrees. Non-auto retail sales grew at a moderate pace across most of the country: Although improved weather generally gave a boost to business, lingering wintry weather in the Northeast continued to weigh on sales in parts of the Boston and New York Districts. Increasingly strong new vehicle sales were reported by more than half the Districts, with most other regions seeing steady sales; demand was generally reported to be less robust for used vehicles than for new vehicles. Tourism was steady to stronger across most of the country--particularly in most of the eastern seaboard Districts.\nActivity in the service sector, excluding finance, grew across most reporting Districts, though New York and San Francisco reported a mixed performance. Boston, Kansas City, and San Francisco noted particular strength among technology firms. Transportation activity strengthened in most Districts reporting on that sector, with Richmond and Atlanta observing brisk growth in port activity, and Cleveland noting a rebound from weather-related weakness in the prior report. Manufacturing activity expanded throughout the nation, and at an increasingly strong pace in a number of Districts--notably along the East Coast, as well as in the St. Louis and Kansas City Districts.\nResidential real estate activity was mixed across the country, with some reports of low inventories constraining sales--specifically in the Boston, New York, and Kansas City Districts. Still, home prices continued to increase across most of the country, while the markets for both condos and apartment rentals were mostly robust. Residential construction activity was mixed, with half the Districts reporting increases but a few indicating some weakening in activity; multi-family construction remained particularly robust. Both non-residential construction activity and commercial real estate markets were generally steady to stronger since the last report.\nOverall lending activity increased throughout the nation. Roughly two-thirds of the Districts reported rising loan demand, with particular strength reported in New York and San Francisco. Credit quality and delinquency rates generally improved, while credit standards were mostly unchanged.\nAmong Districts reporting on agriculture, drought conditions caused problems in the Dallas and San Francisco Districts, and, to a lesser extent, in the Chicago District; conversely, Atlanta and Minneapolis reported that excessive moisture delayed plantings. Energy industry activity strengthened in most Districts, though coal production was steady in Cleveland and declined in the Richmond District.\nLabor market conditions generally strengthened in the latest reporting period, with hiring activity steady to stronger across most of the country, and several Districts reporting shortages of skilled workers. In most Districts, wage increases have remained generally subdued, though Chicago and Dallas noted increased costs for health benefits. Prices of both inputs and finished goods and services were mostly steady to up slightly.\nConsumer Spending and Tourism\nConsumer spending grew at a moderate pace over the latest reporting period, with a mixed performance among non-auto retailers but brisk growth in vehicle sales and moderate growth in tourism. Non-auto retail sales were characterized as mixed and generally lackluster in the Boston, Atlanta, and San Francisco Districts, but growing modestly or moderately across the rest of the country. Kansas City noted some deceleration in sales. While lingering cold and wet weather was cited as somewhat of a negative factor in the Boston and New York Districts, it was characterized as less of a restraint than earlier in both these Districts and in the Cleveland, Chicago, and Dallas Districts. A number of Districts also noted that the later Easter combined with the late arrival of warm weather had the effect of delaying the spring shopping season. Chicago, Kansas City and San Francisco reported relative strength in spending on home-related merchandise, while St. Louis mentioned strong restaurant business.\nNew vehicle sales were generally described as robust in the latest reporting period, while sales of used cars and trucks continued to lag. New York, Philadelphia, Cleveland, Atlanta, St. Louis, Dallas and San Francisco reported moderate to robust growth in new vehicle sales, while Richmond, Chicago, Minneapolis, and Kansas City described sales as generally steady or mixed. Cleveland and San Francisco reported some growth in sales of used vehicles, while New York reported a mixed performance. Auto dealers generally expressed optimism about the near term outlook.\nTourism was seen as fairly strong across most of the country in recent weeks. The Boston, New York, Richmond, Atlanta, Minneapolis Districts reported increasingly robust tourism activity, and Philadelphia noted slight growth; Dallas observed a pickup in passenger airline demand. On the other hand, tourism activity was seen weakening somewhat in the Kansas City and San Francisco Districts. New York and Philadelphia attributed some of the pickup to the marked improvement in weather driving pent-up demand, Boston credited the 2014 Marathon for much of the strength in April, and Atlanta cited strength in international visitors.\nNonfinancial Services\nNonfinancial services activity generally strengthened since the previous report. The Philadelphia, Richmond, Minneapolis, Kansas City, and Dallas Districts reported that service-sector activity expanded, on balance, while such activity was reported to be mixed in the New York and San Francisco Districts. St. Louis noted that reports of planned service sector activity have been positive. Business activity strengthened for technology service firms in the Boston, Kansas City, and San Francisco Districts, while Dallas reported that demand for accounting services remained steady at a high level. Activity in the food services industry continued to decline in the San Francisco District.\nReports on goods transportation services were largely positive. Increased shipments and cargo volumes were noted in the Cleveland, Richmond, Atlanta, Minneapolis, Kansas City, and Dallas Districts. Following a difficult winter, contacts in Cleveland reported strengthening demand for shipments of motor vehicles, chemical products, and construction-related materials. Port activity grew briskly in the Richmond and Atlanta Districts, particularly for auto-related products and containerized cargo. Railroad shipments increased in the Atlanta and Minneapolis Districts, while intermodal traffic expanded in the Atlanta and Dallas Districts. Airline passenger demand improved in the Dallas District.\nManufacturing\nManufacturing activity expanded in all twelve Districts since the previous report, with a pickup in the pace of growth reported in several Districts. Activity expanded robustly in the Boston, New York, Atlanta, and Kansas City Districts, while a more modest pace of growth was reported by Chicago, St. Louis, Philadelphia, Cleveland, Dallas, and Minneapolis. Activity expanded more slowly in the Richmond and San Francisco Districts. Growth was especially strong for several Districts in activity related to motor vehicles, aerospace, and metals. By contrast, construction-related manufacturing activity was mixed. Philadelphia reported weakness in this sector, and Chicago and Kansas City noted some strength, while demand for construction-related materials was mixed in the Dallas District. Demand for semiconductors increased modestly in the San Francisco District. Chicago and Cleveland noted strength in energy-related industries, and refinery utilization rates rose in the Dallas District. Steel production was up slightly in Cleveland, where activity related to oil and gas was also reported to be strong. The Richmond District noted declining sales for machinery, textiles, rubber and plastics, and San Francisco noted a slowing in the pace of new orders among defense-related manufacturers.\nReal Estate and Construction\nResidential real estate activity has been mixed since the last report, with a lack of inventory at times cited as a constraining factor. Boston, New York, and Kansas City indicated that existing home sales were being held back due to low or dwindling inventories. Sales rose modestly in the Cleveland, Richmond, Atlanta, Chicago, and Dallas Districts, with inventories described as low in Richmond and Chicago and declining in Cleveland. Sales activity, however, softened in the Philadelphia, St. Louis, Minneapolis, and San Francisco Districts, though Philadelphia did note some signs of improvement in May. San Francisco attributed some of the weakness to severe weather. Home prices continued to increase across most of the Districts; Boston reported some pullback in prices of single-family homes, though condo prices in that District, as well as in New York, rose. New York, Chicago, and Dallas reported strengthening demand for apartment rentals, whereas Boston noted some slackening in demand.\nHomebuilders gave mixed reports on new home sales and construction in recent weeks: Residential construction strengthened, to varying degrees in the New York, Richmond, Atlanta, Chicago, Kansas City, and Dallas Districts. However, Philadelphia, St. Louis, and Minneapolis indicated some weakening in new home sales and construction. Overall residential construction activity was mixed across the San Francisco District, though contacts there expect activity will increase over the next year. Both Boston and New York reported a good deal of recent multi-family development at the high end of the market, while Cleveland, Richmond, Atlanta, Chicago, and Dallas noted strength in multi-family construction more generally.\nNon-residential construction activity was steady to stronger in most Districts over the latest reporting period, with strengthening reported in the Boston, St. Louis, and Kansas City Districts. Cleveland described pipeline activity as strong, and San Francisco noted that a number of public and commercial high rise projects have been announced or are underway. In contrast, Minneapolis reported a decline in non-residential construction activity, and Philadelphia characterized it as steady at a low level; Chicago described activity as mixed--with office construction weak but industrial and some segments of retail fairly strong. The commercial real estate market was mostly stronger since the last report. Leasing activity and vacancy rates improved in the Richmond, Atlanta, Chicago, Minneapolis, Kansas City, Dallas, and San Francisco Districts, and were generally steady in the Boston, New York, Philadelphia, and St. Louis Districts. Dallas described market conditions as robust.\nBanking and Financial Services\nAll Districts reporting on banking noted that lending activity increased. Loan demand was reported as strong by New York and San Francisco, while more modest growth was reported by Philadelphia, Richmond, Chicago, St. Louis, Kansas City, and Dallas. Commercial and industrial loans grew in the Philadelphia, Richmond, Chicago, and Kansas City Districts. On the consumer lending side, several Districts noted that the demand for auto loans was particularly strong, including Cleveland, Atlanta, Chicago, Dallas, and San Francisco, though such lending was reported to be up only slightly in the St. Louis District. Residential real estate lending increased in the Chicago, Kansas City, and Dallas Districts, while mortgage lending activity was reported as holding steady in the Atlanta and San Francisco Districts. By contrast, both Cleveland and Richmond reported slightly weaker mortgage lending activity, and New York and Richmond reported a decline in mortgage refinancing.\nCredit quality was reported as strong in the San Francisco District, loan quality improved in the Philadelphia and Dallas Districts, and delinquency rates were somewhat lower in the New York, Cleveland, and St. Louis Districts. Credit quality was reported as stable by Richmond and Kansas City. Credit standards were seen as largely unchanged in the New York, Philadelphia, Cleveland, and Kansas City Districts, while St. Louis reported that credit standards for commercial and industrial loans had eased slightly.\nAgriculture and Natural Resources\nAgriculture conditions proved challenging in many Districts, with drought conditions reported by some Districts and excessive moisture reported in others. Drought conditions existed in parts of the San Francisco District, particularly in California and Arizona, resulting in a reduction in crop plantings and reduced herd sizes. Dallas also noted widespread drought conditions, especially in the Texas panhandle, as did the Chicago District in parts of Iowa. On the other hand, rains delayed plantings of crops in parts of the Atlanta and Minneapolis Districts. Planting progressed well overall in the Chicago District and in Idaho as reported by San Francisco. Minneapolis and San Francisco reported a loss of hogs due to a fatal virus, contributing to higher hog prices. More generally, low cattle supplies and strong demand resulted in high beef prices in Minneapolis and Kansas City. Both Kansas City and Dallas reported problems with the quality and quantity of the winter wheat crop, though winter wheat crops were generally in good condition in the St. Louis District.\nActivity in the energy industry generally increased since the previous report. Atlanta and San Francisco reported that crude oil production expanded strongly, and Dallas noted that the demand for oilfield services was robust. Natural gas production climbed in the Richmond and Atlanta Districts. Minneapolis highlighted a number of recent or planned projects to expand energy production capacity. St. Louis reported that coal production was up from year ago levels, while coal production held steady in the Cleveland District but fell in the Richmond District.\nEmployment, Wages, and Prices\nLabor market conditions generally improved since the previous report. The Boston, New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Dallas Districts indicated that employment levels were flat to up modestly. Philadelphia reported that some new hiring occurred but noted that firms remain cautious, while improvement in the labor market has led to increased competition for workers in the Kansas City District. Contacts in the Cleveland and Chicago Districts noted an increase in demand for some temporary workers, while the Atlanta District reported a small increase in workers transitioning from temporary to permanent positions. Several Districts continued to report that employers were having difficulty finding skilled workers.\nMost Districts reported that wage pressures remained subdued since the previous report, although an increase in the cost of health insurance was noted in Chicago and Dallas. According to reports from the New York, Philadelphia, Richmond, Minneapolis, Kansas City, Dallas, and San Francisco Districts, to the extent that wage increases were observed, they were concentrated among highly skilled workers in information technology, engineering, professional services, and some of the skilled trades.\nPrice pressures were said to be contained, as most Districts reported that both input and finished goods prices were little changed or up only slightly since the previous report. However, high or rising prices for some agricultural commodities, construction materials, energy products, and precious metals were cited by some Districts. Contacts in the Boston, Cleveland, Chicago, Dallas, and San Francisco Districts noted higher food prices, particularly for meat and dairy products. By contrast, Chicago reported that corn, wheat, and hog prices declined, and Dallas reported that fuel costs declined for a transportation services firm.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nJune 4, 2014\nThe Eleventh District economy grew at a moderate pace over the past six weeks. Most manufacturers reported an increase in demand. Retail and automobile sales strengthened. Demand improved or held steady in most nonfinancial services industries. Activity in the housing sector was robust, and office and industrial leasing activity remained strong. Growth in loan demand increased. Drilling and oil field services activity remained solid, while agricultural conditions worsened. Price increases were noted in some industries. Employment was flat to up slightly, with several reports of wage pressures. Outlooks were optimistic across most industries.\nPrices\nMost responding firms said prices were stable to up slightly over the reporting period. Manufacturers noted higher selling prices for scrap metal and a few contacts reported rising food prices, particularly for dairy, meat and produce. Airlines said airfares and fees continued to increase. Retail prices were mostly unchanged and vehicle selling prices held steady, although auto dealers said rebates were being offered by some auto manufacturers. In contrast, an aircraft parts manufacturer said selling prices were down from year ago levels, and a transportation services firm noted a decline in fuel costs.\nNatural gas prices rose from April to early May, but fell back in mid-May to a level similar to the beginning of the reporting period. The price of West Texas Intermediate was flat over the reporting period. Retail gasoline prices increased over the last six weeks, while on-highway diesel and feed stock prices were flat.\nLabor Market\nEmployment levels held steady or increased at nearly all responding firms and some contacts noted continued difficulty in finding skilled workers. Food, cement, lumber, primary metals, fabricated metals and transportation equipment manufacturers noted continued hiring. An automobile dealer noted plans to hire several workers for a new body shop that will be opening later this year, and an airline reported hiring pilots and flight attendants in the last six weeks. Energy industry contacts said increased appetite for drilling in the Permian Basin was exacerbating an already tight labor market, and housing sector contacts continued to report construction worker shortages.\nThere were several reports of upward wage pressure. A staffing firm said that employers are paying higher relocation bonuses for talented personnel, particularly engineers. Wage pressures appeared to be the strongest for skilled workers in the energy and construction sectors, but staffing firms, high tech, transportation equipment, fabricated metals and lumber manufacturers also noted upward pressure. A primary metal manufacturer raised wages for hourly employees, and a few firms noted increases in health insurance costs.\nManufacturing\nReports from manufacturers were mostly positive, although there were a few reports of slowing demand. Construction-related manufacturers reported mixed demand. A lumber contact reported a pullback in demand since the last report. Cement producers said demand held steady or increased slightly because of favorable weather conditions, but one respondent noted that the lack of developed lots in Houston was affecting business. Primary metals producers noted very strong demand in April but a slow start to May, and fabricated metals manufacturers saw a broad-based increase in orders.\nHigh tech manufacturers said that growth in sales and orders continued at a moderate pace, largely due to increases in overall consumer demand and growth in new products such as cloud services and wearable electronics. Inventories were at or near desired levels. Most firms expect growth to continue at a moderate to slightly faster pace, although one contact noted that there is still a considerable amount of uncertainty about the industry outlook.\nFood producers reported steady demand, and transportation equipment manufacturers said demand was flat to up over the last six weeks. Refinery utilization rates rose over the reporting period with winding down of the spring maintenance season. Chemical producers reported lower production rates. Outlooks of refiners and chemical producers remained positive.\nRetail Sales\nRetail sales strengthened during the reporting period boosted by favorable weather conditions and a late Easter holiday that shifted sales into April; demand was up in the mid-single digits from last year's levels. Strength was noted in apparel, handbags, patio furniture and sporting goods. Two national retailers said that demand in Texas continued to outperform the national average. Outlooks were positive.\nAutomobile sales increased since the previous report. Respondents noted that sales were particularly strong in April, and demand was up year over year. Inventories varied by manufacturer, and generally were not a source of concern. Automobile contacts expect continued growth in sales through year-end.\nNonfinancial Services\nDemand for most nonfinancial services was flat to up since the last report. Staffing firms said growth in orders was mixed. One contact reported a slight decline in the pace of activity, while another contact reported that demand for direct hires in April was the highest in 10 years but orders slowed somewhat in May. Overall demand remained strong, and some contacts were more optimistic than they were six weeks ago. Accounting firms said demand held steady at high levels. Tax business continued to wind down but audit and transactions work remained strong. Demand for legal services decreased in the last six weeks, mainly stemming from a decline in litigation activity. Real estate related business continued to grow, and corporate work remained softer than desired. Contacts at law firms were less optimistic in their outlooks.\nTransportation service firms said overall cargo volumes increased over the reporting period and outlooks were mostly positive. Intermodal cargo volumes climbed up over the last month but were flat year over year. Railroad contacts reported a broad-based increase in volumes, with particular strength in shipments of crushed stone, lumber and wood, motor vehicles and nonmetallic minerals. Small parcel shipments grew at a faster pace in April, with growth in demand driven by strength in retail trade.\nPassenger airline demand improved over the reporting period. Demand was up from year ago levels, and contacts noted that the outlook has improved modestly.\nConstruction and Real Estate\nActivity in the housing sector was strong over the reporting period. Respondents reported a seasonal pickup in both traffic and home sales, although one contact noted a slight slowing in the pace of activity. Home prices continued to increase but at a slower pace than last year. Land and lot prices remained elevated due to limited supply, and one contact noted that it is becoming difficult to underwrite loans in a few areas at these prices. Robust apartment demand continued to keep vacancies low even with high levels of construction activity. Moderate increases in rents were reported in several major Texas metros. Housing and multifamily contacts were optimistic in their outlooks.\nOffice leasing activity remained robust, and contacts noted strong growth in rents. Occupancy remained at high levels, and contacts in Houston said they are beginning to see interest from foreign investors. Demand for industrial space was strong, especially in Dallas. Outlooks for Texas commercial real estate remained positive.\nFinancial Services\nGrowth in loan demand picked up slightly in the last six weeks. Commercial and residential real estate lending improved modestly as projects continued to respond to the growth in metro areas. Mortgages and home equity lines of credit gained traction after some softness in previous months. Demand for auto loans rebounded, and other types of consumer loans edged up slightly. Loan quality continued to improve and loan rates remained low due to strong competition for borrowers. Deposit volumes held steady and rates remained low. Outlooks were improved; however, contacts noted that regulatory burden remained costly and frustrating.\nEnergy\nDemand for oilfield services was robust in the Eleventh District. All of the increase in the Texas rig count came from drilling activity in the Permian Basin in West Texas, and contacts said that oil field service equipment in the Permian Basin was essentially leased out for the year. Margins for oilfield service providers were up in the Permian Basin, but remained very tight in the Eagle Ford region. Geological service firms continued to see robust demand. Outlooks for the second quarter were positive.\nAgriculture\nDistrict drought conditions worsened further over the reporting period. Most of the Texas panhandle fell into exceptional drought, the most severe drought classification. Winter wheat crop conditions deteriorated and a relatively large share of Texas' wheat acres were abandoned and will not be harvested this year. Cotton planting season began and farmers were already concerned about poor production due to the very dry soil, particularly for dryland cotton. Agricultural commodity prices stayed strong. Export sales for cotton fell over the last six weeks in response to high cotton prices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nJune 4, 2014\nThe Tenth District economy expanded modestly in late April and early May with solid expectations for growth during the coming months. Consumer spending rose slightly at retailers and auto dealers, while restaurant and tourism contacts expected a summer rebound in activity. District manufacturers reported a further increase in production, transportation firms noted increased sales, and business activity at other services companies continued to grow steadily. Residential real estate activity remained steady alongside an increase in home prices and housing starts. Commercial real estate activity improved further with additional declines in vacancy rates. Bankers reported increased loan demand, stable loan quality and a slight decline in deposits. Farm income expectations fell for crop producers, but livestock operators reported improved profits. District energy activity remained stable and was expected to expand in the coming months with an increase in hiring and capital investments. Prices rose modestly, and wage pressures increased for some skilled trade positions in the manufacturing, construction, transportation, and energy sectors.\nConsumer Spending\nConsumer spending increased at a slower pace in late April and early May, but contacts were more optimistic about future sales growth. Retail sales increased modestly from the previous survey and were up slightly from a year ago. Several retailers noted stronger sales of home improvement and building materials. Expectations for future sales climbed higher and store inventories continued to increase moderately. Auto sales grew at a slightly slower pace than in March but remained above year-ago levels. Sales were expected to improve in future months, and contacts said small, mid-sized family vehicles sold particularly well. Auto inventories rose but at a slower rate than earlier this year. Restaurant sales slowed somewhat, but activity was considerably higher than a year ago and expectations for future sales were strong. District tourist activity slowed somewhat in late April and May, and was lower than a year ago. However, most tourism contacts expected modest increases in activity heading forward.\nManufacturing and Other Business Activity\nDistrict manufacturing activity expanded at a solid pace in late April and early May. Production was strongest at durable goods-producing plants, particularly among machinery and construction materials manufacturers. New orders rose marginally and employment also increased. Expectations for future factory activity moderated slightly from previous months, but were generally positive. Manufacturers\u2019 capital spending plans were healthy and remained higher than last year. Wholesale trade and transportation firms noted solid sales growth from the previous survey, and expectations for future activity moved slightly higher, particularly among transportation contacts. Activity at professional and high-tech firms continued to grow, with sales expected to rise further in coming months. However, one high-tech firm noted a sharp revenue decline due to reduced government defense spending.\nReal Estate and Construction\nReal estate and construction activity increased modestly in late April and early May, with stronger seasonal activity anticipated in the coming months. Construction supply and builder contacts reported stronger activity compared with both the previous survey period and last year. Builders reported moderate growth in the number of starts and potential buyer traffic, and housing starts were expected to rise over the next few months. Residential realtors reported steady home sales since the last survey period but expected a modest increase in sales due in part to seasonal factors. Residential home inventories continued to drop and home prices increased further. The market for low- and medium-priced homes remained more robust than the market for higher-priced homes. Mortgage activity was moderately lower than a year ago due to a decline in refinancing activity, but increased since the last survey and was expected to increase in coming months. Commercial real estate contacts continued to report a decline in vacancy rates, an increase in absorption, higher sales, and strengthening construction activity. Commercial real estate prices, sales, and construction were expected to increase moderately in the coming months.\nBanking\nBankers reported an increase in overall loan demand, stable loan quality and a slight decrease in deposit levels in late April and early May. Respondents reported moderately stronger demand for commercial and industrial loans and residential and commercial real estate loans. Bankers also noted a modest rise in demand for consumer installment and agricultural loans. Bankers reported stable loan quality compared to a year ago, and nearly all bankers expected the outlook for loan quality to either improve or remain the same over the next six months. Credit standards remained largely unchanged in all major loan categories, and respondents reported a minor decline in deposits.\nAgriculture\nFarm income prospects for crop producers dimmed since the last survey period, while profitability in the livestock sector improved. Winter wheat growers were concerned that the poor condition of the crop would limit profits despite an upswing in wheat prices. Corn and soybean prices were steady since the last survey period but remained well below year-ago levels. Spring planting prompted increased demand for operating loans to pay for crop inputs. In contrast, profit margins for livestock operators improved further as low cattle and hog supplies pushed prices higher and feed costs remained flat. Strong demand for grazing pastures supported a modest rise in ranchland values, but cropland values generally held steady. Farm loan repayment rates dipped below year ago-levels, and District bankers reported a slight rise in carry-over debt relative to last year.\nEnergy\nDistrict energy activity held steady in April and early May. Contacts reported stable drilling and business activity during the survey period with positive expectations going into the summer season. The number of active oil drilling rigs increased, particularly in Oklahoma and New Mexico. In contrast, the number of active natural gas drilling rigs decreased due to continued low prices and high storage levels. The price of crude oil has remained stable but high, and was not expected to deviate in the near future. The price of natural gas was still above year-ago levels but was expected to decrease over the next couple of weeks due to typically weaker demand in the summer. Current high oil prices continued to maintain profits and drive up capital expenditures. Hiring in the energy sector slowed since the last survey period, but was expected to pick up in the next several months.\nWages and Prices\nPrices continued to rise in most industries, and wage pressures increased slightly, particularly for skilled positions. Retail prices rose further, although the pace of growth was expected to slow in coming months. Prices of manufacturing materials increased moderately compared to the previous period, and more firms began to raise selling prices. Transportation companies reported rising input and selling prices, and menu prices continued to increase for restaurants due to elevated food costs. Construction materials prices moved slightly higher, particularly for drywall and roofing, and were expected to increase further. Wage pressures increased slightly in some industries, particularly those noting difficulties finding qualified labor, such as truck drivers, machinists, high-tech, and other types of skilled workers. Several contacts commented on the increased competition for workers due to the improving labor market.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nJune 4, 2014\nSixth District business contacts described economic conditions as improving modestly in April and May. The overall outlook is positive with most contacts expecting either the same or a slightly higher level of growth for the remainder of the year.\nOn balance, reports on retail activity were mixed; however, auto dealers reported positive sales growth for the period. The tourism sector remained a bright spot with an increase in the number of domestic and international visitors to the District. According to residential real estate contacts, new and existing home sales were up and home prices continued to appreciate compared to a year ago. Homebuilders reported mixed levels of new home inventories and brokers cited a decline in existing home inventories compared to a year earlier. Commercial real estate contacts noted continued improvement in conditions as absorption rates and construction increased from last year. Purchasing managers in the manufacturing sector cited continued growth in new orders and production. According to bankers, loan demand for most types of loans was up across most parts of the region. District firms added to payrolls, albeit at a modest pace. Labor and material cost pressures remained stable and businesses continued to operate under tight margins.\nConsumer Spending and Tourism\nDistrict 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 factors including people diverting spending to obtain mandatory health insurance and a reduction in food stamp benefits. Companies remained cautious in how they managed inventory levels. Auto sales grew at a brisk pace and contacts expect growth in the industry to remain consistent with current levels in the near term.\nContacts from the District's tourism and hospitality sector expressed an overall exuberance regarding activity. The number of visitors, especially international travelers from Latin America and Europe, to New Orleans, Atlanta, and most parts of Florida, increased. The near term outlook among contacts remains positive with most expecting an increase in travel compared with a year earlier.\nReal Estate and Construction\nMore District brokers reported growth this period than the previous report. Roughly two-thirds of broker reports indicated that home sales had increased from the year earlier level. Most brokers indicated that inventory levels continued to decline on a year-over-year basis. The majority of contacts continued to report that home prices remained ahead of the year earlier level. The sales outlook among brokers was notably stronger relative to our last report.\nReports 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. The majority of builders reported that construction activity and new home sales were ahead of the year earlier level. Reports on the level of unsold inventory were somewhat mixed. The majority of contacts continued to report modest home price appreciation. The outlook among builders for new home sales and construction activity was somewhat less optimistic than the previous report.\nCommercial builders and brokers indicated that demand for commercial real estate continued to improve. Absorption picked up, though contacts continued to remind us that the rate of improvement varies by metropolitan area, submarket, and property type. Construction activity continued to increase at a modest pace from last year; most contacts reported that their current backlog is ahead of year earlier levels. Contacts indicated that apartment construction remains fairly strong and the level of construction activity across other property types has remained steady. The outlook among District commercial real estate contacts remained positive with continued improvement expected over the course of the year.\nManufacturing and Transportation\nDistrict contacts reported that manufacturing activity continued to expand. Growth in new orders, production, and employment suggested substantial strengthening in the District's manufacturing sector. Contacts reported increases in commodity prices and a drawdown in finished inventory levels. The outlook among purchasing managers for higher production over the next three to six months remains similar to the previous report.\nTransportation 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. Railroads saw considerable increases in the movement of petroleum products and heavy equipment, as well as continued expansion in intermodal traffic. Trucking companies reported a slowing in the growth of tonnage since the last report but overall freight volumes remained robust. The majority of transportation contacts expect growth to be sustained for the rest of the year.\nBanking and Finance\nOn balance, loan demand across the District increased as 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. The use of home-equity lines increased as home values improved. Demand for auto and small business loans grew. Commercial real estate lending increased as business owners/owner-occupiers showed signs of expanding after many years of being on the sidelines. Some bankers admitted that they were getting \"a little more aggressive\" due to competition; however, they did note that they were not changing their loan structure or underwriting.\nEmployment and Prices\nDistrict 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.\nMost contacts reported relatively stable labor and material cost pressures. Notable exceptions included reports of greater wage pressure for some high-skilled positions and greater cost increases for food, transportation, and some construction materials. Unit costs are expected to increase 1.9 percent over the next 12 months, according to the Atlanta Fed's survey on business inflation expectations. Overall, profit margins were tight across most industries. However, a growing number of contacts communicated an expectation that the need to widen margins could have an upward influence on prices over the coming year.\nNatural Resources and Agriculture\nEnergy activity in the District continued to expand as new discoveries, production, and oil field development increased across the Gulf Coast. Crude oil production was especially solid, which led to record high inventories in the region. Natural gas production, particularly wet natural gas, also increased. Energy firms expect continued strength in the sector during the summer months.\nParts of the District saw excessive rain, with flooding reported in lower Alabama and the Florida panhandle. There were some reports of crop damage and delayed planting attributed to excessive moisture.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nJune 4, 2014\nGrowth in economic activity in the Seventh District was moderate in April and May. Although contacts had been expecting a stronger pick-up, they generally maintained their optimistic outlook for 2014. Consumer and business spending both increased. Gains in manufacturing production remained moderate and growth in construction and real estate activity continued to be modest. Credit conditions improved slightly. Cost pressures increased, but were modest. Corn, wheat, and hog prices moved lower, while soybean, milk, and cattle prices increased.\nConsumer Spending\nGrowth in consumer spending increased slightly in April and May, though the overall pace of growth remained modest. Contacts suggested that higher utility bills and low consumer confidence had a negative effect on retail sales. Nonetheless, they were cautiously optimistic, citing favorable responses by consumers to recent promotional activity. Several contacts also reported higher than normal inventories in anticipation of stronger summer sales. Sales of building materials, garden supplies, and clothing improved with the weather, while sales of electronics and some other big-ticket items failed to meet expectations. Light vehicle sales decreased slightly, while dealers' service and parts departments remained active.\nBusiness Spending\nBusiness spending continued to grow at a moderate pace in April and May, led by higher capital expenditures on equipment and software. Forward-looking capital spending plans also picked up. Although contacts reported that expenditures were primarily for replacement of existing capital, a number indicated that they were expanding capacity and IT infrastructure as well, particularly in the construction and real estate industries. In addition, contacts in the auto and energy industries reported increased capital spending to meet environmental regulations. Inventories remained at comfortable levels for most manufacturers, and there was some desired stockbuilding by retailers. Hiring plans changed little from the previous period. However, a staffing firm reported increased demand for temporary manufacturing workers, and several contacts said they had added part-time workers. Demand remained strong for skilled workers, with firms again reporting willingness to spend on training.\nConstruction and Real Estate\nGrowth in construction and real estate activity picked up, but remained modest in April and May. Contacts attributed the increase in activity to more favorable weather conditions, and expected moderate growth for the remainder of the year. Demand for both single- and multi-family residential construction improved. Existing home sales rose slowly, but real estate contacts expected activity to pick up as inventories return to levels that are more normal. Home prices and residential rents grew moderately. Demand for nonresidential construction expanded at a slow pace. Public construction activity was modest, but one contact noted some increase in infrastructure spending on bridges and schools. Office building remained weak. Contacts continued to note strength in industrial building and some areas of retail construction, particularly grocery stores. Demand for commercial real estate improved, as leasing of industrial buildings and office space increased.\nManufacturing\nManufacturing production continued to grow at a moderate pace in April and May. The auto, aerospace, and energy industries remained a source of strength for the District. Capacity utilization in the auto and steel industries increased as production levels rose. In addition, auto suppliers reported plans to add capacity as vehicle production adjusts to more stringent fuel efficiency requirements. Demand for steel fully recovered from the impact of earlier winter weather-related production disruptions, though an industry contact noted that the late thawing of parts of the Great Lakes hindered transportation of raw materials and that service center inventories remained somewhat low as a result. Furthermore, weak demand abroad combined with higher prices in the US spurred a spike in steel imports. Specialty metals manufacturers continued to share in the moderate growth, with several reporting an increase in new orders and order backlogs. Demand for heavy machinery grew at a slow but steady pace; output was buoyed by construction machinery, but weighed down by global weakness in mining. A slow start to the growing season raised concerns that pressure on farm incomes would weigh on demand for agriculture machinery. Manufacturers of construction materials reported an increase in demand as the weather improved, though not as much as some had hoped.\nBanking and Finance\nCredit conditions improved slightly from the prior reporting period. Equity market volatility decreased, as did corporate financing costs for a number of District firms. Business lending increased, driven by demand for commercial and industrial loans from small businesses. Banking contacts again noted competitive pressure on structure and pricing for traditional and leveraged business lending, particularly from nonbank financial institutions. Investor purchases of commercial property rose, though some contacts expressed concern that the increase was not supported by underlying demand. Growth in consumer loan demand remained modest, with the utilization of credit card lines and the demand for auto loans both increasing. Some banking contacts also noted a slight pick-up in mortgage refinancing activity with the recent decline in interest rates, even as new mortgage originations decreased. Mortgage brokers reported that it remains difficult for many potential borrowers to obtain residential mortgages.\nPrices and Costs\nCost pressures increased, but overall were modest. Commodity prices rose, and contacts noted higher prices for building materials and industrial metals. Energy and transportation costs remained elevated. Contacts reported lingering shipment delays of goods and raw materials from the harsh winter weather earlier in the year. A steel industry contact noted that the resulting supply chain disruptions contributed to the increase in steel prices. Retailers reported higher wholesale prices, particularly for food items such as meat and dairy. However, pass-through to downstream prices remained limited. Wage pressures rose slightly. Non-wage labor costs also increased, as contacts continued to express concern about rising healthcare premiums.\nAgriculture\nCorn and soybean planting progressed quickly after precipitation and cool temperatures slowed fieldwork earlier in the spring, though planting in Michigan and Wisconsin was still lagging. Cold soil temperatures are still a concern; some contacts reported that the corn crop was in good shape but that the emergence of soybeans was behind average. Moisture levels were at least adequate for planting throughout the District, although parts of Iowa remained in drought. Corn and wheat prices were lower, while soybean prices drifted higher. Livestock prices remained well above the levels of a year ago, although hog prices moved lower. High milk prices encouraged the expansion of dairies, and high cattle prices appear to be leading to some new entrants into the livestock business. Farm machinery was readily available after several years of waiting lists for purchases.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nJune 4, 2014\nThe Ninth District economy grew at a moderate pace since the last report. Increased activity was noted in consumer spending, tourism, commercial real estate, professional services, manufacturing, and energy and mining. Decreased activity was noted in farming, construction and residential real estate. Labor markets continued to show signs of tightening. Wage increases were slightly higher over the past few months, but remained moderate overall. Prices remained relatively level overall.\nConsumer Spending and Tourism\nConsumer spending increased modestly. A Minneapolis area mall manager noted that sales were flat during the extended winter season, but with spring weather arriving, sales had picked up. Traffic and sales were slow during late winter months at a North Dakota mall, but sales started increasing in April and May. According to preliminary results of the Minneapolis Fed\u2019s annual survey of professional services companies (conducted in May), consumer spending is expected to increase during the next 12 months. Vehicle sales were solid in North Dakota, but were somewhat softer in recent weeks as farmers were concerned about getting crops planted.\nTourism was up from a year ago. In western South Dakota tourism activity was above year-ago levels during April and May, while advance bookings for lodging and camping were solid for the early part of summer, according to an official.\nConstruction and Real Estate\nThe extended winter negatively affected commercial construction activity. The value of April commercial and hotel permits in Billings, Mont., fell from last year. In Sioux Falls, S.D., April permits were down 69 percent from a year ago. Residential construction decreased from last year. The value of April residential permits in Sioux Falls fell by 10 percent from a year earlier. In the Minneapolis-St. Paul area, April residential permitted units decreased compared with April 2013. The value of April single-family residential building permits in Billings was up from last year, but multifamily building was down.\nActivity in commercial real estate markets increased since the last report. A real estate analytics firm noted that Minneapolis-St. Paul industrial vacancy rates dropped in the first quarter and are forecast to fall throughout 2014. Residential real estate market activity decreased since the last report. In the Sioux Falls area, April home sales were down 12 percent, inventory increased 5 percent and the median sales price decreased 1 percent relative to a year earlier. April home sales were down 12 percent from the same period a year ago in the Minneapolis-St. Paul area; the inventory of homes for sale increased 2 percent and the median sales price rose 8 percent. In La Crosse, Wis., April home sales were down 11 percent from the same period a year ago and the median sales price rose 1 percent. However, April home sales increased in the Bismarck, N.D., area. Multifamily vacancy rates in Minneapolis-St. Paul were level in the first quarter, but are forecast to rise for the remainder of 2014.\nServices\nActivity at professional business services firms increased at a moderate pace since the last report. Preliminary results of the professional services survey showed that over the past four quarters, sales revenue, productivity and profits grew, and they are expected to increase over the next year. A contact from a railroad noted significant growth in freight volumes thus far in 2014 compared with the same period in 2013.\nManufacturing\nThe manufacturing sector saw continued moderate growth. An April survey of purchasing managers by Creighton University (Omaha, Neb.) suggested that manufacturing activity in Minnesota and the Dakotas increased. In Michigan\u2019s Upper Peninsula, a snowplow blade producer and an electrical equipment manufacturer were expanding capacity. A Minnesota plastic parts producer noted that demand from the auto sector has increased. However, in Minnesota a disk-drive parts facility and a military firearms plant will both close later this year.\nEnergy and Mining\nActivity in the energy and mining sectors increased since the last report. Mid-May oil and gas exploration increased in Montana and decreased slightly in North Dakota from a month earlier. Output is expected to surge this spring, as a large number of wells drilled over the winter could not begin producing due to extreme cold. A pipeline operator in Minnesota announced a $125 million plan to double capacity on an existing line that feeds crude from Canada and North Dakota to Minnesota refineries. A plant that will process natural gas from the Bakken oilfield opened in North Dakota. A large wind farm development will be built this summer in South Dakota. A mining firm finalized plans for a large copper mine in northern Minnesota. While district iron ore mines were operating at near capacity, industry contacts were concerned that demand from the steel industry may slow.\nAgriculture\nDistrict farmers saw their financial condition continue to weaken, while livestock and dairy producers were in better shape. More than half of respondents to the Minneapolis Fed\u2019s first quarter (April) Survey of Agricultural Credit Conditions said farm incomes and capital spending fell in the first three months of 2014, and about the same percentage expect it to decrease in the second quarter. A late spring and heavy early-season rains significantly delayed corn and soybean plantings throughout the district. Hog producers continued to lose large numbers of animals to a virus, pushing up prices for pork, as well as poultry. Cattle producers enjoyed record beef prices, as overseas demand grew and efforts to rebuild the U.S. herd kept cattle from going to slaughter. Grain elevators reported delays in shipping grain due to rail capacity constraints.\nEmployment, Wages, and Prices\nLabor markets continued to show signs of tightening. A number of manufacturers noted difficulty hiring qualified employees to fill positions. A new outlet mall in Minnesota is looking to hire 1,600 workers. A window manufacturer announced plans to add 100 jobs at a Minnesota factory, while a window and door manufacturing facility in North Dakota plans to add up to 125 jobs. Minnesota initial claims for unemployment insurance benefits in April were down 15 percent compared with a year earlier. In contrast, a fertilizer company announced plans to lay off 50 employees at its headquarters.\nWage increases were slightly higher over the past few months, but remained moderate overall. For example, wages for workers at some nonunion Minnesota construction firms increased for carpentry and trades positions; however, wage rates remained lower than prerecession levels. A Minnesota manufacturer noted that wages were up about 5 percent, a larger increase than the previous two years.\nPrices remained relatively level overall. Late-May Minnesota gasoline prices were about the same as in mid-April. While natural gas prices were relatively level from the last report, they remained higher than a year ago. According to the survey of professional services firms, input costs and selling prices are expected to increase about the same during the next 12 months as over the previous 12 months. Meanwhile, copper and nickel prices increased somewhat since the last report.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nJune 4, 2014\nBusiness activity generally continues to increase on a year-over-year basis in the First District, but performance varies across sectors. Manufacturers and tourism contacts note strong results, software and IT services firms cite strengthening sales, staffing services respondents indicate activity has picked up recently, while retail reports are somewhat mixed. In real estate, commercial conditions are largely unchanged since the last report, while single-family home sales and prices declined year-over-year in March in four of the six New England states. Contacts in most sectors indicate that price pressures are minimal; a few manufacturers mention high or rising prices for selected inputs. Most responding firms say they are neither augmenting nor cutting headcount; some note that jobs in selected occupations remain difficult to fill. Outlooks remain quite positive, even in sectors where recent results have not been strong, but apparently not sufficiently positive to result in plans for increased hiring.\nRetail and Tourism\nRetail sources contacted for this round report comparable store sales results ranging from an 8 percent decrease to a 10 percent increase year-over-year. One chain indicates an improving trend, with first quarter sales down 8 percent from a year earlier and April sales down 5 percent; they expect this month to end with sales 1 percent to 2 percent below May 2013.Another contact reports that April sales were up 10 percent but predicts that May will finish 5 percent to 10 percent above last year. Apparel sales have softened a bit, with some of this decline attributed to cooler weather lingering in the northeast; one contact notes that with the weather finally getting warmer over the last few weeks, spring and summer clothing sales have picked up. Furniture sales are down a bit. Some inventories are a bit higher than anticipated. Despite these rather mixed results, contacts continue to believe that the U.S. economy is improving--one source terms the recent weakness \"just a hiccup.\"\nBoston hotel revenues were up 4.8 percent year-over-year in 2014:Q1. In April, Boston-area hotel occupancy rates were above 90 percent, which is unusually high, and observers say they expect hotel revenues to exceed those posted for April 2013. Some of this increase is due to business related to the 2014 Marathon, which had almost 36,000 entrants compared to about 17,600 in 2013. Boston area restaurants also did well in April, although final numbers are not yet in. For 2014:Q1, Boston restaurant revenues were up 4.9 percent over 2013:Q1--this breaks down as flat in January, a 3.4 percent increase in February, and a 7.6 percent increase in March. Attendance at Boston area museums and attractions was down in 2012 and 2013, but attendance and revenues in 2014:Q1 were up 3 percent over 2013:Q1.\nManufacturing and Related Services\nFirst District manufacturers report that business conditions in the sector are strong. Of the 13 firms contacted this cycle, 12 report higher year-on-year sales and the one firm with a decline attributes the slow sales to weather and says that underlying sales growth is exceptionally strong. Contacts' only serious concerns involve international sales. A firm that sells building equipment reported \"Europe is still a mess.\" Two contacts express some concern about China, saying that growth had slowed or was slower than expected. For many companies, new products are the engine of growth. For example, a contact in the dairy industry said that almond milk will generate significant growth.\nOf the 12 firms reporting information about inventories, six cite flat inventories, five note higher inventories and only one saw a reduction. The reasons for higher inventories are varied; a manufacturer of aircraft engines and a manufacturer of computer storage devices both attribute the higher inventories to new product introductions. None of our contacts view the rising inventories as cause for concern.\nMost of our contacts report both flat prices and flat costs. One exception is a dairy firm citing an \"all time high\" for the price of raw milk. Two contacts indicate that energy prices are up. A manufacturer of aircraft engines notes that the prices of two key inputs, nickel and titanium, have risen and notes the possibility that the problems are due to turmoil in Russia, a key supplier of both metals. So far, the contact says the problems have affected prices but have not disrupted supply.\nMost contacts report flat employment and wage growth in line with expectations, but there are some exceptions. Two firms report staff reductions. One of them, a manufacturer of business equipment, has recently concluded a major restructuring of the firm as their legacy business of providing equipment for physical mail has declined. Two firms, a software company and a manufacturer of storage devices, report that the market for software engineers is exceptionally tight. None of our contacts reports significant revisions to their capital spending plans. From almond milk to aircraft engines, the main driver of new spending appears to be new products. All 13 responding firms say their outlook for the rest of the year is positive.\nSoftware and Information Technology Services\nNew England software and information technology services firms report strengthened business activity through May, with year-over-year revenue growth in the 5 percent to 20 percent range. Contacts attribute this growth to strong demand for technology services, increased consumer spending, and improvements in the manufacturing sectors of the United States and Western Europe. In general, firms are slightly incrementing headcount; two such expansions were a result of acquisitions. Wages largely remain flat, with one firm awarding a merit increase in the 3 percent range. There are no signs of increases in selling prices. Looking forward, New England software and IT contacts remain cautiously optimistic, expecting that revenue growth will continue as long as the global economy remains stable. Concerns include a weakening Chinese economy and general macroeconomic stability.\nStaffing Services\nNew England staffing contacts report higher growth in recent months, with quarter-over-quarter revenue increases in the double-digit range and generally flat year-over-year growth. While the region's inclement winter weather contributed to soft business activity through the first quarter, billable hours increased by early April as the weather improved. Contacts generally report an uptick in labor demand, concentrated in the legal, internet technology, production, welding, and machine operation industries. However, one contact observes decreases in labor demand in the healthcare sector, particularly for medical assistants. Labor supply remains tight for specialized roles in the welding, web development, intellectual property, and internet technology spheres. As a result, firms continue to expand their recruiting and social media efforts to attract new talent and gain a larger share of the existing applicant pool. Bill and pay rates have largely held steady, although two contacts note slight increases in both rates. Looking forward, contacts continue to be optimistic, and anticipate that growth will continue through the next few months.\nCommercial Real Estate\nConditions in the First District's commercial real estate market are largely unchanged since the last report. In Boston, office leasing activity is stable. Demand for space in the Seaport District, Back Bay, and Kendall Square remains very strong, while a few buildings in the Financial District still have elevated vacancy rates. Some new apartment buildings in Boston appear to be having trouble achieving the rents and occupancy levels they had hoped for. Contacts attribute this difficulty to the fact that a large number of high-end units came on the market in a short period of time. Some investors are reportedly starting to balk at Boston's high commercial real estate prices, but overall investor interest in the city remains very high. The growth pace of multifamily construction slowed in greater Boston while planned office construction increased, leaving overall construction activity roughly stable year-over-year.\nIn Hartford, office leasing fundamentals are steady; foot traffic increased but did not translate into increased deal volume. Also in the Hartford area, construction activity increased over last year in both the multifamily and mixed-use sectors, driven in part by state and local funding and tax credits. Leasing deals continue to proceed slowly in greater Providence, where business investment is seen as being held back by political and fiscal uncertainty at the state and local levels. Leasing activity remains robust in Portland, and that city's industrial leasing sector is described as particularly strong. Also in Portland, new permits for office construction continue to increase, with interest concentrated in downtown locations.\nA regional lender saw an increase in commercial real estate loan volume in recent weeks. Contacts are either cautiously optimistic or, in Portland, unreservedly optimistic, that conditions in their respective commercial real estate markets will continue to improve slowly in the coming months, provided slow-to-modest economic growth continues at local and national levels. The outlook for office construction in greater Boston for the remainder of 2014 is very strong based on recent indicators but, looking farther ahead, contacts say the construction industry faces potential shortages of qualified workers. While such shortages are seen as a potential restraint on construction activity in 2015 and beyond, they are expected to be less severe in the First District than in some other U.S. regions.\nResidential Real Estate\nSentiment across First District residential real estate markets can be summarized as generally positive, as contacts express optimism despite March data indicating year-over-year declines in single family home sales and in median sales price for single family homes in four of the six states. (Contacts in New Hampshire were unavailable for comment, while Maine saw an increase in sales and Rhode Island saw median prices rise.) For Rhode Island, Massachusetts, and Connecticut, sales also declined year-over-year in February. Respondents attribute the declines in single family homes sales to inventory shortages, weak employment security, and uncertainty surrounding changes to flood maps and flood insurance legislation. Lack of inventory remains the predominant constraint in Massachusetts, which once again saw available inventory decline relative to last year. While contacts indicate that inventories are beginning to expand in parts of Massachusetts as new sellers enter the market, they emphasize that inventory shortages cannot be resolved without new construction. Need for additional units, especially in the first time homebuyers market, is also noted in Connecticut, where multiple bids have started to occur and contacts state that developers are beginning to build. In Maine and Connecticut, short sales and foreclosures continue to be released to market, partially contributing to the decline in median sales prices.\nThe First District condominium market is doing somewhat better, with year-over-year closed sales increasing in all contacted states except Connecticut. Median sale prices for condos also increased relative to last year in all contacted states.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nJune 4, 2014\nBusiness activity in the Fourth District expanded at a modest pace during the past six weeks. New orders and production at District factories grew slowly. Construction activity began to pick up in the second quarter, after a slow start to the year. Auto dealers saw a strong rise in new-motor-vehicle sales during April, while retailers experienced rising sales on a year-over-year basis. In the energy sector, coal exports strengthened, and shale gas drilling edged slightly higher. Freight volume improved to more normal levels. Demand for business and consumer credit moved higher.\nEmployment has picked up in the manufacturing and construction sectors. Staffing-firms reported little change in the number of job openings and placements, with job vacancies found primarily in the manufacturing and oil and gas industries. Several of our contacts noted a shift toward hiring temporary workers. Wage pressures are contained. Input and finished goods prices were stable, apart from some increases in steel, construction materials, and agricultural products.\nManufacturing\nReports from District factories indicated a modest increase in new orders and production during the past six weeks; contacts attributed some of the improvement to seasonal factors. Finished goods inventories were in line with orders. Compared to a year ago, demand was generally consistent or somewhat higher. Strongest demand came from the aerospace, motor vehicle, oil and gas, and residential construction markets. While there is growing confidence in western European markets, the outlook for the Chinese economy remains a question. Our contacts are fairly optimistic about the U.S. outlook and they expect demand will rise relative to current levels in the coming months. Steel shipments grew slightly since our last report, and the pace of growth is expected to increase as the year progresses. Through April, year-to-date auto production at District assembly plants is almost 10 percent higher as compared to 2013.\nCapital expenditures are in line with budgeted amounts for the fiscal year. A majority of our respondents reported that they intend to increase their capital budgets as the year progresses for software-based productivity enhancements or for capacity expansion--additional machinery and larger plant footprints. Raw material prices were largely unchanged, though a few manufacturers reported that steel prices have risen slightly. Little pass-through was noted. Hiring of production workers has picked up recently, but the net gain in payrolls is still small. Wage increases this year are in the range of 2 to 3 percent.\nReal Estate and Construction\nSales of new single-family homes improved during the past six weeks, and the number of units sold was higher than during the February/March time frame. Most of our contacts noted that year-over-year sales were slightly higher. Existing single-family home purchases also started to improve in April. Reports indicated that the inventory of existing homes decreased, while the number of days on the market rose slightly. New-home contracts were mainly in the move-up price-point categories. First-time buyers continued to experience difficulty obtaining credit, especially for condominiums. Selling prices of new homes are trending slowly higher (5 to 10 percent from a year ago) due to rising labor, development, and material costs. Buyers are reportedly more accepting of the higher prices. Homebuilders believe that the housing market will grow at a slow but sustained pace in 2014.\nMany nonresidential builders characterized current pipeline activity as strong, and they are fairly optimistic about converting proposed projects into contracts, though they expect that margins will remain tight. Builders experiencing declining revenue this year attributed it to 2013 being an exceptional year, and they said they were not expecting the same level of activity. Backlogs are satisfactory. Demand was strongest for multifamily housing, retail, distribution centers, and healthcare facilities--albeit small footprints. Confidence in the economy is still somewhat tepid, which is holding back some high-value projects.\nCommercial developers said that banks are becoming more interested in financing projects, although the amount of paperwork required seems excessively high. One developer reported that banks are now quoting 10-year loans, and insurance companies have resumed CRE lending. In contrast, banks are reluctant to finance spec home construction and lot development. Comments on construction-material pricing varied widely, with cited increases ranging from 2 to 10 percent. General contractors are in the process of hiring--skilled trades, professionals, and back office. Skilled trade workers are very difficult to find and are driving up wages. Several builders reported that they are increasing benefits to stay competitive and to retain their labor force.\nConsumer Spending\nAfter a disappointing first quarter, most retailers reported that sales began to increase in April, in response to warmer weather and the Easter holidays. Same-store revenues were higher than a year ago. Core merchandise, such as consumables and basic apparel, were in highest demand. Furniture dealers cited weak consumer confidence for lackluster sales of indoor and outdoor furniture. Retailers are hopeful that third-quarter revenues will be higher, mainly in the low single-digits, than those seen a year earlier. We heard reports about rising food prices, especially for meat and dairy products, which are being attributed to poor weather conditions. Retailers remain reluctant to pass through these increases to consumers. Otherwise, vendor and shelf prices held steady. Hiring is being restricted to staffing new stores and a few technology-related jobs.\nThe number of new motor vehicles sold in April rose sharply on a month-over-month basis. Year-to-date sales were moderately higher compared to 2013. Smaller, fuel-efficient cars are gaining in popularity, as consumers shift away from SUVs and crossover vehicles. A weak first quarter kept new-vehicle inventories elevated and contributed to a boost in dealer incentives. Year-to-date sales of used cars were stronger through April than for the same time period in 2013. The outlook by dealers for the summer season is positive, with year-over-year increases in unit volume of 2 to 5 percent expected. Leasing remains popular as an alternative to buying a vehicle. Dealers are on the lookout for service technicians, but are having difficulty finding qualified workers.\nBanking\nThe rise in demand for business credit that began in April is strengthening. Requests were strongest for equipment financing, commercial real estate development, and mergers and acquisitions. There was also a pickup in credit line utilization. Consumer credit demand stayed on a slow upward trend. Applications for auto loans were strong, and households made greater use of home equity lines of credit and credit cards. A majority of bankers we spoke with said that residential mortgage activity slowed since the fourth quarter of 2013. Recent mortgage applications were mainly for purchase transactions. Many of our contacts, especially community bankers, noted that competitive loan pricing, an inability to raise fee income, and reduced income from mortgage refinancing is impairing their ability to offset the cost of regulatory compliance and to invest in on-line and mobile banking technology. No changes were made to loan-application standards during the past six weeks. Delinquency rates trended slightly lower. Core deposits (consumer and business) showed steady growth at most banks. On balance, banking payrolls were steady: hiring was mainly for replacement or to work in regulatory compliance. We heard a couple of reports about staff cuts in mortgage business lines.\nEnergy\nYear-to-date coal production across the District is fairly consistent with year-ago levels. We heard a report about the reopening of a shuttered mine in West Virginia due to strong demand from European and Chinese customers. Although export markets are strategically important to the coal industry, a strengthening U.S. dollar is hindering domestic production expansion. Going forward, output is projected to be stable to somewhat higher. Spot prices for steam and metallurgical coal were little changed. Unconventional oil and gas drilling increased slightly during the past six weeks. Reports indicated that wet gas production is restricted due to limited pipeline and processing capacity. Wellhead prices for natural gas have declined, while oil prices were stable. Equipment, material, and labor costs remain stable.\nFreight Transportation\nFreight executives are generally satisfied with current business conditions, following a very difficult winter. One contact observed that overall trends are starting to normalize. Freight carriers are seeing strong or strengthening demand for shipments of motor vehicles, chemical products, and construction-related materials. Their outlook is positive. Capacity is expected to remain tight, due in part to the effects of the hours-of-service rules that were implemented last July. Diesel fuel prices have leveled off but remain elevated. Year-to-date capital spending was in line with budgeted amounts. Monies are allocated more for equipment replacement, especially by small-to-medium fleets, than for capacity expansion. Hiring is mainly for replacement.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nApril 16, 2014\nGrowth in economic activity in the Seventh District picked up in March, and contacts generally maintained their optimistic outlook for 2014. Growth in consumer and business spending increased. Growth in manufacturing production was moderate, while growth in construction and real estate activity was modest. Credit conditions were little changed on balance. Cost pressures remained mild. Corn, soybean, milk, hog, and cattle prices moved higher.\nConsumer Spending\nGrowth in consumer spending increased slightly in March, but remained modest. Sales of winter-related items, such as clothing and snow removal equipment, were stronger than normal, while other sales categories picked up as the weather improved. Retail contacts noted that the colder weather had likely created some pent-up demand as customers delayed purchases of spring- and summer-related items. Light vehicle sales increased since the last reporting period, spurred by new products, increased incentives, and higher showroom traffic levels as the weather improved. Dealers also reported higher activity levels in their service and parts departments because of winter-related maintenance. However, some retailers expected that higher utility bills during the winter months would negatively affect household spending.\nBusiness Spending\nGrowth in business spending increased to a moderate pace in March. Inventories remained at comfortable levels for most manufacturers. Retailers expanded their inventories despite some weather-related delivery delays. Growth in capital spending picked up. Several contacts reported new spending on equipment and information technology, along with investment in structures. The pace of hiring increased, and while hiring plans decreased slightly, they remained positive. A staffing firm noted a slight increase in demand for their industrial services, but a continuing decrease in demand for their professional services. A number of manufacturers and some retailers reported capacity expansions along with attendant hiring or plans to hire. Demand remained strong for skilled workers, with positions often difficult to fill in engineering, information technology, accounting, and other technical occupations. Contacts cited an increasing willingness on the part of firms to train workers, where shortages exist, through in-house training, tuition reimbursement, or partnerships with local high schools and community colleges.\nConstruction and Real Estate\nGrowth in construction and real estate activity was modest in March. Although conditions have improved since the last reporting period, contacts reported that adverse weather continued to restrain growth. A decline in single-family construction was offset by growing demand for new apartment projects as residential rents continued to increase. Home sales and new listings declined, though brokers attributed this primarily to cold weather and were optimistic that activity would improve during the coming months. Several contacts cited high unemployment and restrictive lending standards as barriers to more robust growth. Demand for nonresidential construction grew at a moderate pace, with several contacts noting that industrial building activity had picked up substantially. In addition, contacts expected an increase in public construction resulting from the impact of harsh winter weather on infrastructure. Commercial real estate activity continued to expand, as vacancies ticked down and rents rose. Growth was concentrated in central business districts with high-end office space.\nManufacturing\nGrowth in manufacturing production increased from a mild to moderate pace in March, with contacts from a number of industries reporting increased activity. The auto, aerospace, and energy industries remained a source of strength for the District. Auto and steel production recovered from the weather-related slowdown, with overtime hours increasing to make up for earlier lost production. In addition, a steel industry contact noted that capacity utilization had returned to its expected level. Specialty metals manufacturers shared in the overall improvement of conditions, with many contacts reporting an increase in new orders and order backlogs. Manufacturers of consumer goods and construction materials also indicated increased demand. In contrast, demand for heavy machinery grew at a slow and steady pace, buoyed by the construction, transportation, and energy sectors, but weighed down by weakness in mining. A number of exporters reported that growth in demand from China was slower than expected, although growth picked up in Europe and Japan.\nBanking and Finance\nCredit conditions were again little changed on balance over the reporting period. Corporate financing costs for a number of District firms decreased slightly, as bond spreads narrowed. Banking contacts reported moderate growth in business loan demand, mostly driven by purchases of equipment. The leveraged loan market remained active with steady deal flow. Contacts noted continued competitive pressure on structure and pricing for commercial and industrial loans. Growth in consumer loan demand was modest, with a slight uptick in demand for home equity lines of credit and continued strong growth in auto lending.\nPrices and Costs\nCost pressures remained mild. While energy and transportation costs continue to be elevated, prices were lower than during the previous reporting period. Prices for nickel, aluminum, steel, and cement rose, and fell for copper and scrap steel. Retailers reported little change in prices, with the exception of some rising prices for foodstuffs. Wage pressures were slightly lower overall but mixed across industries. Overall, non-wage pressures moderated even while contacts continued to report concern about higher healthcare premiums.\nAgriculture\nThe slow arrival of spring-like weather delayed fieldwork. However, concerns about a delayed start to planting were muted, especially in Illinois and Indiana where 2013 crops performed well after being planted late. The mood among farmers improved as crop prices increased enough from winter lows that breakeven outcomes now seem possible. Hence, there has been more forward contracting of crops than a year ago to manage risk. Higher soybean prices still support a shift in planting intentions toward soybeans and away from corn, but not as much as earlier this year. Fertilizer costs decreased from a year ago, and seed costs were flat. The livestock sector moved further into the black, as milk, hog, and cattle prices increased. Given lower numbers of hogs and cattle available to market, animals were fed longer in order to gain additional weight. Although hog operations were still battling a virus that killed many piglets, there were signs that the worst had past.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nApril 16, 2014\nThe First District economy continues to expand moderately, according to business contacts, although growth rates vary across sectors and firms. Most--but not all--retailers and manufacturers are seeing sales and revenue increases from a year ago; several continue to cite adverse effects of the recent winter weather. Advertising and consulting firms report strong growth, with the exception of a government contractor. Real estate markets continue to strengthen, although lack of inventory is constraining home sales in Massachusetts and commercial contacts cite concerns about \"highly optimistic\" assumptions underlying purchase prices and lending decisions. Very few firms outside of advertising and consulting are adding to head counts. Price changes remain minimal. The outlook is somewhat mixed, but mostly positive.\nRetail\nFirst District retailers contacted for this round were just completing Q1 or Q4 reports, depending on their fiscal year calendar. Year-over-year comparable-store sales ranged from being down 4 percent to being up slightly more than 10 percent. All of the respondents say that their retail sales were affected, to some degree, by the severe winter weather. One retailer benefited from much higher demand for winter-related items, while the others saw sales suffer because snowstorms kept consumers from shopping. Apparel, furniture, and appliances sold well, as did paint for interior home improvement projects. Inventories are mixed, in part because bad weather cut some stores' sales. For retailers with both brick-and-mortar stores and online sales channels, Internet sales continue to account for an increasing share of total sales.\nContacts continue to report that prices are steady overall, but some expect to see very modest price increases later in the year; one, for example, cites higher prices for a range of apparel inputs as well as higher foreign labor costs. The consensus is that consumer sentiment is continuing to improve.\nManufacturing and Related Services\nOf the nine manufacturing firms contacted in this round, seven report higher sales than the same period a year earlier. The two citing declines were a frozen fish company and a manufacturer of pressure sensitive films. Two others, a manufacturer of industrial motors and brakes and a manufacturer of scientific equipment, report very slight sales increases compared with a year ago. Contacts at four firms say the weather adversely affected their sales in the first quarter but they find it difficult to estimate how much of the reduction is likely to be recovered in coming months. A manufacturer of parts for the auto industry said that slow sales in the auto industry have not yet affected build schedules, so inventories of finished cars are piling up. If auto sales don't \"bounce back\" in the spring, the contact believes that summer shutdowns in the industry will be longer than usual. A firm that makes water treatment devices reports that demand in residential real estate is strong. Globally, respondents indicate that sales in Europe are growing more rapidly, but from a very low base, while sales in Asia are strong.\nContacts report that commodity and other input prices are generally stable. Two firms say they raised prices on January 1 and customers largely accepted the increases. Inventory levels are largely unchanged. Five contacts report no change in employment and two report small increases. A biotechnology company plans to hire 1,000 workers this year and completed about 20 percent of that in the first quarter. A manufacturer of frozen fish closed a plant in Canada and moved production to New England, with no change in overall firm employment. Two-thirds of contacts report higher capital expenditures planned for 2014 versus 2013. For two contacts, a manufacturer of parts for jet engines and a maker of industrial motors and brakes, the increases are large relative to their typical levels of investment and represent substantial increases capacity. None of our manufacturing contacts has a negative outlook, but four said that they expect sales to be flat or to grow very slowly in 2014.\nSelected Business Services\nConsulting and advertising contacts report a strong first quarter, consistent with an accelerating economy. Healthcare consulting contacts indicate that very strong demand is ongoing, as providers continue to adjust to the changes imposed by the Affordable Care Act (ACA). Economic consulting remains a strong growth industry, although the conclusion of litigation related to mortgage-back securities and the financial sector may restrain growth slightly in the near future. Strategy consultants report strong demand growth, driven by high levels of private equity activity and increased demand for corporate work, as clients have become more comfortable with the economic outlook and begin to release pent-up demand for consulting work. Advertising and marketing contacts also report strong growth, ranging from 5 percent to 20 percent year-over-year, and cite factors including growing confidence in the economic outlook and an increased willingness among large corporations to spend in order to position themselves within their markets. By contrast, a government contractor cites continued contraction, but has observed increasing interest in new projects since the passage of the recent budget deal.\nContacts report small increases in costs and prices, ranging from zero to 4 percent. Some consultants cite minimal pressure to keep prices low, while others say that competition has forced them to keep prices flat. Employment growth is in the zero to 5 percent range, although most firms at zero either increased their workforce in the recent past or expect to do so soon if their current growth continues. All contacts are optimistic about the coming year and expect economic growth either to continue or to accelerate. Contacts cite various ongoing risks, but generally were only minimally concerned.\nCommercial Real Estate\nCommercial real estate contacts in Boston report that brisk demand for and tight supply of office space in portions of the city, including the Seaport District and Back Bay, have pushed asking rents up in those locations in recent months. While these localized rent increases are contributing to increases in average office asking rents in greater Boston, contacts note that rents remain flat in portions of the Financial District and in a number of suburban locations, and that rising maintenance costs mean that net rents are growing more slowly than asking rents. Speculative office construction remains limited, although respondents say that the pipeline of planned office construction for greater Boston is growing. Contacts continue to express concerns that prices being paid by investors for commercial properties in Boston, along with lending terms for commercial mortgages, embody highly optimistic assumptions concerning future rent growth on the properties. Demand for Boston properties has been particularly strong among foreign investors and domestic pension funds. A few contacts, located in Boston as well as elsewhere in the region, also expressed concern that current construction levels of high-end apartments are excessive in relation to potential demand for such units. At the same time, these contacts indicate that recently delivered luxury apartment units appear to be fetching rents in line with developers' projections.\nIn Hartford, sluggish leasing activity is attributed to the long, harsh winter, although fundamentals and business sentiment are described as stable. Also in Hartford, a new apartment construction project recently broke ground downtown, and investment sales interest remains healthy. Leasing deals proceeded slowly in greater Providence in the first quarter, leading to decreased confidence by one contact there, who nonetheless cites some positive developments in the Rhode Island economy that should contribute to job creation in coming months. Rents in Providence are described as flat on average, with some modest upward pressure in the class A office sector and diminishing concessions in suburban locations. Leasing activity reportedly increased in Portland in recent weeks, up from the already healthy pace seen at the beginning of the year. In addition to strong leasing demand, which pertained especially to the class A office sector and the retail sector, Portland's investment sales and development and construction inquiries grew in number. Growing demand for new construction reflects current, very low vacancy rates for downtown retail and class A office space in Portland. A regional lender faces ongoing competitive pressure to lower credit spreads for commercial mortgages, and continues to see a healthy pipeline of loan demand for most property types, with the exception of class B office space.\nContacts in both Hartford and Providence expect more slow improvement in fundamentals. The outlook for Portland's commercial real estate market is bullish in light of its recent growth and planned business expansions, while contacts expect that mixed performance will persist across different locations in the Boston metropolitan area.\nResidential Real Estate\nRealtors in the First District express caution but optimism about the mixed sales results that continued in the region in February. Year-over-year sales of single family homes decreased in Rhode Island, Massachusetts, and Connecticut, and increased in Maine and Vermont. (Contacts in New Hampshire were unavailable for comment in this round.) In the condominium market, sales increased relative to last year in Connecticut, Massachusetts, and Vermont, while decreasing in Rhode Island; condo sales information is not reported in Maine. The consensus across the First District is that the decline in sales will be short lived; respondents say it was partially driven by the tough winter, as well as uncertainty about new federal flood insurance rules. Signs of spring weather and new legislation limiting flood insurance premium increases are lessening these concerns. In Massachusetts, however, inventory shortages are said to be the key reason for the decline in sales. One Massachusetts contact stated \"there is just not enough supply to meet demand.\" As a result, Massachusetts contacts say multiple bids are common and the median sales price for single family homes has increased compared to the year-earlier median in 17 consecutive months. Median sales prices also increased year-over-year in Connecticut and Maine, but declined in Vermont and Rhode Island. Residential real estate contacts say they expect sales to pick up seasonally this spring, but foresee no significant market shifts.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nApril 16, 2014\nThe Fifth District economy expanded moderately since our last report. Manufacturing reports were mixed, ranging from lackluster to a pickup in production. Retail revenues also varied in recent weeks, with moderate growth on balance. Revenues remained generally flat in the non-retail service sector. Tourism increased, although persistent cold weather continued to lower forward bookings. Residential real estate markets improved; inventory was low in many areas although there were pockets of new construction. Construction of multifamily housing remained solid and construction of retail space increased. However, office and industrial building softened. Residential mortgage lending was sluggish and refinancing declined further. Commercial borrowing strengthened. Leasing of retail and industrial space picked up, while demand for office space weakened. In agriculture, prolonged winter weather delayed planting of row crops; prices of beef and pork rose. Natural gas production remained robust. Reports on labor markets were mixed, and average wages rose modestly. According to our latest survey, service sector prices edged up more quickly while retail prices advanced at a slower pace. In manufacturing, prices of raw materials and finished goods rose at a slower pace.\nManufacturing\nManufacturing reports were mixed in recent weeks. Winter weather continued to affect some regions and manufacturers reported that they were trying to make up lost production. A food manufacturer stated that the weather delayed shipments and also reduced some Mardi Gras orders, but production was unchanged overall. A producer of industrial equipment components reported a slowdown because capital goods orders had fallen. In contrast, a fixtures manufacturer remarked that his firm has been \"busting at the seams\" and he planned to expand. Another producer said he was keeping inventory low. Several manufacturers reported an increase in supplier delivery times. Manufacturers expected a pickup in orders during the weeks ahead. Prices of raw materials and finished goods rose at a slower pace, according to our survey.\nPorts\nPort officials reported that container volume continued to grow briskly, despite winter storm disruptions. Import growth exceeded export growth, with particular strength in housing-related durable goods, auto parts, and some seasonal products. Exports of grain and soybeans were especially robust and significant increases in exports of construction and building equipment destined for Europe moved through the Port of Virginia. Coal shipments declined. A South Carolina port official reported that a recently announced local automotive expansion will increase exports. Auto exports from the Port of Baltimore softened somewhat.\nRetail\nReports on retail revenues varied in recent weeks, but generally pointed to moderate gains. A large auto dealer outside the Washington, D.C. beltway reported that business had increased dramatically, necessitating additional inventory purchases. He attributed the strength to improved consumer attitudes about the economy. A discount retailer in the Tidewater area of Virginia reported that average transaction amounts had increased, but the drawn out winter weather had reduced foot traffic, resulting in overall sales contraction. The manager of a discount store in Baltimore stated that sales revenues were unchanged despite recent price increases. However, an executive at a chain of hardware stores in central Virginia saw somewhat faster sales growth. Retail prices rose at a slower pace since our last report.\nServices\nRevenues remained generally flat in the service sector. A financial services executive remarked that clients were feeling more confident, but there has been no real change in their investment activity. A North Carolina hospital executive reported that demand for services was only slightly higher in recent weeks, and a CPA reported business was at typical seasonal levels. According to an executive at a national freight trucking firm, shipments have increased markedly in recent weeks, partly due to \"catching up.\" Harsh winter weather kept many trucks from delivering goods and pre-loaded trucks could not leave warehouses because no one was present to release the freight. Service sector prices edged up more quickly.\nTravel and tourism reports were generally positive. A Virginia hotel representative reported that government groups have started booking conferences again after nearly a year of decline. In Washington, D.C., tourist traffic for the Cherry Blossom Festival started in March and was described as robust, even though cold weather pushed the peak bloom time to the second week of April. An executive at a Virginia resort reported that his facility had the longest ski season in their history this winter with higher than typical occupancy. However, spring break bookings have shortened as schools make up winter class cancellations, and summer vacations are being booked for a week later than normal this year. A hotel manager in western North Carolina said bookings were \"decent and growing.\" Most hoteliers reported that although they expect strong bookings this summer, they have not increased rates.\nFinance\nRecent trends continued as consumer borrowing remained depressed while commercial lending strengthened. Residential mortgage and refinance demand was sluggish, according to several bankers. A lender commented that the slower pace has led to bankers becoming more aggressive on rates to get business. New auto lending also weakened slightly in recent weeks. In contrast, demand for commercial real estate and new business lending remained robust. Credit quality of applicants has improved recently, while credit standards were unchanged.\nReal Estate\nResidential real estate improved, with some reports of strength. District home sales rose mildly and sale prices edged up. In some instances weather continued to slow buyer traffic, although Realtors reported a pickup as spring started. A Northern Virginia broker reported that activity remained strong and homes in his region were \"getting snatched up\" at or above asking price with multiple offers. Inventory was generally limited, although some contacts reported that new construction had boosted inventories a little. North Carolina Realtors reported conservative growth in single family residential building and a South Carolina contact stated that builders are starting to construct more pre-sold custom homes. A Maryland contractor stated that a townhome community located near the Washington, D.C. beltway was quickly selling units at a high price, while projects in other locations were slower to move.\nCommercial construction contacts reported strong retail demand and softness in office and industrial building. A contact in South Carolina said free-standing retail was \"hot,\" and an increase in retail construction was also noted in Virginia Beach. Construction of multifamily housing remained strong. Commercial leasing activity intensified for retail and industrial space, while demand for office space softened. Vacancy rates were unchanged on net, however. Rental rates varied across submarket, with some increases in the retail segment. A South Carolina Realtor reported that the industrial market was \"incredibly active\" with an increase in manufacturing inquiries and that the state's commercial retail market had ramped up. Broker reports on supply of Class A office space varied.\nAgriculture and Natural Resources\nPersistent cold temperatures and wet field conditions delayed planting of row crops and in some locations, limited days out in the fields. There were reports of slower small grain growth and some freeze damage to fruit trees. An agribusiness located in South Carolina reported that winter weather pushed back some of their harvesting timelines, although demand levels remained solid. Beef prices remained high and pork prices increased due to a virus currently being found in pigs. A contact reported that the spreading virus decreased the number of pigs available to farmers and reduced the number maturing to hogs.\nThe natural gas sector remained robust. A contact in West Virginia reported an increase in manufacturers seeking natural gas. Coal production declined at a slower rate in recent weeks. The severe winter increased coal demand and diminished stock piles at power generating plants, bringing levels below the five year average. Coal production is expected to be steady as inventories are replenished.\nLabor Markets\nReports on labor markets were mixed. Skilled manufacturing workers and specialized information technology workers were in high demand. However, a contact at a financial services firm commented that his office was \"skittish\" about hiring. Firms reported that finding manufacturing employees with the requisite skills remained challenging. An employment contact said entry level laborers were \"easily sourced.\" Temporary employment was generally unchanged, although some manufacturing contacts increased hiring to make up for weather-related lost production. According to our most recent surveys, manufacturing employment remained flat, the average workweek increased, and manufacturing wages grew at a slower rate. In the service sector, hiring declined slightly and average wages rose modestly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nApril 16, 2014\nOn balance, economic activity in the Fourth District declined slightly in the past six weeks. The severe winter weather appears to have negatively impacted business activity to a heightened degree; some producers and service providers are still experiencing lingering effects. Demand for manufactured products grew at a slow rate. Building contractors reported that their pipelines remained active, while field work slowed. Retailers and auto dealers experienced disappointing sales during February and into March. In the energy sector, shale gas production stayed at a high level, while coal output trended lower. Freight volume declined. Demand for business and consumer credit moved higher.\nHiring was sluggish across industry sectors. Reports by staffing-firm representatives on the number of job openings and placements were mixed, with job vacancies found primarily in manufacturing and healthcare. Wage pressures are contained. Input and finished goods prices saw little change, apart from increases in metals, building materials, and diesel fuel.\nManufacturing\nReports from District factories indicated that production levels held steady or they started to pick up as supply chain disruptions seen earlier in the year dissipated. Compared to a year ago, demand was generally consistent or somewhat higher. Many of our contacts expect production will rise relative to current levels in the upcoming months, with the strongest demand coming from the oil and gas sector and the motor vehicle industry. However, some concern was expressed about a weakening in Chinese and western European markets and its effect on new orders. Steel shipments grew slightly during the past six weeks. Contacts expressed disappointment with the overall level of market activity during the first quarter. Some believe that the severe winter weather may be partially responsible for the slow start to the year. Steel shipments are expected to grow, but at a slow pace: estimates of year-over-year growth rates ranged from 2 to 5 percent. District auto production increased modestly during February on both a month-over-month and year-over-over basis. One motor vehicle OEM reported that recent weather-related supply disruptions might negatively impact his production schedule until early summer.\nFinished goods inventories have increased slightly, primarily due to an expected rise in demand or weather-related cutbacks in new orders. Several contacts noted that their capacity utilization rates rose during the past six weeks but are still within a normal range. Capital expenditures were in line with budgeted amounts for the fiscal year. Current budgets are higher than those of a year ago, with outlays being used for equipment upgrades, product development, and maintenance. Raw material price growth was mainly flat, although several reports indicated rising prices for metals. However, passing through price increases to customers was difficult. The number of manufacturers who are hiring skilled production workers and engineers has declined since our last report. Wage pressures are contained.\nReal Estate and Construction\nThe number of new and existing single-family homes sold during February was little changed compared to the previous month. On a year-over-year basis, the number of units sold showed a modest decline. In contrast, single-family housing starts across the District fell sharply between January and February and compared to a year ago. Single and multifamily permits also declined during February. Although the drop-off in activity was attributed primarily to the cold weather, there is some concern about the housing market stabilizing after a year of fairly robust growth. New-home contracts were in the move-up price-point categories. Builders raised prices slightly on new homes after the beginning of the year to offset material and labor cost increases. Most of our contacts anticipate that the housing market will grow at a slow but steady pace in 2014.\nActivity in nonresidential construction held steady during the past six weeks, with demand coming from a broad range of industry sectors. Reports indicated that the severe winter weather slowed fieldwork. While inquiries continued at a steady pace and backlogs were characterized as reasonably good, builders expressed frustration with financing issues or customers who keep pushing back contract signings. Some builders believe the latter is due to a lack of confidence in the underlying strength of the economy. One contact observed that unless clients have a compelling need, they will not move on new construction. Nonetheless, builders remain cautiously optimistic and expect modest to moderate growth this year.\nPrices for concrete, drywall, and hardwood are trending higher. General contractors are satisfied with current staffing levels and plan to hire only for replacement or if business activity expands. Subcontractors are still confronting a tight supply of skilled labor; their ability to perform in a robust market and rising wage rates are a concern among many general contractors. Reports of rising costs related to healthcare are widespread.\nConsumer Spending\nRetailers reported that the cold weather played a role in holding down consumer spending during February and into early March. A few of our contacts observed that as weather conditions began to improve later in March, so did their sales. In general, same-store revenues were down slightly from a year ago. Cold-weather gear and small personal items were in highest demand. One contact reported a softening in purchases of consumables. Retailers are optimistic about consumer spending in the second quarter due to pent-up demand, the Easter holidays coming in late April, and warmer weather. Most projections were for single-digit increases in revenues. Vendor and shelf prices held steady. Several retailers noted that they are running more promotions than normal, though inventories were described as being in good shape. Hiring will be restricted to staffing new stores, and even here, it will be limited.\nThe number of new motor vehicles sold in February fell sharply compared to January figures. The decline was attributed to the persistently cold weather. However, unit volume was unchanged from a year earlier as light-truck sales continued to trend higher and auto sales moved down. New-vehicle inventories remain slightly elevated, which was credited to the extreme weather. Used-vehicle purchases during February were ahead of those in January and a year ago. The outlook by dealers for the spring selling season is positive, with several noting a rise in incentives at this time of year to help boost sales. Leasing continues to grow in popularity as an alternative to purchasing a vehicle. Dealers are anticipating an uptick in payrolls, some of which is seasonal.\nBanking\nDemand for business credit began to pick up after a slow start earlier in the year. Requests were strongest for commercial real estate development, including multifamily housing, equipment financing, and mergers and acquisitions. Pricing of business loans remains competitive. Consumer credit demand stayed on a slow upward trend. Requests were primarily for auto loans and home equity products. We heard a few reports about declining credit card balances. Comments on residential mortgage activity were mixed; bankers seeing an increase said that most applications were for purchase transactions. Our contacts reported no changes to loan-application standards. Delinquency rates were stable or trended lower. Core deposits (consumer and business) grew slightly since our last report. Banking payrolls held steady, with little change expected in the upcoming months.\nEnergy\nFirst-quarter coal production across the District fell below year-ago levels. However, the rate of decline is shrinking, due in part to higher demand from domestic electric utilities. Going forward, little change in output is projected. Spot prices for steam coal rose slightly, while metallurgical-coal price growth was flat. Natural gas production was stable at a high level. However, the number of unconventional wells drilled has fallen off. We heard a couple of reports indicating that conventional drilling companies are experiencing historic lows in activity due to low natural gas prices. Apart from diesel fuel, equipment, material, and labor costs were stable. Hiring was for replacement only.\nFreight Transportation\nFreight executives reported that their bottom lines fell sharply through the first two months of 2014 due to the severe winter weather\u00e2\u20ac\u201dvolumes declined while costs rose. After adjusting for weather-related costs, carriers were still close to their projected growth targets. As weather conditions improved, volume began to pick up. However, one contact noted that some business that was lost to the weather is unlikely to be regained. Diesel fuel prices moved higher in January and February. Operators have been unable to pass through the entire increase via surcharges. Year-to-date capital expenditures were in line with budgeted amounts. Monies are allocated more for equipment replacement than for capacity expansion. We heard reports about some carriers experiencing difficulty meeting demand due to the impact brought about by the hours-of-service regulations. The end result could be higher rates, which would help enable carriers to purchase additional equipment. Hiring is mainly for replacement.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nApril 16, 2014\nAggregate business activity in the Third District grew at a moderate pace during this current Beige Book period. Many sectors rebounded to various degrees from the economic disruptions caused by severe winter weather in January and February. Auto sales rebounded robustly over the Beige Book period, returning sales to levels above one year ago. General retail sales contacts reported moderate growth that helped bring sales levels even with the prior year's levels. Demand for general services accelerated to a moderate pace of growth; staffing services reported slight gains. After declining in the previous Beige Book period, the construction and real estate sectors rebounded sufficiently to resume a slight pace of growth. Manufacturers also reported slight growth similar to what they had reported before the severe winter weather. An extended ski season helped winter tourist destinations to do well, while reports from the shore destinations were mixed during their off-season. Lending volumes grew slightly over this period, and credit quality continued to improve. Overall, contacts reported slight increases in wages, home prices, and general price levels, similar to the last Beige Book period.\nSince most sectors seem to be resuming their trends from before the recent winter disruptions, most contacts are as optimistic as before, if not more so. Overall, contacts anticipated moderate growth over the next six months and continued to express confidence in the underlying economy. In regard to hiring and capital expenditure plans, firms are beginning to increase capital expenditures to boost efficiency, but they continue to approach new hiring with caution.\nManufacturing\nThird District manufacturers reported that levels of activity rebounded with a slight overall increase during the current Beige Book period, following the previous decline that had been attributed to frequent, severe weather disruptions. New orders and shipments grew slightly this period after falling slightly last period. The share of all firms reporting increases in general activity rebounded from about one-fourth to one-third, while the share reporting decreases fell from about one-third to one-fourth. The makers of food products, lumber and wood products, chemicals, primary metals, and electronic equipment have reported gains, rebounding from the flat or lower activity they reported during the last Beige Book period. They join the makers of paper products, fabricated metals, and industrial machinery that have reported gains for both periods. A mixed report came from the makers of instruments during this period. Firms that reported stronger growth attributed much of the demand to growth in the auto- and housing-related sectors. Some increased demand is reported to stem from the desire of some big-box retailers to have access to a broader domestic supply chain.\nOptimism that business conditions will improve over the next six months remained high and continued to be widespread across sectors. About half of all firms continued to anticipate increases in activity; however, slightly more firms than before (now, about one-sixth) reported expectations of lower activity. About one-third of all firms reported that they anticipate higher levels of employment and capital expenditures in six months--up from one-fourth in February. Nearly half of all firms anticipate that overall capital expenditures for 2014 will be higher than they were in 2013. While most firms reported that their capital expenditures focus on technology to increase their plant productivity with few new hires, a few firms reported plans to increase both their plant and staff size.\nRetail\nThird District retailers reported a healthy rebound from the prior Beige Book period when sales slipped below plan and below the prior year. Retailers reported that sales grew at a moderate pace over the period and finished about even with last year. Stronger sales were observed despite ongoing poor weather that continued to limit sales potential and prompted continued heavy promotions to move inventory. Contacts also explained that year-over-year comparisons would be positive if one adjusted for the early Easter activity that was included in 2013 sales. Moreover, contacts described traffic returning to stores, reporting that the last Saturday of March was \"tremendous,\" despite rain and snow, and restaurants were packed. Retail development managers described strong optimism for new deals over the remainder of 2014 and into next year. Contacts mentioned rising rents for lease renewals, higher capital expenditure plans for new stores, and greater attendance and enthusiasm at deal-making conferences.\nAuto sales rebounded robustly during this Beige Book period compared with the prior period when winter weather took a significant toll on sales. Dealers reported that sales grew at a strong pace, especially during several good weekends in March; the last week of March was \"about as good as it gets.\" According to one large dealership, its sales force closed on 30 to 40 vehicles per salesperson in March. Auto dealers remain bullish for 2014. In addition to expecting to capture more sales lost to winter weather, dealers cite increased credit availability, demand for leasing, and the still-high average age of cars as factors for their optimism.\nFinance\nThird District financial firms have reported slight increases in total loan volume since the last Beige Book. Commercial and industrial loan volume grew modestly, and commercial real estate loans grew slightly. Other real estate loans, such as home equity lines and mortgages, changed little. Volumes of credit card lending and other consumer credit loans fell throughout the Beige Book period (until the last week); however, those declines are typical of the seasonal trend following the winter holiday credit run-up. Overall, banking contacts described increasing consumer confidence, stronger middle market lending, but continued reluctance by small businesses to extend themselves with hiring or new investments. There were some exceptions, however: Some small businesses in healthier markets began to hire, while other markets with continuing high foreclosure rates struggled to grow at all. In healthier markets, housing prices have firmed, appraisals have strengthened, and credit quality has improved. Overall, most bankers remained optimistic for growth through the remainder of the year; however, markets were divided between those who believed the economy had turned a corner and others who continued to see a slow bleed of population and business in their local market.\nReal Estate and Construction\nThird District homebuilders continued to report weather-related disruptions to new home sales; however, customer traffic and construction activity grew enough to resume more normal levels. One builder reported a \"decent\" number of contract signings in March but stated that contract closings for the entire first quarter were well below last year and even further below plan for this year for them as well as for other area builders. Most builders, large and small, expect to see a strong spring sales season in part due to growing pent-up demand from winter as well as the slowly improving economy. Some builders are using their own cash to build more speculative homes, anticipating that potential buyers will make faster decisions on a finished property than on a build-to-suit home. According to residential real estate brokers, sales activity grew somewhat from the prior Beige Book period; however, March contract numbers were still not good. Sales of existing homes were down (year over year) in most of the Third District's larger metropolitan areas in February. Pending sales and new listings were also reported as declining at a modest pace, except along the Jersey Shore where listings were up slightly but only when compared with the quiet market that prevailed after Hurricane Sandy. Throughout the Third District, brokers expect to recapture some portion of the \"lost\" sales over the next three months; however, some potential buyers from the first quarter of 2014 may defer a decision until 2015.\nNonresidential real estate contacts indicated slight increases--representing a resumption of nearly normal activity following disruptions from the more severe weather of the prior period. Ongoing commercial construction resumed a low level of activity but is expected to ramp up this summer, as several major projects are expected to break ground. Leasing activity also rebounded slightly with the greatest activity (and lowest vacancy rates) for offices in the Philadelphia central business district and the Lehigh Valley. Despite the ongoing slow job growth of firms that fill office space, most contacts remain optimistic for stronger growth as the year progresses.\nServices\nActivity among Third District service-sector firms accelerated to a moderate pace of growth since the last Beige Book. Ski resorts and other winter tourist destinations reported a stellar season and one of the longest ski seasons for many resorts. Some mountain resorts have been able to extend the ski season almost up to the opening of their golf season. Contacts along the shore destinations provided mixed reports regarding tourist traffic over the slow winter season. Responses were more uniformly positive regarding early bookings for the summer season. A few contacts from both mountain and shore resorts reported that many summer weekends are already sold out.\nOther service-sector firms reported mostly moderate growth rates, with almost half reporting increased sales and over 40 percent reporting increased orders. Staffing firms that lost billable hours during weather-related business closings reported modest growth--resuming their previous trend. One central Pennsylvania firm reported seeing a lot of hiring activity across all sectors of the economy and deemed that growth to be sustainable. Overall, the vast majority of service-sector contacts are optimistic that the growth trend will continue over the next six months.\nPrices and Wages\nOverall, Third District contacts reported no change to the steady, slight pace of price level increases, similar to other recent Beige Books periods. Manufacturing firms reported that prices paid and prices received tended to rise slightly, about the same as last period. Auto dealers reported little change in pricing, general retailers reported ongoing promotions, and most builders reported holding prices steady, if they were not offering specials. Many contacts continued to report tight, or narrowing, margins. Generally, real estate contacts continued to report rising prices for lower-priced homes, while higher-priced homes are aligned to local market conditions. Several contacts reported that appraisals are starting to support local sales offers. Very few contacts are seeing wage pressures, although labor market tightening was observed in some smaller central Pennsylvania markets.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nApril 16, 2014\nThe Eleventh District economy grew at a moderate pace over the last six weeks. Most manufacturers noted an increase in demand, although there were also reports of flat or slightly decreased activity. Retail and automobile sales increased and were above year-ago levels. Demand reports from nonfinancial services firms were mixed, but contacts were universally positive in their outlooks. Housing demand remained robust and home prices rose further. Loan demand grew at a slower pace than in the previous report. In the energy sector, oilfield services activity was robust and drilling increased, while drought conditions continued to negatively impact the agriculture sector. Price increases were noted in certain industries, but most contacts said prices were stable. Employment was flat to up slightly, with some reports of higher wages. Overall, industry outlooks were slightly more positive than six weeks ago.\nPrices\nFirms said prices were stable to up slightly over the reporting period. Manufacturers noted higher selling prices for steel, scrap metal, brick and cement. A few contacts reported rising food prices, particularly for dairy, meat and fresh fruit. Transportation services firms said an increase in fuel costs over the last six weeks led to higher shipping rates, and airlines noted slightly higher ticket prices. Retail prices were stable overall and automobile selling prices were unchanged, although automobile contacts said there were some additional manufacturer incentives and rebates available for consumers.\nCrude oil prices rose in early March to a high not seen since last September, but ended the month at a level similar to the beginning of the reporting period, around $100 per barrel. Natural gas prices trended downward over the last six weeks, shedding much of the winter weather-related gains from earlier in the year.\nLabor Market\nEmployment held steady or increased slightly at most responding firms. Transportation, food and construction-related manufacturers reported continued hiring. Retail employment was flat over the reporting period but contacts noted stronger year-over-year headcount increases in Texas stores than elsewhere in the United States. Energy contacts said the labor market for drilling and oilfield services remained very tight, and one firm noted that they would be doing more work if there was sufficient labor. A food manufacturer found skilled labor to be in short supply, and housing sector contacts continued to report shortages of construction workers.\nThere were several reports of upward wage pressures. Construction-related manufacturers said they had to pay truck drivers more, and an oilfield services firm noted definite wage increases. Upward wage pressure continued to be reported in petroleum refining, both in construction-type jobs and factory personnel. Two other manufacturers said they intend to give small raises in the near future.\nManufacturing\nReports from manufacturers were mostly positive, with more reports of demand increases than in the last report, although some firms noted flat or weaker demand. Construction-related manufacturers said demand had generally increased over the last six weeks, although a few contacts said winter weather, especially on the East Coast, was still having a lingering effect on business, although less so than during the prior reporting period. A lumber contact noted that demand was almost as strong as it was in 2006. Fabricated metals manufacturers reported a broad-based increase in demand, with particular strength in highway construction and energy-related projects. Outlooks for the second quarter were mostly positive.\nRespondents in high tech manufacturing reported that overall demand continued to grow at a moderate pace, with a few respondents noticing a slight but broad-based pickup in orders growth. Demand for logic devices was strong while demand for memory devices continued to be weak. Firms' outlooks were for continued moderate growth, with some increased optimism that growth would pick up slightly.\nTransportation equipment manufacturers said demand held steady at high levels, and they expect business this year to exceed that of 2013. Food manufacturers reported a decline in demand that was largely weather related, but said demand was still above year-ago levels. Petroleum refinery utilization rates fell slightly over the reporting period, largely because of the start of the spring maintenance season and to a lesser extent due to the temporary closure of the Houston Ship Channel because of an oil spill. Margins for refineries and petrochemical manufacturers remained healthy.\nRetail Sales\nRetail sales were stronger this reporting period, and demand was up from a year ago. Demand in Texas continued to outperform the nation, according to two national retailers.\nAutomobile sales strengthened slightly since the previous report, as the weather improved and the spring selling season began. Demand was up slightly year over year. Inventories were mostly at desired levels to a little high; contacts attributed higher inventories to the loss of selling days earlier in the year because of the weather. Retail and automobile contacts' outlooks for the upcoming quarter and the rest of the year were positive.\nNonfinancial Services\nNonfinancial services firms reported varying changes in demand from six weeks ago but were all optimistic in their outlooks for the months ahead. Staffing firms said demand was steady at high levels, with multiple contacts noting business was up more than 10 percent from last year. One firm cautioned that demand was shifting toward temporary placements rather than direct hires. Growth in the accounting sector slowed slightly over the reporting period due to seasonal factors, as the corporate tax return deadline passed in mid-March, but activity remained robust and above year-ago levels. Demand for legal services picked up, with particular strength in real estate business. Litigation ticked up in Austin but slowed elsewhere in Texas.\nTransportation services firms noted mixed demand. Railroad, small parcel and air cargo volumes increased slightly while container and intermodal cargo volumes decreased. A small parcel firm noted strength in retail trade, and a railroad firm noted increased volumes of crushed stone (largely used for road construction) but weakness in motor vehicle and drilling sand volumes.\nAirline demand was slightly soft, partly due to numerous storms in the past six weeks causing cancelled business trips. Demand was stronger than a year ago and passenger revenue per seat mile is expected to be up in April and May across the industry.\nConstruction and Real Estate\nThe district housing sector remained strong over the reporting period. Single-family home sales volumes remained healthy, with some contacts reporting a seasonal pickup in demand over the past six weeks. Home prices continued to trend upward and inventories remained low. A contact in Dallas noted that low inventory levels were bidding up prices above asking prices in high-demand areas. Contacts expect demand for single-family homes to stay strong this year. Apartment demand remained solid. Construction activity continued at a brisk pace, especially in Austin. Rental rate growth accelerated in Dallas and Houston from already solid levels and was holding strong in Austin, according to contacts. The outlook for the multi-family market remained positive.\nOffice and industrial leasing remained robust, with one contact noting particularly strong demand for office space in Dallas. Rents continued to trend upward and occupancy levels remained high for office space. Contacts in Houston reported high levels of office development. Overall, the outlook remained generally positive and respondents expect demand to stay strong this year.\nFinancial Services\nGrowth in loan demand softened slightly in the last six weeks. Demand for commercial and residential real estate loans was weaker than expected, although it improved somewhat. Consumer loans continued to grow moderately, and lending to mid-sized firms continued to tick upward. Loan quality remained high. Deposit volumes were healthy and grew moderately. Contacts noted continuing frustration with regulatory burden, but outlooks remained optimistic.\nEnergy\nDemand for oilfield services was very healthy in the Eleventh District over the last six weeks, particularly in West Texas. Much of the increase in U.S. drilling over the reporting period came from Texas. March demand exceeded expectations and led to improved second-quarter outlooks.\nAgriculture\nDistrict drought conditions continued to worsen in March, particularly in the Texas panhandle which is where much of the state's cotton is grown. Winter wheat crop conditions deteriorated somewhat. Agricultural commodity prices rose over the reporting period, with across-the-board increases in crop prices and particularly strong gains in livestock prices. Beef prices rose to record highs in March in light of strong exports and stable domestic demand coupled with tight cattle supplies. Dairy demand boomed, especially exports, and prices for dairy products moved to record highs. According to respondents, the rise in prices has allowed all segments of the livestock industry to be profitable, an occurrence not all too common.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nApril 16, 2014\nOn 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.\nRetailers cited a slight pickup in activity after experiencing sluggish sales at the beginning of the year. Hospitality contacts in areas negatively impacted by the adverse winter weather saw improvements in activity. Home sales were mixed but prices continued to appreciate from a year ago, according to residential homebuilders and brokers. Commercial real estate activity improved with construction growing at a modest pace from last year. Manufacturers reported continued improvements in new orders and production. Bankers noted an increase in loan demand. Hiring remained restrained for all sectors except construction. Prices increased slightly but most firms continued to report having little pricing power.\nConsumer Spending and Tourism\nDistrict merchants reported an uptick in activity from mid-February through March following sluggish sales in January, which were widely attributed to the severe winter weather. Valentine's Day provided a boost to activity with some contacts reporting double-digit, year-over-year, sales growth. Retailers continued to express concerns regarding the potential impact from increased healthcare premiums on consumer discretionary income. Light motor vehicle sales grew modestly over the time period.\nOverall, District hospitality contacts reported positive activity after experiencing a decline in January as a result of the adverse weather conditions. However, negative impacts on the number of travelers to the District due to international political issues, especially on Latin America visitors, were a concern among many tourism contacts. The outlook for the next six months remains optimistic with most expecting an increase in business and leisure travel compared with a year ago.\nReal Estate and Construction\nDistrict brokers' reports were slightly less positive than in previous reports. Brokers reported home sales were mixed. In areas where sales growth had slowed, brokers largely attributed the softness to higher home prices, limited inventory, and higher mortgage rates. Inventory levels continued to fall on a year-over-year basis and the majority of contacts reported that home prices remained ahead of the year earlier level. The sales outlook among brokers was somewhat weaker since our last report, although most contacts indicated that they expect the recent softness to be temporary.\nReports from District builders were slightly less positive than earlier reports. Fewer contacts indicated that recent activity was in line with their plan for the period. However, the majority of builders reported that construction activity and new home sales were ahead of the year earlier level. Most reports indicated that the level of unsold inventory had fallen from a year ago. The majority of contacts continued to report modest home price appreciation. The outlook among builders for sales and construction activity remains positive.\nDistrict brokers noted that demand for commercial real estate continued to improve. Absorption picked up, although contacts indicated that the rate of improvement still varied by metropolitan area, submarket, and property type. Construction activity continued to increase at a modest pace from last year. Most contacts reported that their current backlog was ahead of year earlier levels. Commercial contractors indicated that apartment construction remains fairly strong; however, some shared concerns that construction activity may be getting overheated in a few markets. Contacts reported that construction activity across other property types increased modestly. The outlook among District commercial real estate contacts remained positive with continued improvement expected over the course of the year.\nManufacturing and Transportation\nManufacturers reported increased activity across the region from mid-February through March. Significant improvements were cited in production and new orders. Weather conditions hampered activity, but the impact was not as severe as earlier this year. Finished inventory levels rose while purchasing agents reported longer wait times for supply deliveries and higher commodity prices. Nearly half of purchasing managers polled expect production levels to be higher over the next three to six months.\nDistrict transportation contacts widely reported an expansion of activity since the last report. Port contacts were especially upbeat, citing a rise in energy exports, increased shipments of bulk agricultural commodities, and record container volumes. Significant capital expenditures for port property expansion, infrastructure, and tenant activity were noted. District trucking contacts reported strong freight volumes, along with notable increases in tonnage following a significant decline in January due to the weather. Railroads continued to cite modest gains in intermodal traffic, led by container volume. Total rail carloads remained flat as significant increases in shipments of grain, petroleum, and metallic ore were offset by double-digit declines in the movement of farm products, phosphate rock, and coke.\nBanking and Finance\nSince the last report, some banking contacts indicated a loosening of credit as a result of increased competition. Community bankers reported improved loan demand with aggressive loan terms and pricing driven by competition from larger banks and other community banks. Commercial loans were primarily fueled by poaching transactions from other banks rather than new business formation though District bankers noted a healthy pipeline for new loans related to commercial real estate. Credit line usage fell at some banks and small business clients remained hesitant about new borrowing. Banking contacts indicated their cost of doing business was going up as compliance costs increased.\nEmployment and Prices\nDistrict payroll growth remained constrained from mid-February through March. Firms continued to show a preference for implementing technology to increase output as opposed to adding staff. However, hiring increased in the construction sector across most of the District. Trucking companies continued to note difficulty finding drivers. Some employers continued to show hesitance in hiring on a large scale due to concerns surrounding healthcare reform.\nContacts continued to indicate little wage pressure outside of some high-skilled positions. With regard to the Affordable Care Act, most large companies expressed little concern about the law; however, some small and service-oriented businesses noted that health benefits costs had risen significantly and more eligible employees elected coverage. Non-labor input costs increased very slowly, with a few noted exceptions, including rising costs for developed land, construction materials, and food. Unit costs are expected to increase 1.8 percent over the next year, according to the Atlanta Fed's survey of business inflation expectations. Profit margins remained tight across most industries, as contacts continued to report very little pricing power.\nNatural Resources and Agriculture\nContacts reported that harsh winter weather exposed limitations in U.S. natural gas distribution infrastructure. Demand was high and there was ample supply, yet transportation and distribution of gas was limited by the weather. In order to meet demand, power plants that typically operate with natural gas were forced to revert to coal. Over the fall and winter, utility companies in the region experienced growth in their residential customer base and attributed this to household formation and migration. The outlook among energy contacts remains optimistic for the year.\nWhile sufficient rainfall left only small pockets of dry conditions in the District, some growers reported delaying spring planting due to too much precipitation. Florida's citrus growers continued to seek ways to mitigate the effects of citrus greening and contacts were hopeful that new research funding included in the recently approved Farm Bill would help find a solution to this problem.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nApril 16, 2014\nEconomic activity in the Twelfth District continued to improve moderately during the reporting period of mid-February through early April. Upward pressures on prices and wages were quite modest overall. Demand for consumer goods improved slightly relative to the prior reporting period, while demand for business and consumer services was mixed. The manufacturing industry appeared to gain some momentum. Demand for agricultural and resource-related products was largely stable, but weather-related factors held back production in some areas. Activity in residential and commercial real estate markets advanced further. Banking contacts reported that loan demand increased overall, notably from small business borrowers.\nPrices and Wages\nPrice inflation remained subdued for most final goods and services. Contacts observed modest increases in dairy and protein prices. Reduced availability of water as a consequence of the drought in California is expected to put upward pressure on the prices of some fruits and vegetables in coming months. Prices edged up for some construction-related inputs, including wood and insulation. Reports indicated that wheat and coffee prices dropped. Final prices for steel products also fell.\nWage gains remained quite modest overall, but some contacts noted increases for certain occupations and in certain areas. Contacts observed rapid gains in compensation for software developers and engineers. As the cost of living climbed in major metropolitan areas, especially the San Francisco Bay Area, contacts reported stronger wage pressures for entry-level positions. The prospect of rising minimum wages triggered concerns about possible future labor cost increases for contacts in agricultural and construction businesses.\nRetail Trade and Services\nRetail sales improved a bit relative to the previous reporting period. Retailers continued to observe increasing online sales and declining traffic at malls. Retail grocers noted that the growth of e-commerce and the entry of new firms into the industry have made the environment extremely competitive, and, as a result, some firms have shifted their product offerings in an effort to preserve gross margins. For example, one contact noted that traditional brick-and-mortar stores reduced inventories of baby products, which consumers tend to buy online. Reports from auto dealerships in the 12th District highlighted strong sales in the early part of the year, and contacts expect auto sales to remain strong over the next couple of years. Most contacts project consumer spending overall will improve or stay the same over the next 12 months.\nDemand for business and consumer services was mixed. Reports indicated healthy overall conditions in the technology industry, with particularly strong demand for services related to network security, data analytics, and cloud-based infrastructure. Food service industry contacts noted that monthly same-store sales and transaction counts declined, especially at family and casual dining establishments. Providers of health-care services highlighted historically weak demand for semi-elective dermatological and allergy-related procedures. Contacts noted that the level of Hawaiian travel and tourism activity remained high in early 2014, although it was lower compared with the same period a year earlier.\nManufacturing\nDistrict manufacturing activity appeared to gain some momentum during the reporting period of mid-February through early April. The electronic components industry expanded at a pace consistent with its historical average. The sustained backlog of orders for commercial aircraft supported growth in the commercial aerospace industry. Launches of innovative products buoyed growth in the pharmaceutical industry. Defense-related manufacturers pointed to a recent pickup in new orders as a source of optimism. A utilities provider noted that year-over-year gas and electricity use expanded for various manufacturing customers, including food processers, metal producers, and wood product fabricators. Contacts noted that demand for steel production inputs improved from both domestic and foreign sources, particularly from Southeast Asia. Capacity utilization rates at U.S. steel mills held steady at low levels.\nAgriculture and Resource-related Industries\nDemand for most agricultural and resource-related goods was largely stable, but the supply was somewhat constrained as several weather-related factors held back production. Demand was stable or up for assorted crop and livestock products and particularly robust for dairy items. However, storms in parts of the District disrupted transportation of winter vegetables. Contacts' concerns about water costs and availability mounted, and limited water for irrigation contributed to decreased yields of annual crops, including tomatoes, greens, and onions, in California's Central Valley. Water shortages led some farmers to reduce cattle herd sizes as well. Pork production fell as some hogs in the District contracted a fatal virus. Year-over-year growth of crude oil production increased robustly, outpacing year-over-year growth in demand for petroleum and gasoline.\nReal Estate and Construction\nActivity in residential and commercial real estate markets advanced further. Most contacts expect demand for residential real estate during the first half of 2014 to strengthen relative to the second half of 2013. Home prices across the District continued to move up. The pace of home sales varied across geographic areas; some contacts in California noted an uptick, while contacts from Washington observed a more sluggish pace. Construction of both single and multifamily units improved across the District, and almost all contacts expect housing starts to improve over the next 12 months. However, contacts in Utah, Washington, California, and Hawaii anticipated potential shortages of construction labor. Robust leasing activity in large urban areas drove up rental rates for both residential and commercial properties. Vacancy rates for commercial and industrial space were either stable or down in many areas. Contacts from Oregon noted that public-sector construction activity was somewhat slow, but in other areas such as the San Francisco Bay Area, Southern California, Honolulu, and Seattle, public infrastructure projects and a number of high-rise commercial construction projects have been announced or are under way.\nFinancial Institutions\nLoan demand increased overall. Consumers exhibited solid demand for home and auto loans. Some contacts observed an uptick in loan demand from small businesses and increased loan growth at community banks. However, contacts noted that the availability of credit for small businesses largely remained limited to higher-quality borrowers. Lenders, flush with liquidity, continued to compete vigorously on rates and terms for such borrowers. Contacts noted that some financial institutions also relaxed underwriting standards in an effort to win new business or maintain existing business relationships. The pace of initial public offerings in the District's Internet and digital media sectors continued to pick up. Reports indicated that private equity and venture capital financing activity was strong in late 2013 and has appeared to hold steady in early 2014.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nApril 16, 2014\nBusiness activity in the Eighth District has declined slightly since our previous report. While recent reports of planned activity in manufacturing have been positive, reports in services have continued to be negative on net. Residential real estate market conditions have deteriorated slightly, while commercial real estate market conditions have been mixed. Finally, total lending at a sample of small and mid-sized District banks decreased slightly from mid-December to mid-March.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our previous report. Several manufacturing firms reported plans to add workers, expand operations, or open new facilities in the District, and a smaller number of manufacturers reported plans to reduce employment. Firms in food, steel ferroalloy, roofing material, thermal, furniture, biomedical testing products, alcoholic beverage, medical equipment, industrial inorganic chemicals, and aircraft manufacturing plan to hire new employees and expand operations in the District. In contrast, firms that manufacture carbonated beverages and pharmaceuticals reported plans to close down facilities and lay off workers in the District.\nReports of planned activity in the District's service sector have been negative on net since the previous report. Firms in food, health care, and casino gaming services plan to lay off a large number of employees. In contrast, firms in online shopping, restaurant, telecommunication, marketing, accounting, logistics, insurance, and mortgage services reported plans for new hiring and expansion in District. Reports from retail contacts were generally positive. Contacts reported a number of store openings and planned openings in the St. Louis and Louisville areas.\nBusiness contacts in the Eighth District noted that price and wage growth pressures have been generally modest in recent weeks. Contacts in Louisville noted that challenges in retaining and attracting workers have resulted in some wage growth.\nReal Estate and Construction\nSales of new and existing homes declined across most of the largest metro areas of the District. Compared with the same period in 2013, January 2014 total home sales were down 12 percent in Louisville, 5 percent in Memphis, and 30 percent in St. Louis. In contrast, total home sales were up 7 percent in Little Rock. Similarly, February 2014 year-to-date single-family housing permits decreased in the largest metro areas of the District compared with the same period in 2013. Permits decreased 26 percent in Louisville, 23 percent in Little Rock, and 10 percent in St. Louis. In contrast, permits increased 14 percent in Memphis.\nCommercial and industrial real estate market conditions have been mixed throughout most of the District. A contact in Evansville, Indiana, reported a languishing commercial real estate market. Contacts noted slow growth in the commercial real estate market in northeast Mississippi and no growth in the industrial market in Shelby County, Mississippi. Contacts in St. Louis reported increased demand for industrial space, while office leasing and sales slowed in the first quarter of 2014. On the other hand, commercial and industrial construction activity improved throughout most of the District. A contact in Louisville reported new commercial construction plans in west Louisville. A contact in Memphis reported a new office building construction in the east Memphis business corridor and several new industrial projects in DeSoto and Fayette counties in Mississippi. A contact in Little Rock reported a new industrial construction project. Contacts in St. Louis reported an ongoing construction plan at the Gateway Commerce Center and several industrial construction plans in St. Charles and north St. Louis County.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks decreased 1.3 percent from mid-December to mid-March. Real estate lending, accounting for 72.9 percent of total loans, decreased 1.3 percent. Commercial and industrial loans, accounting for 15.7 percent of total loans, decreased 0.2 percent. Loans to individuals, accounting for 5 percent of total loans, decreased 0.9 percent. All other loans, accounting for 6.3 percent of total loans, decreased 4.7 percent. During this period, total deposits at these banks increased 0.5 percent.\nAgriculture and Natural Resources\nDistrict farmers are expected to plant 1 million fewer acres of corn in 2014 (a decline of 4 percent) relative to 2013. In contrast, District farmers are expected to plant 570,000 and 511,000 more acres of soybeans and rice this year than in the previous year (an increase of 2 percent and 37.6 percent), respectively. Year-to-date coal production in the District for February 2014 was 5.4 percent lower compared with the same period in 2013. Coal production for February 2014 was 4.6 percent lower than in February 2013.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nApril 16, 2014\nThe Ninth District economy continued to grow at a moderate pace since the last report. Increased activity was noted in commercial construction and real estate, professional services, manufacturing, tourism and energy. Mining and consumer spending were level, while agriculture was mixed and residential real estate and construction activity decreased. Labor markets continued to show signs of tightening, and wage increases were moderate. Overall price increases were modest.\nConsumer Spending and Tourism\nOverall consumer spending was level since the last report. Recent traffic was down from a year ago at a Minneapolis area mall largely due to unusually cold and snowy weather, while sales were up slightly. Sales at a Montana mall were up 5 percent in February compared with a year ago, while March sales slowed somewhat. A Minnesota-based food producer reported that recent sales were down slightly from a year ago, while a Minnesota-based clothing retailer noted that same-store sales were down slightly. Meanwhile, a car dealer in Minnesota noted strong sales during the past few weeks.\nLate winter tourism activity was up somewhat. In northwestern Wisconsin, recent lodging levels were strong, while advance bookings for summer vacations were filling up. Several Montana ski resorts were able to extend their seasons due to the deep snow. According to a survey, 57 percent of Montana tourism business owners expect increases in visit numbers during 2014, while only 4 percent expect decreases. A travel agency in Minnesota noted that spring break travel bookings were about the same as last year.\nConstruction and Real Estate\nCommercial construction activity continued to grow since the last report. The value of March commercial permits in Sioux Falls, S.D., increased 18 percent from a year ago. A large university is proposing a $190 million athletic complex. Overall residential construction activity decreased. In the Minneapolis-St. Paul area, the value of March residential permits decreased slightly from March 2013, while the value of March residential building permits in Billings, Mont., decreased. Residential building permits in Sioux Falls dropped significantly in value in March from a year earlier.\nActivity in commercial real estate markets increased since the last report. Several cities in Minnesota noted increased interest in office, retail and hotel projects by developers. Residential real estate market activity decreased since the last report. In the Sioux Falls area, February home sales were down 2 percent and inventory was down 5 percent, while the median sale price increased 3 percent relative to a year earlier. In Eau Claire, Wis., March home sales declined and the median price increased from March 2013. Meanwhile, February home sales in Minnesota were down 11 percent from the same period a year ago; the inventory of homes for sale was down 1 percent, while the median sale price rose 9 percent.\nServices\nContacts from a wide variety of professional business services firms noted increased activity since the last report. An architecture firm reported that business recently hit record levels due to increased apartment construction. An engineering firm said growth was spreading across the District. A law firm noted growth in a broad mix of specialties. An accounting firm reported that while activity was slower in the beginning of the year, it picked up recently.\nManufacturing\nDistrict manufacturing activity increased since the last report. A March survey of purchasing managers by Creighton University (Omaha, Neb.) indicated that manufacturing activity increased in Minnesota and the Dakotas. In Minnesota, a medical device parts supplier was expanding its production facilities and a producer of recycling machinery was expanding its production and shipping facilities to meet strong international demand. Several unmanned aerial vehicle makers have recently expanded in eastern North Dakota due to the location of a test facility there.\nEnergy and Mining\nActivity in the energy sector continued to increase at a brisk pace. Late-March oil and gas exploration increased in North Dakota and decreased slightly in Montana from the last report, while production remained at record levels. A North Dakota grain elevator recently finished a conversion that will allow the facility to load and ship sand used for hydraulic fracturing. Mining activity was stable. Production at district iron ore mines in early 2014 was roughly level from a year earlier. In Montana, regulators recently approved the expansion of a gold mine, while two other proposed operations were in the exploration stages.\nAgriculture\nDistrict agricultural conditions were mixed, with livestock and dairy producers performing well, while crop producers were in worse shape. March prices received by farmers fell from a year earlier for corn, wheat, soybeans and chickens; prices increased for cattle, hogs, milk, eggs and turkeys. While crop prices increased slightly in March from the previous month, they remain significantly below the strong levels of recent years. A freight rail backlog led to significant shipping delays reported by dry bean producers and will also likely delay getting the winter wheat harvest to market. District farmers overall intend to plant fewer acres of corn and significantly more acres of soybeans and wheat in 2014 compared with last year.\nEmployment, Wages, and Prices\nLabor markets continued to show signs of tightening. A survey of business leaders in eastern North Dakota showed that difficulty in attracting and retaining qualified employees was rated the top factor expected to adversely affect business in 2014. In Minnesota, a call center was in the process of adding 230 new jobs, a printing and packaging company plans to hire 200 new workers and a communications company plans to add 140 new jobs. A manufacturer with locations in the Dakotas recently announced that it intends to hire as many as 200 skilled laborers in the next five years. An employment services firm in Minnesota noted an increase in the rate of workers in temporary positions becoming permanent hires. A number of communities in North Dakota indicated difficulty finding enough health care workers to fill open positions. In contrast, a bank laid off about 200 employees in Minnesota due to declines in mortgage financing demand, a telemarketing operation closure affected about 100 workers and a technology company in Wisconsin was cutting nearly 80 jobs.\nWage increases were moderate. According to a recent survey of businesses in the St. Cloud, Minn., area, 49 percent of respondents expect to increase compensation over the next six months, while 50 percent expect no change, results similar to last year's survey. However, in the energy-producing areas of North Dakota, the U.S. Postal Service and its union recently agreed to pay increases of up to 20 percent for rural carriers.\nOverall price increases were modest. Minnesota gasoline prices were slightly higher at the end of March compared with the end of February. Changes in metals prices were mixed since the last report. However, residential propane and natural gas prices posted substantial increases from a year ago in some areas, due to extreme cold weather.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nApril 16, 2014\nPrepared at the Federal Reserve Bank of Richmond and based on information collected before April 7, 2014. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts suggest economic activity increased in most regions of the country since the previous report. The expansion was characterized as modest or moderate by the Boston, Philadelphia, Richmond, Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco Districts. Chicago reported that economic growth had picked up, and New York and Philadelphia indicated that business activity had rebounded from weather-related slowdowns earlier in the year. The Cleveland and St. Louis Districts both reported a decline in economic activity.\nConsumer spending increased in most Districts, as weather conditions improved and foot traffic returned. Auto sales were up in the New York, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco Districts, but they were little changed from a year earlier in Kansas City and Cleveland. In addition, assessments of tourism were generally positive, particularly for the Districts of Philadelphia, Richmond, and Minneapolis, where ski resorts had record seasons. Summer bookings were also solid in several Districts. Activity was mixed at non-financial services firms, with the Boston, Philadelphia, Minneapolis, and Kansas City Districts reporting increased demand. In the Boston District, for example, advertising and consulting were strong. The Richmond District indicated that revenues at non-retail services firms were flat, and St. Louis said firms' planned activity declined on net.\nThe transportation sector generally strengthened in recent weeks, with higher port volumes and increased trucking. Even in districts where transportation was soft, the outlook was optimistic.\nManufacturing improved in most Districts. Several Districts reported that the impact of winter weather was less severe than earlier this year. Chicago and Minneapolis saw moderate growth, while manufacturing grew at a steady pace in New York, Atlanta, St. Louis, and Dallas. San Francisco noted that manufacturing appeared to gain some momentum. Other Districts noted mild growth, except Richmond, where manufacturing activity was mixed. Demand for food production declined in the Boston, Richmond, and Dallas Districts; however the drop was primarily weather related. Steel production picked up in several districts.\nReports on residential housing markets varied. However, across most Districts, home prices rose modestly and inventory levels remained low. Residential construction increased in several Districts; only Cleveland, St. Louis, and Minneapolis reported a decrease. Commercial construction also strengthened, with the exception of Cleveland, which reported a mild decline. Commercial leasing activity generally advanced at a modest pace. Industrial markets showed signs of tightening in downstate New York and northern New Jersey.\nLoan demand strengthened since the previous Beige Book. Credit quality improved in the Philadelphia, Cleveland, Richmond, and Kansas City Districts. New York and Dallas reported especially strong increases. New York, Philadelphia, Cleveland, and Richmond cited the inclement weather as a factor reducing home sales and therefore mortgage borrowing. Commercial loan volumes grew in each of the Districts reporting on banking except St. Louis, where lending declined marginally.\nAgricultural reports were mixed, as weather disruptions delayed crop plantings and shipments of commodities. A pig virus adversely affected hog farming in the Richmond, Chicago, Kansas City, and San Francisco Districts. Prices of beef and pork rose. In the energy industry, oil and natural gas production increased, while coal output continued to decline.\nLabor market conditions were mixed but generally positive. The New York, Cleveland, Richmond, Chicago, Kansas City, and Dallas Districts reported difficulty finding skilled workers.\nIn most Districts, wage pressures were contained or minimal. The New York District reported scattered wage pressures and Cleveland reported that wage pressures were contained. However, there were several reports of upward wage pressures in the Dallas District.\nPrices were generally stable or slightly higher. The New York District described price pressures as subdued in manufacturing and steady in the service sector. In Philadelphia, manufacturing prices paid and received edged up; in Richmond, prices of raw materials and finished goods rose more slowly since the previous Beige Book. Some districts reported higher prices for construction inputs and livestock. In Cleveland, concrete, drywall, and hardwood prices rose, while in the Kansas City District, drywall and roofing prices increased and were expected to rise further.\nConsumer Spending and Tourism\nConsumer spending increased since the previous report in a majority of Districts. Retailers reported improvement from generally weak sales at the beginning of the year that were most likely the result of winter storms. Retail sales in New York rebounded strongly from weather-depressed levels, while cold weather continued to hold down consumer spending in Cleveland. St. Louis contacts reported a number of store openings and plans for future openings. Some categories of spending benefited from the long winter, such as cold weather apparel, appliances, and snow removal equipment. Finally, Boston noted increasing online sales, and some San Francisco firms have adjusted product offerings accordingly. Retail inventories were mixed in Boston and at or near desired levels in New York. Cleveland inventories were described as being in good shape. Inventories expanded in the Chicago District, and increased moderately in Kansas City.\nSales of cars and light trucks picked up in recent weeks as the weather improved and consumer traffic returned to dealerships. Auto sales were strong in the New York, Philadelphia, Richmond, and San Francisco Districts; sales growth was moderate in Chicago. Automobile sales strengthened slightly in the Dallas District and grew modestly in Atlanta, but were flat in Kansas City. In the Cleveland District, dealers reported that winter weather continued to push down transactions.\nTourism was generally positive in the Philadelphia, Richmond, Atlanta, Minneapolis, and Kansas City Districts. Tourism in the San Francisco District was higher than in the previous report but below year-ago levels. In New York, reports were mixed. Attendance at Broadway theaters picked up, in part because more shows were running. However, some contacts suggested that cold weather had decreased travel. In the Philadelphia, Richmond, and Minneapolis Districts, ski resorts reported an outstanding season. Atlanta reported positive tourist activity and Kansas City noted that activity picked up. Some districts were already experiencing heavy summer bookings.\nNonfinancial Services\nReports on non-financial services were mixed. In the Boston District, advertising and consulting were strong, especially for healthcare consulting; firms had a positive outlook for the remainder of the year. Philadelphia's businesses were also optimistic; growth there was moderate. Activity increased in the Minneapolis District and Kansas City reported improved sales in professional, technical, and healthcare services. The Richmond District reported generally flat revenues at non-retail services firms. Chicago's nonfinancial services firms increased business spending. St. Louis reported that firms' planned activity declined on net. Reports in the Dallas and San Francisco Districts were mixed, with San Francisco noting healthy demand in the technology industry.\nTransportation generally strengthened in recent weeks. In the Richmond District, container volume through ports continued to grow briskly despite winter weather disruptions. Trucking increased as firms worked to catch up with weather-delayed shipments. Atlanta ports cited increased shipments of bulk agricultural commodities and record container volumes. In addition, intermodal traffic rose modestly. Transportation firms in the Kansas City District saw slower growth in March but expected moderate growth over the next six months. Dallas transportation services firms reported mixed demand, as container and intermodal cargo decreased. Airline demand there was soft, but above year-ago levels. In the Minneapolis District, freight rail backlogs delayed agricultural shipments. Costs of freight rose while volumes declined in the Cleveland District, and operators were unable to pass through increases in diesel prices.\nManufacturing\nConditions in the manufacturing sector improved since the previous Beige Book. The Chicago and Minneapolis Districts reported moderate growth, with a pickup in new orders and production. The San Francisco District stated that manufacturing activity appeared to gain some momentum. Manufacturing in the Boston, New York, Atlanta, St. Louis, and Dallas Districts grew at a steady pace, while Philadelphia, Cleveland, and Kansas City reported mild growth. Richmond reported mixed conditions in manufacturing. The Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Kansas City, and Dallas Districts noted that lingering winter weather hampered business activity, but the impact was less severe than earlier this year.\nThe auto, aerospace, and energy-related industries remained a source of strength for the Chicago District. Energy-related manufacturing was also particularly strong in Dallas. The sustained backlog of orders for commercial aircraft supported growth in the commercial aerospace industry in the San Francisco District. The Chicago District indicated that steel production recovered from a weather-related slowdown and capacity utilization returned to its expected levels. Additionally, specialty metals manufacturers reported an increase in new orders and order backlogs. In contrast, food manufacturers in Boston, Richmond, and Dallas reported a decline in demand that was largely weather related, but indicated that production was unchanged overall. Steel shipments grew slightly in Cleveland, with contacts anticipating slow growth in the months ahead. The demand for steel production inputs improved from both domestic and foreign sources in the San Francisco District. Firms expected continued moderate growth in manufacturing, with some increased optimism.\nReal Estate and Construction\nReports on residential housing markets varied. Home sales in Kansas City strengthened since the last survey period due in part to seasonal factors and improved weather conditions. Moreover, in the Dallas District single-family home sales remained healthy, with some contacts reporting a seasonal pickup in demand over the past six weeks. Residential real estate improved in Richmond, with further strengthening in Northern Virginia. New York housing markets continued to be mixed, while severe winter weather hampered sales activity. Chicago reported that home sales and new listings declined, though brokers attributed this primarily to cold weather and were optimistic that activity would improve in coming months. Atlanta brokers reported homes sales were mixed and contacts attributed areas of softness to higher home prices, limited inventory, and higher mortgage rates. The pace of home sales varied across the San Francisco District. Some contacts in California noted an uptick, while contacts from Washington observed a more sluggish pace. Home sales declined across most of the largest metro areas of the St. Louis District, and Minneapolis residential real estate market activity decreased since the previous report. In most Districts, inventory levels remained limited and residential home prices rose modestly.\nResidential construction grew at a moderate pace in the Boston and San Francisco Districts, while New York, Philadelphia, and Atlanta reported modest growth. In the Chicago District, a decline in single-family construction was accompanied by growing demand for new apartment projects as residential rents continued to increase. Richmond single-family home construction grew slowly. In the Kansas City District, builders reported moderate growth in the number of housing starts and expected an increase in buyer traffic and prices in the coming months. In contrast, residential construction declined in Cleveland, St. Louis, and Minneapolis. Multifamily construction remained strong in the New York, Richmond, Atlanta, Chicago, Dallas, and San Francisco Districts. The Minneapolis District reported that overall residential construction activity decreased and that the value of residential permits fell in March.\nCommercial construction activity strengthened since the previous survey period for the Kansas City and Dallas Districts. The Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco Districts reported modest to moderate expansion in commercial construction. Philadelphia noted mild growth, while Cleveland reported a slight decline in commercial construction. Commercial leasing activity generally grew at a mild to moderate pace. Office and industrial activity remained robust in the Dallas District, with one contact noting particularly strong demand for office space in the Dallas metropolitan area. Leasing activity improved for retail and industrial space in the Richmond District. Commercial real estate contacts continued to report a decline in vacancy rates, a slight increase in absorption, and higher sales in Kansas City. The Boston, New York, and Chicago Districts reported modest commercial leasing in recent weeks. Industrial markets were generally steady across upstate New York but showed signs of tightening in downstate New York and northern New Jersey.\nBanking and Financial Services\nOn the whole, loan demand strengthened since the previous Beige Book. Of the Districts that reported on banking, Philadelphia, Richmond, Atlanta, and Kansas City noted slight increases in loan volume, while Cleveland and Chicago indicated modest growth. The New York and San Francisco Districts had moderate gains. The Dallas District noted that consumer loans continued to grow moderately. St. Louis was the only district to report a decrease in loan volumes. With respect to credit quality, slight improvements were noted in Philadelphia and Cleveland, and modest advancements were made in Richmond and Kansas City. The New York and Dallas Districts reported especially strong increases. San Francisco indicated no net change in credit quality but noted that credit standards had tightened and that small business lending was primarily reserved for better-quality borrowers. Credit standards were reported to be loosening in the Atlanta District. New York, Cleveland, Richmond, and Kansas City indicated that standards were unchanged.\nThe majority of Districts described mixed or declining residential mortgage borrowing; only Dallas and San Francisco reported slight growth. New York, Philadelphia, Cleveland, and Richmond cited the inclement weather as a factor reducing home sales and therefore mortgage borrowing. However, the Philadelphia District also added that bankers reported growing consumer confidence.\nCommercial loan volumes grew in each of the Districts reporting on banking except St. Louis, where lending declined marginally. Overall commercial mortgage lending grew in the New York, Philadelphia, Atlanta, Minneapolis, Kansas City, and San Francisco Districts. Cleveland and Chicago saw increased lending for equipment purchases. Kansas City reported greater demand for agriculture loans. Deposits were up in the Cleveland, Kansas City, and Dallas Districts but little changed in New York. Delinquency rates declined in New York and Cleveland.\nAgriculture and Natural Resources\nAgricultural conditions varied across Districts in recent weeks. In the Chicago District, conditions improved. Kansas City and Dallas reported mild growth in the sector, while San Francisco reported stable demand for agricultural products. However, agricultural conditions weakened in the Richmond, Atlanta, St. Louis, and Minneapolis Districts. Adverse weather affected several districts. Winter wheat suffered as a result of dry conditions in the Kansas City District, and drought conditions continued to worsen in Dallas. In contrast, wet field conditions delayed planting in the Richmond and Atlanta Districts. Additionally, Chicago noted that the slow arrival of spring-like weather delayed fieldwork, although in some areas crops perform well after late planting. Minneapolis and San Francisco reported that winter weather disrupted transportation of some crops. In most Districts, crop prices increased in recent weeks but were below year-ago levels. Higher soybean prices shifted planting intentions away from corn. Dairy demand boomed in Dallas, especially for export, and prices for dairy products moved to record highs. Hog operations in a few Districts were battling a virus, and pork prices continued to rise. Beef prices reached record highs.\nActivity in the energy industry increased modestly since the last report, with moderate growth reported by the Richmond, Kansas City, and Dallas Districts. San Francisco reported a mild increase. In Kansas City, the number of active oil and natural gas drilling rigs edged up, and expectations for the coming months were positive. San Francisco reported that crude oil production increased robustly. Demand for oilfield services was very healthy in the Dallas District, particularly in West Texas. Crude oil prices generally increased. Natural gas production was stable at a high level. Minneapolis reported strong growth in natural gas and increased exploration in North Dakota. Prices of natural gas and natural gas liquids stabilized. Coal production declined at a slower rate in Cleveland and St. Louis due in part to higher demand from domestic electric utilities. The Richmond District reported steady coal production as inventories were replenished from this winter's drawdown. Cleveland and St. Louis indicated a mild decline in coal production. The Minneapolis District reported that mining was stable, with production at ore mines roughly level with a year earlier.\nEmployment, Wages, and Prices\nRecent reports on labor market conditions were mixed but generally positive. For example, the New York, Chicago, and Minneapolis Districts saw modest to moderate growth in employment. Dallas noted that transportation and manufacturing firms added jobs. Boston, however, indicated that few firms outside of advertising and consulting were hiring. Both Philadelphia and Atlanta said that firms planned to make capital expenditures to boost efficiency before they would hire. Employers in the New York, Cleveland, Richmond, Chicago, Kansas City, and Dallas Districts reported difficulty finding skilled workers. More specifically: New York, Richmond, and Chicago mentioned the IT field, Atlanta noted a need for truckers, Kansas City cited labor shortages for skilled positions, and Dallas reported that a food manufacturer found skilled labor in short supply.\nIn most Districts, wage pressures were generally portrayed as contained or minimal. For example, New York reported only scattered wage pressures and Philadelphia added that very few contacts are seeing wage pressures. In Cleveland, wage pressures were contained, Minneapolis reported that wage increases were moderate. However, Dallas cited several reports of upward wage pressures, and San Francisco added that wage gains remained quite modest overall but noted increases for certain occupations and in certain areas.\nPrices were mostly steady, with scattered reports of increases. The New York District described price pressures as subdued in manufacturing and steady in the service sector. In Philadelphia manufacturing prices paid and received edged up, and in Richmond, prices of raw materials and finished goods rose more slowly since the previous Beige Book. Retail prices were steady in Boston while food prices moved up modestly in the Atlanta, Chicago, Kansas City, Dallas and San Francisco Districts. Boston reported that costs and prices increased between zero and four percent. Cleveland, Atlanta, Chicago, Kansas City, Dallas, and San Francisco Districts all said that prices of metals, brick, and cement rose modestly. Chicago noted that prices for corn, soybeans, dairy, hogs, and cattle increased. Kansas City also saw higher livestock prices. Prices of various categories of construction materials rose in some districts; in Cleveland, concrete, drywall, and hardwood prices all trended higher. The Kansas City District indicated that drywall and roofing prices rose and were expected to rise further. In San Francisco, wood and insulation prices edged up. Changes in natural gas prices varied: Minnesota reported increases while Dallas reported decreases as the winter weather subsided. The Cleveland District reported that spot prices for steam coal rose slightly, while the metallurgical coal price growth was flat.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nApril 16, 2014\nEconomic activity in the Second District rebounded since the last report, as the harsh winter weather abated. Prices of finished goods and services remained generally stable, though businesses in a broad range of sectors report upward pressure on input prices. Manufacturers and especially service-sector firms in the District report that activity has picked up in recent weeks. Labor market conditions have shown signs of firming, in both the manufacturing and service sectors. Both general merchandise retailers and auto dealers report that sales have rebounded in recent weeks, following a weather-related slump in the first few weeks of the year. Tourism activity has been mixed since the last report, with weather continuing to be a factor. Both housing markets and commercial real estate markets were mixed but somewhat improved, on balance, in recent weeks. Finally, banks report increased loan demand from the commercial sector, little change in credit standards, and across the board declines in delinquency rates.\nConsumer Spending\nGeneral merchandise retailers report that sales rebounded strongly in March, running at or close to plan and generally on par with or up a bit from comparable 2013 levels. Weather was still seen as a factor restraining sales in March--particularly for spring merchandise--but to a lesser extent than in January and February. Contacts at major malls in upstate New York report that sales rebounded in March, following a disappointing performance in the first two months of the year, and were up modestly from a year earlier. Similarly, two major retail chains report that same-store sales, which had been disappointingly weak in the first two months of the year, bounced back in March and were on or close to plan. Inventories are generally at or near desired levels. Prices are characterized as steady overall, though one contact reports ongoing heavy discounting.\nAuto dealers in upstate New York report that new vehicle sales rebounded since the last report. Buffalo-area dealers report that new vehicle sales were robust in both February and March, with double-digit percentage gains over comparable 2013 levels. Good lease deals, as well as lease turn-ins helped drive this recent strength. Rochester-area dealers also report a pickup in sales of new vehicles in recent weeks, though less pronounced, with sales up moderately from 2013 levels. Dealers in both these areas also note some pickup in used car sales and note that wholesale and retail credit conditions, more generally, remain in good shape.\nTourism activity has been mixed since the last report. Both revenues and attendance at Broadway theaters picked up in March and were up nearly 15 percent from a year earlier--in part because there are more shows running now. The average ticket price has leveled off. In contrast, New York City hotels report some softening in demand: both occupancy rates and room rates slipped below comparable 2013 levels in March, resulting in a roughly 8 percent decline in revenue per room; still, it should be noted that the number of hotel rooms city-wide is up 5 1/2 percent. Contacts surmise that unseasonably cold weather into March may still be adversely affecting travel.\nFinally, consumer confidence was little changed in March: Siena College's survey of New York State residents indicates a small decline in confidence, mainly among upstate residents; the Conference Board's survey also shows a small decrease in confidence among New York State residents but a small increase among residents of the Middle Atlantic states (NY, NJ, Pa) overall.\nConstruction and Real Estate\nThe District's housing markets continue to be mixed, with severe winter weather weighing on sales in parts of the District. In particular, contacts in the Buffalo-Niagara region indicate that a combination of harsh weather and low inventory has hampered sales activity, though home prices have held steady. This pattern appears to be mirrored in other parts of upstate New York. In northern New Jersey, while weather appears to be less of a factor, a backlog of foreclosed properties continues to weigh on prices, according to one industry contact. Still, there are some signs of a pickup in the market, and builders appear to be increasingly optimistic, especially about the multi-family rental market. New York City's co-op and condo market has shown further strength in the first quarter: a leading residential appraiser notes that prices continue to rise modestly in Manhattan and substantially in Brooklyn and Queens, buoyed by a low inventory of homes on the market. In Manhattan, a shift in the sales mix towards larger apartments and new development has reportedly boosted dollar sales volume and exaggerated the price rise. Manhattan's rental market remains on a plateau, whereas rents continue to rise briskly in Brooklyn. In Brooklyn, most new development is rental housing, while in Manhattan, it is predominantly condos.\nCommercial real estate markets were generally stable to somewhat stronger through the end of the first quarter. In New York City, office availability rates were little changed, as brisk leasing activity allowed several newly available spaces to be absorbed; however, asking rents continued to rise and were up roughly 8 percent from a year earlier. Office availability rates were down modestly in the Long Island and Westchester/Fairfield markets; they were little changed in northern New Jersey but up modestly across upstate New York. Outside of New York City, asking rents for office space were little changed. Industrial markets were generally steady across upstate New York but showed signs of tightening in downstate New York and northern New Jersey.\nOther Business Activity\nThe labor market has shown increasing signs of strength. A large and growing proportion of business contacts across the District plans to expand their workforces in the months ahead--particularly in the service sector. Moreover, two major New York City employment agencies report that labor demand has strengthened across the board, in particular with increased hiring from the financial sector. One contact notes that there are only scattered wage pressures but anticipates a broader pickup in wages soon. Another agency, however, has observed a growing number of unemployed job-seekers from the health care sector. Nevertheless, graduating college students in the New York City area are reported to be finding jobs quickly, and skilled workers are increasingly difficult to find--particularly in the IT field. In upstate New York, some auto dealers mention a shortage of skilled technicians.\nManufacturing firms in the District report that overall activity continued to expand modestly in March, while service-sector firms indicate a more pronounced pickup, following a weather-related slump in early 2014. Price pressures in the manufacturing sector have picked up somewhat but remain generally subdued, while in the service sector they remain steady but fairly widespread.\nFinancial Developments\nSmall to medium sized banks across the District report increased demand for commercial mortgages and commercial & industrial loans, but lower demand for residential mortgages; consumer loan demand remains little changed. Bankers report that credit standards are unchanged across all loan categories. Respondents indicate a decrease in spreads of loan rates over costs of funds for commercial mortgages and especially commercial & industrial loans, but report no change in other categories. Deposit rates are reported to be little changed. Finally, bankers report increasingly widespread improvement in delinquency rates across all loan categories.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nApril 16, 2014\nThe Tenth District economy grew moderately in March, and most contacts were optimistic about future activity. Consumer spending increased despite flat auto sales, with solid sales expectations heading forward. District manufacturing activity grew further, and professional, high-tech, and health service firms reported improved sales. Commercial and residential real estate activity strengthened, and energy activity expanded. Bankers noted slightly higher loan demand, better loan quality, and rising deposits. In agriculture, District crop conditions remained dry, and livestock prices increased due to low inventories and strong export demand. Transportation firms reported some moderation in sales growth. Prices increased in most industries, with slightly more firms reporting higher wage pressures and labor shortages for skilled positions than in previous surveys.\nConsumer Spending\nConsumer spending increased moderately from the previous period, and contacts were more optimistic as weather conditions improved. Retail sales increased from the previous survey and were up considerably from a year ago. Several retailers noted stronger sales of discounted items and warm-weather products. Expectations for future sales also rose, and store inventories increased moderately. Auto sales were flat in March and similar to year-ago levels. However, expectations for future sales were notably better and contacts said light, mid-sized vehicles sold particularly well. Auto inventories rose but at a slower pace than in previous surveys. Restaurant sales increased, especially for value and take-out items, but activity remained similar to year-ago levels. Contacts expected restaurant sales to rise further in coming months. Tourist activity improved in March, and several hotels noted increased occupancy rates. Tourism contacts expected future activity to rise further.\nManufacturing and Other Business Activity\nDistrict manufacturing activity grew at a slightly faster pace in March, with some contacts attributing improved activity to better weather conditions. Production increased at all types of plants, particularly among machinery and plastics manufacturers. Shipments and new orders also rose, while employment was flat. Expectations for future factory activity were mostly stable and generally solid overall, although capital spending plans eased somewhat. Contacts in professional and high-tech services, healthcare services, and wholesale trade reported generally higher sales than the previous survey period. Wholesale trade firms noted an increase in capital spending plans and a positive outlook for future sales, while expectations for professional and high-tech activity were not quite as strong. Transportation firms reported slower growth in March, but contacts expected moderate growth over the next six months. One contact mentioned capacity concerns due to equipment and driver shortages.\nReal Estate and Construction\nCommercial and residential real estate sales strengthened, and construction increased moderately from the previous survey period. Residential realtors reported stronger sales since the last survey period due in part to seasonal factors and improved weather conditions. Home sales were flat compared to a year ago, with low- and medium-priced homes continuing to sell well, while higher-priced home sales remained weak in most of the District. Residential home inventories fell further, putting upward pressure on prices. Inventories were expected to stabilize, and prices were expected to continue to rise in the near term. Construction supply and builder contacts reported stronger activity since the previous survey period and compared to last year. Builders reported moderate growth in the number of starts, and construction activity was expected to increase in the coming months, with prices and buyer traffic both expected to increase modestly. Mortgage activity was flat since the previous survey but was expected to increase in the coming months with a rise in home purchases. Commercial real estate contacts continued to report a decline in vacancy rates, a slight increase in absorption, and higher sales. Commercial construction activity strengthened since the last survey period and was higher than a year ago. Commercial real estate contacts expected both construction and prices to increase further in the coming months.\nBanking\nBankers reported a slight increase in overall loan demand, improved loan quality and increased deposits levels in April. Respondents reported a minor increase in demand for commercial real estate loans. Most respondents reported steady demand for commercial and industrial loans, consumer installment loans and agriculture loans. Demand for residential real estate loans was mixed during the survey period but improved compared to the prior survey. Bankers reported stable or improving loan quality compared to a year ago, and all bankers expected the outlook for loan quality to either improve or remain the same over the next six months. Credit standards remained largely unchanged in all major loan categories, and respondents reported an increase in deposits.\nEnergy\nEnergy activity expanded in March. Contacts reported solid drilling and business activity, and expectations for the coming months were positive. The number of active oil and natural gas rigs in the District edged up in March. Natural gas and natural gas liquids prices stabilized after rising in recent survey periods but contacts expected them to stay above average in the coming months. Crude oil spot and futures prices increased slightly since February and are expected to remain stable heading forward. High spot prices, especially for oil, continued to drive plans for strong capital expenditures in 2014. Hiring in the industry grew at a strong pace, but several contacts noted a sustained shortage of skilled labor.\nAgriculture\nCrop growing conditions remained dry in March, while livestock prices increased further since the last survey period. The winter wheat crop was in need of moisture and rated in mostly fair to poor condition. Spring fieldwork began, and District farmers followed national trends by intending to plant slightly more soybeans and less corn. With crop prices still lower than a year ago, farm operating loan demand rose this year as farmers financed a larger portion of crop input costs. However, global supply concerns supported strong exports, and crop prices rose to a six-month high during the reporting period. Low cow inventories kept feeder cattle prices elevated, and strong export demand supported higher fed cattle prices. In addition, hog prices surged as the on-going swine virus cut inventories further.\nWages and Prices\nPrices rose in most industries, and wage pressures increased slightly in some industries, particularly for skilled positions. Retail prices edged up, with further increases anticipated. Prices of manufacturing materials increased modestly compared to the previous period, although slightly fewer firms planned on raising selling prices. Transportation firms reported higher input and selling prices, and restaurants noted a considerable rise in food costs and menu prices. Construction materials prices moved slightly higher, particularly for drywall and roofing, and were expected to increase further. Many contacts continued to cite concerns about future costs for health care and the potential for minimum wage reform. Wage pressures increased slightly in some industries, especially manufacturing. Many contacts noted difficulties finding qualified labor, particularly for truck drivers, machinists, high-tech, and other types of skilled workers.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nMarch 5, 2014\nBusiness contacts in the First District continue to report modest increases in revenues and sales. Respondents in several sectors cite negative effects of severe winter weather. Firms report little hiring and wage increases remain very modest. Price pressures are reportedly minimal, but a few contacts note specific items for which prices are rising or are expected to rise. The outlook is generally positive, albeit cautiously so.\nRetail and Tourism\nThis round's retail contacts completed their 2013 fiscal years at the end of December or in mid-February. Most report 2013 year-over-year sales increases ranging from 3 percent to the mid-single digits, though one cites an increase in the mid-teens. Several respondents report continued good results so far in 2014, but two retailers indicate that the pace of sales has slowed a bit. Some of this softness is said to be due to weather-related issues or to tough year-over-year comparisons with the post-Hurricane Sandy rebound. A furniture retailer reports that President's Day sales were extremely strong. Prices remain steady overall, though contacts say a modest increase in apparel prices is coming, reflecting a rise in some raw material prices and overseas labor costs. Retail respondents expect continued overall improvement in U.S. economic conditions and consumer sentiment in 2014.\nBoston area hotels attained new record highs for hotel occupancy rates and revenues in 2013, building on the strong records sent in 2012. Expectations are for continued strong growth in 2014, though hotels expect to see revenue growth but not increases in occupancy rates; these are forecast at 80 percent, a 1 percentage point increase over 2013. Severe winter weather in January and February had hotels faring well, but restaurants, museums, and other venues losing revenue due to the harsh weather conditions. An industry contact says that this pattern seems to hold for much of the eastern seaboard.\nManufacturing and Related Services\nOf 13 manufacturers contacted this round, nine report higher sales than the same period a year earlier. Two firms, a toy manufacturer and a publisher, cite flat sales but the reasons appear to be idiosyncratic. Two others, a manufacturer of electrical equipment for residential and commercial buildings and a maker of membranes, report falling sales but both attribute the drop to the weather. The direct effect of the storms was the loss of several days of production in February. In addition, demand fell both because some of their products are intermediate goods for other plants in afflicted areas and because end users demanded less. For example, reduced construction meant that there was less demand for electrical supplies. Three firms in the semiconductor industry report strong sales, confirming the end of that sector's slowdown, which began in 2011. Two firms, a maker of electrical equipment and a tool maker, both reported that residential investment was a significant driver of growth.\nThe news on inventories is mixed. Six contacts say that they continue to make a concerted effort to reduce inventories. However, one contact was building inventory on the assumption that the drop in sales due to the winter weather would lead to an increase in demand in the second quarter to make up for it. An electrical equipment supplier said that in some product lines, bad weather led to higher demand for replacement parts which reduced inventories. None of our contacts report any major pricing pressure, up or down, either from suppliers or customers. One contact said that pressure on pipeline capacity in New England is driving up natural gas prices.\nMost firms report increased capital spending in 2013 and plans to increase again in 2014. However, most of those plans were already in place and there is little evidence of positive revisions in recent months. Five contacts report flat employment, four note positive hiring, and four cite reduced staffing. Respondents say engineering staff remains somewhat difficult to find, but otherwise none of our contacts have complaints about the labor market.\nEleven of 13 contacts report positive or very positive outlooks for 2014. The exceptions are a toy maker, who is generally cautious, and a publisher anticipating falling sales.\nSoftware and Information Technology Services\nFirst District software and information technology services contacts generally report stronger-than-expected business activity through February, with revenue growth exceeding earlier forecasts. For example, a healthcare contact expected a large year-over-year revenue decline due to the expiration of federal stimulus for health records software; however, the firm ended the year with just a marginal dip in revenues and positive net income growth. Only one contact, a provider of payment and banking software, reports accelerated growth, with year-over-year revenue increases in the 15 percent range. The majority of firms are maintaining headcount; one contact added positions in sales and marketing. Wages remain steady, with firms awarding (and in one case reinstating) merit increases in the 2.5 percent to 3.5 percent range. Both selling prices and capital and technology spending have gone largely unchanged. The outlook among software and IT contacts is cautious optimism, with expectations of modest revenue growth through the end of the quarter. Contacts remain concerned about general macroeconomic conditions and uncertainty surrounding healthcare reform.\nStaffing Services\nNew England staffing contacts report softened business conditions in recent months, attributed to both the holiday season and the large number of snowstorms occurring throughout the Northeast. Although revenues are up slightly year-over-year, they are down on a quarter-over-quarter basis. Despite these difficulties, labor demand remains strong across most industries, with contacts noting particularly high demand in the software, engineering, legal, specialty manufacturing, and healthcare sectors. Demand has weakened in the defense sector. On the supply side, contacts cite a shortage of candidates to fill nursing, specialized manufacturing, and IT roles. This reportedly reflects a skills mismatch, amplified by the holidays and severe weather. In response, firms continue to invest in social media initiatives to reach a broader audience of candidates. The temporary-to-permanent conversion rate remains strong. Bill rates and pay rates have generally held steady, with the exception of two contacts reporting an upward trend in pay rates and one contact reporting a slight increase in bill rates. Looking forward, staffing contacts are optimistic that growth will accelerate as weather conditions improve, expecting mid-single-digit revenue growth through the next few months. Several contacts express concerns about continued uncertainty regarding how healthcare reform will affect the staffing industry.\nCommercial Real Estate\nCommercial real estate activity was mixed across the First District, but contacts report that leasing fundamentals were largely stable in recent weeks. In Providence, demand for multifamily housing remains strong downtown, while industrial leasing activity is still weak. In Boston, office demand continues to be uneven within the city, with strength in the Seaport District, increasing demand in some suburban areas, and comparative weakness--including downward pressure on rents--in the Financial District. In Boston and Hartford, severe winter weather modestly reduced office leasing inquiries. Also, according to one contact, investment sales activity slowed in the region in the aftermath of a year-end surge in transactions. At the same time, contacts indicate that investment demand for commercial real estate remains strong across the region, and especially strong in Boston. A Portland contact characterizes leasing activity as solid and notes that land sales continue to gather momentum. Planned developments in Portland include a diverse mix of structures: recreational facilities, hotels, office space, and specialty retail. According to a regional banking contact, the bank lending environment for commercial real estate remains highly competitive, with solid loan demand across numerous sectors, albeit including fewer condominium development loans than had been expected. Recent trends in construction activity persist, with slow growth in the institutional sector, a declining pipeline of multifamily structures, and an increase in planned mixed-use developments and speculative office construction in parts of Boston.\nWhile contacts are mostly optimistic concerning the outlook for commercial real estate in their respective markets, some downside risks are noted, including renewed macroeconomic uncertainty stemming from recent, weaker-than-expected employment reports, an uncertain future path of interest rates, and fallout from unrest in the Ukraine, Syria, and Venezuela. Other factors seen as restraining growth include rising construction and maintenance costs, and, in Rhode Island, political stagnation stemming from the current gubernatorial election.\nResidential Real Estate\nThe First District experienced mixed results for sales of single family houses and condominiums in December. Contacts in New Hampshire and Rhode Island cite declines in sales of single family homes, while Massachusetts experienced no change, and respondents in Connecticut, Maine, and Vermont cite increases in sales relative to December 2012. Scarce inventory is said to be the most significant constraint on the growth of sales, while uncertainty from new qualified mortgage rules and flood insurance reforms are also believed to be causing buyers to remain cautious about making offers. Contacts in Connecticut say that sales are being affected by weak consumer confidence and a shortage of stable employment opportunities. Median sale prices increased year-over-year in four of the six New England states, decreasing only in Connecticut and Vermont. In Massachusetts, particularly in the Greater Boston area, price appreciation driven by low inventory levels has become a concern as realtors caution that high prices could keep first time home buyers out of the market.\nPending sales suggest the market for single family houses and condos is off to a good start in 2014, increasing in all states except Rhode Island. Contacts express optimism about local housing markets looking forward but say they expect the snowy winter to depress sales in the near term.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nMarch 5, 2014\nPrepared at the Federal Reserve Bank of Atlanta and based on information collected before February 24, 2014. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports from most of the twelve Federal Reserve Districts indicated that economic conditions continued to expand from January to early February. Eight Districts reported improved levels of activity, but in most cases the increases were characterized as modest to moderate. New York and Philadelphia experienced a slight decline in activity, which was mostly attributed to the unusually severe weather experienced in those regions. Growth slowed in Chicago, and Kansas City reported that conditions remained stable during the reporting period. The outlook among most Districts remained optimistic.\nRetail sales growth weakened since the previous report for most Districts, as severe winter weather limited activity. However, Richmond, St. Louis, and Minneapolis reported modest sales growth since the beginning of the year. Weather was also cited as a contributing factor to softer auto sales in many Districts, with the exception of Cleveland, which saw strong gains. Tourism increased in a number of Districts but declined in Philadelphia and was reported to have been mixed in New York and Minneapolis.\nThe demand for nonfinancial services was mixed compared with the last report; however, both Boston and San Francisco reported strong demand for technology related services. 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.\nResidential real estate markets continued to improve in several areas, albeit modestly. Boston and New York gave mixed reports on sales, and Philadelphia, Cleveland, Minneapolis, and Kansas City noted a decrease in sales. Many Districts cited low inventories of housing and continued home price appreciation. Commercial real estate leasing expanded, according to most reports, while reports on construction activity were mixed. Demand for commercial real estate loans was solid in Boston, improved slightly in Dallas, and continued to grow steadily in Chicago and Kansas City.\nOf the Districts that reported on agriculture, conditions softened in Kansas City and Dallas as dry soil adversely affected wheat crops. Districts reported that energy production and demand continued to increase as a result of increased demand due to the unusually cold winter.\nEmployment levels improved gradually for most Districts, and shortages of specialized skilled labor continued to be reported. Price pressures remained subdued, with the exception of upward cost pressures for some energy and construction products. Wage pressures remained stable for most Districts.\nConsumer Spending and Tourism\nMost Districts reported sales growth had softened from January to early February. New York reported noticeable weakness; however, Richmond, St. Louis, and Minneapolis reported modest growth since the beginning of the year. The extreme winter weather conditions reportedly contributed to the decline in sales in some markets; however, Richmond, Chicago, and Minneapolis reported that weather-related goods contributed to positive sales growth. Reports from furniture retailers in Boston and Minneapolis indicated strong sales. Contacts in Cleveland, Richmond, Kansas City, Dallas, and San Francisco expected retail spending to improve going forward. Vehicle sales varied across Districts. Severe weather conditions resulted in softer vehicle sales as reported by New York, Philadelphia, Richmond, Chicago, Kansas City, and Dallas. Cleveland noted a modest increase in auto sales compared with a year ago. New York cited upcoming auto shows as an expected boost for future sales, while Chicago anticipates that sales incentives will increase near-term sales.\nTravel and tourism was generally strong across most reporting Districts except for Philadelphia who recorded a slight decrease. San Francisco stated that the level of travel and tourism increased in their region. 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. New York reported mixed activity from January to early February. Hotel occupancy rates in Manhattan and New Jersey increased, buoyed by the Super Bowl, while hotel business was down in western New York State due to the harsh winter storms. Airline contacts from Dallas indicated solid to slightly stronger demand, with some temporary disruptions due to severe winter weather across the nation. The majority of Districts reported a solid start in the first quarter for hotel bookings, occupancy, and revenue with an optimistic outlook for the remainder of the year.\nNonfinancial Services\nReports from Districts mentioning nonfinancial business services indicated that activity has been mixed since the previous report. Both New York and Philadelphia reported that severe winter weather reduced demand for services in their region. Activity in Minnesota and San Francisco's professional business service firms improved since their last report. Boston said that demand for software and information technology was stronger than expected, and demand for cloud computing remained strong according to San Francisco's report. Richmond service providers noted flat revenue in recent weeks, while sales were characterized as stable among Kansas City service providers. The outlook among contacts was mixed, as well. Planned activity in St. Louis was described as negative, while contacts in Minneapolis and Dallas noted optimism. Contacts in Kansas City anticipate activity will pick up, while software and IT professionals in San Francisco are cautiously optimistic and anticipate revenue growth will be positive this quarter.\nTransportation activity since the previous report was mixed. 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. Port activity in Atlanta and Richmond reflected increases in auto shipments, while Dallas reported declines in container volumes. Atlanta and Dallas indicated air cargo was down, compared with year earlier levels. Kansas City cited increasing optimism about future transportation activity, while Cleveland noted expectations that demand in 2014 will be the same or only moderately higher than a year ago.\nManufacturing\nManufacturing activity expanded at a moderate pace from January through early February in most Districts. Several Districts reported that severe winter weather had a negative effect on sales and production during this period, including Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, and Dallas. The weather was cited to have caused utility outages, disrupted supply chains and production schedules, and resulted in a slowing of sales to affected customers. Philadelphia and Richmond reported that shipments and orders declined during the first half of February. Steel producers in Cleveland indicated that they have excess capacity, and San Francisco reported low capacity utilization rates at steel mills. Boston and San Francisco indicated that semiconductor sales had been particularly strong. High-tech contacts in Dallas reported a slight improvement in orders, as demand for memory chips remained strong and demand for logic devices remained weak but stable. San Francisco also cited growth in the commercial aerospace industry due to a backlog in orders for commercial aircraft, while defense-related manufacturers reported sluggish overall conditions and expected sales to trend downward. Auto production was strong in Chicago despite weather-related slowdowns in sales, and Cleveland reported auto production to be higher than a year ago. Most Districts were optimistic about the future and expect manufacturing activity to rise in the coming months.\nReal Estate and Construction\nReports on residential housing markets were somewhat mixed. Many Districts continued to report improving conditions but noted that growth had slowed. Most of the Districts indicating otherwise attributed the slowing pace of improvement to unusually severe winter weather conditions. Home sales increased in Richmond, Atlanta, Chicago, St. Louis, and Dallas, while sales were down in Philadelphia, Cleveland, Minneapolis, and Kansas City. Boston and New York reported that the trend in sales for their Districts was mixed. New home construction increased in Richmond, Atlanta, Chicago, St. Louis, and Minneapolis, and remained flat in Kansas City, and was down slightly from the previous period in Philadelphia. Most Districts reported low levels of home inventories and indicated that home prices continued to appreciate. The outlook for sales and residential construction was positive in Boston, Philadelphia, Cleveland, Atlanta, and San Francisco.\nStrong multifamily construction was cited in New York, Cleveland, Richmond, Atlanta, and Dallas, while Boston indicated that its pipeline of multifamily construction was declining. Dallas experienced rent growth above its historical average, while New York reported mixed trends in rent growth. Cleveland noted that it expects healthy growth in rents this year.\nMany Districts, including New York, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, and San Francisco, indicated that commercial real estate activity had increased and that conditions continued to improve since the previous report. Philadelphia noted that there was very little activity to report in construction or leasing due to severe winter weather. The outlook for nonresidential construction was fairly optimistic in Boston, Philadelphia, Cleveland, Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco.\nBanking and Financial Services\nDistrict reports of loan demand and volume were mixed. Demand for residential mortgages decreased in New York, Richmond, St. Louis, and Kansas City, and softened in Philadelphia and Dallas. Cleveland and Atlanta noted increased demand for new purchase mortgages, while mortgage refinancing declined in New York, Richmond, Atlanta, and Kansas City. Demand for consumer loans grew slightly in Philadelphia, Cleveland, Chicago, and Dallas, and held steady in Kansas City. Decreased demand for consumer loans was noted by Richmond and St. Louis, and among small to medium-sized banks in New York. Boston reported commercial real estate loans were highly competitive and demand was solid. Richmond businesses looked for shorter-term commercial real estate loans in order to benefit from lower interest rates those loans offered. Chicago and Kansas City reported steady growth in commercial real estate loans, and demand for such loans improved marginally in Dallas. Small to medium-sized banks in New York reported no change in commercial real estate loan demand.\nNew York noted modest declines in delinquency rates. Cleveland reported delinquencies were stable or trended lower, and St. Louis indicated delinquencies for most types of loans decreased. Loan quality in Kansas City improved compared with a year ago and continued to strengthen in Dallas. Bankers in Cleveland and Atlanta voiced concerns about recently enacted regulations and the potential negative impact on lending.\nAgriculture and Natural Resources\nAgricultural conditions softened since the previous report. 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. Several Districts noted falling feed prices had a positive effect for cattle and hog producers. Kansas City indicated farmland price appreciation moderated from the rapid pace seen in the past few years. Crop prices received in January by farmers fell from a year earlier for corn, wheat, soybeans, hogs, and chickens; prices increased for cotton, rice, oranges, cattle, milk, eggs, and turkeys.\nDistrict 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. Cleveland, Richmond, and St. Louis reported coal production was down, with steam coal plant closures in Richmond. Cleveland, Atlanta, and Dallas described growth in drilling (both inland and offshore) and refining activity. 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. Some firms in the Richmond and Chicago Districts indicated that they elected to delay production and/or reduce usage rather than pay high prices. Dallas indicated that increases in the price of West Texas Intermediate (WTI) crude oil were being bolstered by debottlenecking at Cushing, Oklahoma.\nEmployment, Wages, and Prices\nSince 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. Despite a pickup in hiring in some sectors across New York, Cleveland, Atlanta, and St. Louis, notably in manufacturing, overall employment growth for these Districts remained sluggish. In Philadelphia, as outlooks for long-term overall economic growth improved, firms reportedly continued to expand their headcounts cautiously. In contrast, labor markets in the Minneapolis District tightened slightly. The rate at which temporary employees were converted to permanent hires remained strong across Boston, while contacts in Richmond reported this conversion was happening at a slightly faster pace than previously noted. Many Districts continued to note shortages for particular types of specialized, technical skilled labor, such as healthcare professionals and information technology workers. Atlanta and Dallas also noted shortages for freight truck drivers.\nInflation pressures remained largely unchanged across most Districts. Price pressures were described as minimal or roughly steady in Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco. There were some mentions of rising raw materials prices passing through to final goods. Boston indicated that higher material costs and rising costs of overseas labor could have an upward influence on apparel prices. Chicago, Minneapolis, and Dallas noted that unseasonably cold weather had pushed up costs for some energy products. Construction materials prices remained a source of upward cost pressure, according to contacts in Atlanta and Kansas City. Retail contacts in New York and Philadelphia reported deep product discounting; however, reports from Dallas indicated that retail prices were stable.\nMost Districts noted that wage pressures were largely steady since the last report; however, a few Districts cited upward wage pressures in some highly skilled jobs in industries such as information technology, transportation, and construction. Reports from Cleveland, Kansas City, and San Francisco indicated that businesses were anticipating wage growth to increase from the recent mild pace as the year progresses. Contacts in Chicago indicated that higher healthcare premiums increased non-wage labor costs, while a growing number of employers in Cleveland reported passing through rising healthcare costs to their employees.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nMarch 5, 2014\nGrowth in economic activity in the Seventh District slowed in January and February, as severe winter weather affected activity in a number of sectors. The modest pace of growth to start the year tempered contacts' expectations only somewhat, as most generally maintained their optimistic outlook for 2014. Growth in consumer and business spending slowed. Manufacturing production growth and construction activity were modest. Credit conditions were little changed on balance. Cost pressures remained generally mild, though extreme temperatures caused energy prices to spike. Prices for corn, soybeans, and livestock were up slightly.\nConsumer Spending\nGrowth in consumer spending slowed to a modest pace in January and February. Some retail categories initially benefitted from the poor winter weather, in large part reflecting increased outlays for necessities. However, retail contacts said that once necessary items were purchased, the persistent bad weather led to declining customer traffic and sales. Auto dealers also noted that the weather contributed to lower showroom traffic and sales. However, some contacts pointed to wavering consumer confidence as an alternative reason for lower auto sales. Many dealers expected incentives to increase in the near-term in an effort to rejuvenate sales.\nBusiness Spending\nGrowth in business spending also slowed to a modest pace in January and February. Inventories remained at comfortable levels for most retailers and manufacturers. Growth in capital spending slowed somewhat, while plans for future capital expenditures edged higher. Several manufacturing contacts reported plans to purchase new equipment to increase capacity. Contacts in the manufacturing, banking and finance, and retail sectors reported plans for expansion, either by building or buying new structures or through mergers and acquisitions. The pace of hiring slowed, as did expectations of future hiring, though expectations for the coming year remained positive. A staffing firm reported continued growth in demand for its industrial services, despite some weather-related closures. In contrast, growth in demand for its professional services weakened. A banking contact noted an increase in layoffs due to declining mortgage refinancing. Many contacts noted continuing strength in the demand for skilled workers, with positions often difficult to fill in engineering, information technology, accounting, and other technical occupations.\nConstruction and Real Estate\nConstruction and real estate activity again increased modestly in January and February. However, the pace of growth slowed over the reporting period, with homebuilders reporting that the unusually cold weather had added to costs and led to construction delays. The weather also affected home sales, as several contacts indicated that the cold had dampened new buyer activity. Overall, however, the housing market continued to improve slowly, with home prices and residential rents rising modestly. Real estate brokers noted that the supply of homes for sale remains low, and many homes continue to be purchased with cash because lending standards remain tight. In addition, several contacts indicated that the continued limited availability of new construction financing has kept new home inventories near record lows. Nonresidential construction grew slowly, with one contact noting that industrial building activity had paused in recent weeks. Commercial real estate activity ticked up, as vacancies declined and rents rose. Niche, high-income properties remain a source of strength for the sector, particularly for restaurants and office buildings.\nManufacturing\nManufacturing production growth slowed to a modest pace in January and February, as unusually bad winter weather dampened the demand for manufactured goods and disrupted supply chains. However, manufacturing contacts remained optimistic, generally believing that overall economic conditions remained positive. The auto industry remained a source of strength for the District, even with a weather-related slowdown in sales. The weather also had a significant effect on the demand for steel, though contacts were preparing to meet any pent-up demand that developed during the reporting period. The severe weather conditions also affected the production and transportation of goods. For example, a steel industry contact reported that there were seven days in the last six weeks where his firm could not send shipments, a first in his thirty-five years of experience. Steel service centers reported reduced demand, while specialty metal manufacturers cited mixed but overall modest growth in new orders. Manufacturers of construction materials noted fewer shipments because of the weather, but continued to have a positive near-term outlook for the housing market. Demand for heavy machinery remained soft, as weakness in the mining and agricultural industries overshadowed increasing strength in the construction and energy industries.\nBanking and Finance\nCredit conditions were little changed on balance over the reporting period. Equity market volatility increased and corporate bond spreads widened some. Banking contacts reported slow but steady growth in business loan demand, but greater demand for purchases of equipment and owner-occupied real estate. Activity in the leveraged loan market picked up, with contacts noting increased competition from commercial finance companies and greater demand on the secondary market. Agricultural contacts reported that banks were helping farms restructure costs for the coming season to shore up margins. However, in some cases troubled farmers were forced to search for new lenders when denied credit. Growth in consumer loan demand remained modest, again led by the relative strength of auto lending. Contacts noted moderate downward pressure on pricing and standards across a variety of loan categories.\nPrices and Costs\nCost pressures remained mild overall. However, the severe winter weather pushed up prices for energy commodities, creating supply shortages and disruptive price spikes in some areas, especially for propane and natural gas. For instance, a contact reported that a grain elevator withdrew its propane from storage and resold it for home use. Another business contact reported that because homes have priority in natural gas delivery, her company faced a supply shortage and was forced to shift its production schedule. Other producers chose to delay production rather than pay high prices. Most contacts expected energy markets to return to normal once warmer weather arrives. Prices for cement, drywall, lumber, copper, and rare earth metals rose. Prices for steel, scrap, and iron ore were lower even though the winter weather interrupted shipments. Wage pressures edged up, and were stronger for skilled workers. Many contacts indicated that non-wage labor costs increased because of higher healthcare premiums.\nAgriculture\nSevere winter weather disrupted the flow of agricultural products between farms and markets during the reporting period. Crops that were sold stayed on farms longer than intended as transportation problems delayed shipments. Contacts also reported shortages of trucks and drivers to deliver inventories from the large harvest last fall. Demand for crops has been better than expected, particularly for corn, pushing inventories lower and prices higher. Soybean prices drifted up as uncertainty regarding the harvest in South America weighed on markets. Concerns about high costs for land rentals were also widespread. Livestock producers reported improving bottom lines driven by higher prices for milk, hogs, and cattle combined with lower feed costs. However, some hog farms reported losses of young pigs because of disease. Dairy producers have seen a boost in demand from exports.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nMarch 5, 2014\nThe Ninth District economy experienced moderate growth since the last report. Increased activity was noted in consumer spending, residential and commercial construction, commercial real estate, professional services, manufacturing, and energy and mining. Tourism was mixed, while residential real estate activity decreased and agricultural conditions weakened for farmers. Labor markets tightened since the last report, and wage increases were moderate. Prices generally remained level with a few exceptions noted.\nConsumer Spending and Tourism\nRetail sales activity increased moderately. A Minnesota-based restaurant and bar chain reported that recent same-store sales were up 2 percent to 5 percent from a year ago. A mall manager in Minnesota noted that apparel retailers reported an increase in resort wear sales and that restaurants and bars were busy. Two furniture retailers were expanding showroom space in North Dakota and Montana. A car dealership in Minnesota noted that mechanics were working overtime to meet demand for repairs in large part due to cold, wintry weather. A Montana auto dealer reported solid sales activity in January.\nTourism was mixed, as extremely cold weather was balanced by strong snow depth in several areas of the district. Cold weather slowed the number of visitors to the Upper Peninsula of Michigan. A Minnesota ski resort reported that cold weather slowed ski lift sales on a number of days. However, several ski resorts in Montana reported that lift ticket sales and lodging were up over last year, as the region benefited from good snow conditions. Looking ahead, Minneapolis' convention and tourism bureau anticipates that attendance at events in 2014 will be the largest in more than 10 years.\nConstruction and Real Estate\nCommercial construction activity continued to grow since the last report. New hotels are planned or under construction in several Minnesota markets. In the Minneapolis-St. Paul area, a large retail mall and several industrial as well as mixed-use developments were planned. The retail vacancy rate dropped 50 basis points in the fourth quarter from the third quarter of 2013 in the Minneapolis-St. Paul area. However, the value of January commercial permits in Sioux Falls, S.D., was down slightly from a year ago. Overall residential construction activity increased. In the Minneapolis-St. Paul area, the value of January residential permits grew by 28 percent from January 2013. The value of January multifamily residential building permits in Billings, Mont., increased from January 2013, but single-family decreased. The value of January residential building permits in Sioux Falls decreased significantly from a year earlier.\nActivity in commercial real estate markets increased since the last report. A recent report by a Minneapolis-St. Paul area real estate analytics firm noted that absorption of space is solid and that investors expect more activity across all property types. Residential real estate market activity decreased since the last report. In the Sioux Falls area, January home sales were down 13 percent and inventory was down 4 percent, while the median sale price increased 5 percent relative to a year earlier. In La Crosse, Wis., January home sales and the median price decreased from January 2013. Meanwhile, January home sales were down 13 percent from the same period a year ago in the Minneapolis area; the inventory of homes for sale was down 11 percent, while the median sale price rose 12 percent.\nServices\nActivity at professional business services firms increased since the last report. A February Minneapolis Fed ad hoc survey of lawyers, accountants, engineers, architects, IT consultants and other professional business services firms noted optimism. Most respondents expected more orders and increasing billable hours. A lawyer noted that transactional activity was up and that clients' business increased during the past two years; the lawyer expected this to continue. Recent revenue was up at several Minnesota advertising agencies compared with a year earlier.\nManufacturing\nDistrict manufacturing activity increased moderately since the last report. Purchasing managers responding to a January survey by Creighton University (Omaha, Neb.) reported that manufacturing activity increased in Minnesota and the Dakotas. A company in the early stages of planning a $1.7 billion nitrogen fertilizer plant in North Dakota exceeded its fundraising goals. South Dakota's state government withdrew $13 million in loan commitments for a shuttered Aberdeen beef slaughter plant that declared bankruptcy and was sold last December.\nEnergy and Mining\nActivity in the energy sector remained brisk. Mid-February oil and gas exploration in Montana and North Dakota decreased slightly from recent months, primarily due to extreme cold; however, production remains at record levels. Unexpected demand for propane to dry corn at harvest time, along with severe cold, led to a surge in demand for the fuel. A judge's decision opened the doors for approval of a $250 million solar power development in Minnesota. Overall mining activity was stable. District iron ore mines were operating at near capacity. Meanwhile, fourth quarter 2013 palladium and platinum production was up in Montana compared with the same period in 2012.\nAgriculture\nConditions continued to soften for district farmers, while livestock and dairy producers remained in better shape. More than half of respondents to the Minneapolis Fed's fourth quarter (January) Survey of Agricultural Credit Conditions said farm incomes decreased in the last three months of 2013, and two-thirds expected incomes to fall in the first quarter of this year. Cattle and hog producers continued to benefit from high prices and falling feed costs, as did dairy producers, according to survey comments. Informal survey results suggest that farmers are reacting to falling corn prices and intend to plant fewer acres of corn and a potentially record high acreage of soybeans this coming spring. January prices received by farmers fell from a year earlier for corn, wheat, soybeans, hogs and chickens; prices increased for cattle, milk, eggs and turkeys.\nEmployment, Wages, and Prices\nLabor markets tightened slightly since the last report. A software company expansion in North Dakota will result in 150 construction jobs, followed by increased employment of up to 180 new workers over the next few years. A home improvement retailer announced plans to hire about 1,000 workers in the Minneapolis-St. Paul area to fill spring positions. A workforce center in western Minnesota noted strong demand for welders and health care workers, such as certified nursing assistants. In contrast, a Minnesota-based retailer announced plans to lay off 400 to 500 employees, while another Minnesota company will lay off more than 180 employees in its legal publishing division. A printing plant in Minnesota will close, laying off 170 workers.\nOverall wage increases were moderate. Wages remained at high levels in the oil-drilling areas of North Dakota and Montana, but the pace of increase has moderated recently.\nPrices were generally level with a few exceptions noted. Minnesota gasoline prices remained level since the last report. Some metals prices were down slightly. Meanwhile, District consumers of residential propane faced prices two to three times higher than a year ago due to strong demand and supply constraints.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nMarch 5, 2014\nEconomic activity in the Fifth District increased modestly on balance, despite snow, ice, and unusually cold temperatures that caused many business closings. Manufacturing operations generally slowed as winter storms closed some plants, although a few firms reported an uptick in new orders. Retail sales increased modestly overall, even though many stores and auto dealerships closed during the snow storms. While some retailers benefitted from increased demand for cold-weather items, auto sales declined. Non-retail service providers reported flat revenues in recent weeks. In contrast, tourism and corporate travel picked up, and hoteliers reported strong bookings. Consumer borrowing slowed since the start of the year, while commercial lending remained strong, with several bankers reporting a healthy pipeline for business lending. Residential real estate strengthened, with Realtors reporting faster absorption in some submarkets. In addition, construction of single family homes has been slowly improving, while multi-family housing remained strong. Non-residential construction was generally soft. Commercial leasing ranged from no change to a slight increase since our last report. Agricultural activity slowed seasonally, while contacts were optimistic about a good year ahead. In the energy sector, natural gas production accelerated. In contrast, coal mining fell and some steam coal plants closed. District labor markets were mixed in recent weeks, as extreme weather affected production and services. However, demand was high for semi-skilled workers; also, more quality temp employees were being offered permanent work. According to our latest survey, employment declined at retail establishments and increased at non-retail services firms, while average wages rose across the service sector. Manufacturing employment slowed and average wages ticked up. Service sector prices advanced more quickly, while manufacturing prices increased at a slower pace.\nManufacturing\nManufacturing activity slowed in recent weeks, with winter storms affecting business operations throughout the District. There were a few weather-related plant closures since our last report, totaling between three and four days. In one instance, a North Carolina food manufacturer stated that recent storms caused his plant to close for a few days, resulting in lost wages, hours, and production. A few District plant managers said that the facility downtime would reduce shipments, and in February, survey respondents also indicated that shipments and new orders declined. However, some manufacturers reported that new orders have risen slightly and plants are working to catch up after a slow start in January. A metals manufacturer in South Carolina reported an increase in January sales, slight growth in export sales, and a stronger March forecast. Overall, contacts expected improvement in the spring. Prices of raw materials and finished goods rose at a slower pace, according to our survey.\nPorts\nReports from port officials were mixed but indicated that activity increased overall. Auto imports remained robust, and container volume continued to be strong and growing year over year, particularly at the Port of Virginia. Exports of agricultural materials leveled off in Baltimore, while in Charleston, South Carolina, exports of containerized grains and soybeans were very strong. International coal exports declined slightly while coal shipments to domestic locations fell sharply. Dockworkers at the Port of Baltimore with unresolved labor contracts have remained on the job as mediators work toward a conclusion. Seasonal slowdowns related to the Chinese New Year are expected to last into mid-March.\nRetail\nDistrict retailers reported modest revenue growth, restrained in part by the unusually cold temperatures and multiple winter storms that forced many stores and auto dealerships to close temporarily. An auto dealership in West Virginia reported getting 18 to 20 inches of snow, with only one customer on the lot the next day. Sales of weather-related goods were up for a chain hardware merchant in central Virginia, and the manager of a West Virginia sporting goods store said that the weather helped sales, despite declining foot traffic. Post-holiday discounting boosted sales at several stores in January following mediocre results in December. The manager of a discount department store in the Tidewater area of Virginia reported little change in recent weeks and noted that 2013 had ended with sales below the previous year. Looking ahead, a representative of central Virginia retailers stated that with Easter falling in late April, merchants have more time for promotions, especially for warm-weather apparel. Retail price growth accelerated moderately.\nServices\nRevenues at non-retail services firms remained flat since our last report. An executive at a national freight trucking firm reported that he still expects double-digit tonnage growth in the first quarter, despite closed roads and terminals as winter storms moved across the country. However, several other businesses reported no change in demand for their services, and an executive at a wealth management firm in central Virginia described business as \"status quo,\" even with improved client optimism. An executive at a North Carolina healthcare system reported that flu cases were below typical seasonal levels. Services prices edged up at a slightly faster pace.\nTourism was booming at winter resorts, as natural snowfalls were abundant and colder temperatures allowed additional snowmaking. In several locations, mid-February bookings were solid because Valentine's Day and Presidents' Day sandwiched a weekend. However, an hotelier commented that this pushed bookings into one good weekend instead of two. A hotel manager in western North Carolina reported strong bookings and also noted a shift to more transient visits than conference or group bookings in recent weeks. In contrast, a contact in Baltimore saw increased corporate travel. On the Outer Banks of North Carolina, visitors now expect a package \"experience\" when renting a home, such as included linens, tickets to events, and restaurant coupons.\nFinance\nSince our last report, consumer borrowing slowed considerably while commercial lending remained strong. Several contacts indicated that residential mortgage lending had nearly come to a halt, in part because of this winter's extreme weather. However, a Virginia lender believed that the demand for new homes is there, but that people are \"just trying to survive the weather right now.\" Mortgage refinancing activity also declined in most areas. Interest rates flattened recently, after a decline in January. Meanwhile, credit standards remained tight, according to two bankers.\nAccording to sources, commercial lending picked up. Several bankers reported that loan volumes were robust and that they had a healthy pipeline for the future. One lender said that businesses were looking for shorter term commercial real estate loans in order to benefit from the lower interest rates that those loans offer.\nReal Estate\nResidential real estate strengthened since our last report. Several brokers reported a slight increase in home sales in recent weeks and generally higher sale prices. In addition, buyer traffic and pending sales rose in the past four to six weeks, although a few Realtors noted slowness due to winter weather conditions. A Northern Virginia Realtor commented that sales were more robust than expected, particularly in the high-end market. However, most brokers indicated steady improvement in the $200,000 to $500,000 price range. Realtors reported a mild decrease in housing inventory, with faster absorption in some submarkets.\nConstruction of multifamily housing remained strong since our last report. In addition, single-family residential construction is returning throughout the district, according to contacts, but has been \"slow to come out of the ground\" primarily due to weather conditions. Other than in Washington, D.C., non-residential construction was softer. Commercial leasing ranged from unchanged to slightly stronger, with inquiries mainly for small spaces. While most Realtors reported little change in concessions and incentives, some in Washington D.C. and Northern Virginia saw more concessions, in the form of tenant improvements. Reports on vacancy rates varied across location and submarket. Lease rates were unchanged and sale prices rose mildly. Realtors reported either no change or a slight increase in demand for Class A office space.\nAgriculture and Natural Resources\nAccording to agriculture contacts, crop prices declined in recent weeks. Falling feed costs and higher cattle prices led contacts to believe it will be a good year for livestock producers. Also, farmers expect an increase in poultry production. However, a North Carolina respondent was concerned about an increase in swine virus in his region. A Virginia nursery owner stated that recent cold weather damage, if any, will not be known for a month or two; even so, he expects a ten percent increase in year-over-year sales this spring. A North Carolina agri-business contact reported that tobacco and vegetable producers in his region were cautiously optimistic for the year ahead. In South Carolina, recent ice storms have caused timber damage that is still being assessed.\nNatural gas production remained robust. A West Virginia executive reported \"incredible\" industry growth and noted that shale gas has fundamentally changed the industry outlook. Contacts remarked that energy prices had risen due to increased demand during the extremely cold weather, and a few businesses reduced usage as a result of the higher cost. An executive also noted that two nuclear power plants are expected to shut down because of high licensing costs. Coal mining continued to soften. Several observers have stated that while steam coal plants experienced closings, metallurgical coal is holding its own--but overall the coal industry is weak at best. In West Virginia, leaking chemicals from a coal processing plant were found in public drinking water, and in North Carolina coal ash was discovered leaking into a river.\nLabor Markets\nReports on labor were mixed, as weather-related shutdowns slowed hiring slightly. Demand was strong for semi-skilled workers, project-based laborers, government and healthcare workers, and experienced administrative professionals. Increasingly, quality temporary workers were being offered permanent positions. Turnover remained high among low skill positions. According to our latest survey, retailers reduced employment and average retail wages declined slightly, while non-retail services providers moderately increased payrolls and average wages rose. Manufacturing employment slowed and average wages edged up.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nMarch 5, 2014\nThe Tenth District economy remained stable in January and February and was expected to improve during the next few months. Consumer spending declined moderately as a decrease in automobile, retail, and restaurant sales outweighed an increase in tourism activity. Manufacturing activity expanded moderately, and expectations for future activity remained positive. Construction and residential real estate activity decreased slightly, while commercial real estate activity strengthened. Contacts anticipated stronger real estate and construction activity in the coming months as the weather improves and demand remains strong. Bankers continued to report steady overall loan demand, improved loan quality, and stable deposit levels. Agricultural growing conditions for winter wheat deteriorated, while livestock and crop prices edged higher. Energy activity remained strong, and capital expenditures were expected to increase along with drilling activity. Prices increased slightly for both finished goods and raw materials, with further gains expected in the next few months. Wages rose modestly in most industries, and contacts continued to report difficulty finding workers for some skilled positions.\nConsumer Spending\nConsumer spending declined moderately in January and February but was expected to increase modestly in the coming months. Contacts noted a variety of reasons for the recent slowdown including typical seasonal patterns, extreme winter weather, regulatory and political uncertainty, and a softening in consumer confidence. Although retail sales fell over the past month, sales remained slightly above year-ago levels. Automobile sales decreased moderately in recent months and fell to levels that were well below one year ago. However, automobile inventories continued to build, and contacts anticipated modest improvement in sales over the next few months. Restaurant sales also dipped sharply in February, but were consistent with year-ago levels and were expected to rise in the next few months. Tourism activity was significantly stronger than one year ago, with hotel occupancy rates and room rates both higher. Increased snowfall improved skiing conditions in the District and led to more ski-related tourism.\nManufacturing and Other Business Activity\nManufacturing and transportation activity increased moderately since the last survey period, while other business activity was unchanged. Manufacturing activity picked up for both durable goods and nondurable goods, with production, shipments and new orders expanding at a faster pace among durable goods manufacturers. Overall, manufacturing activity and capital expenditures remained above year-ago levels, and expectations for the future were positive. Contacts in professional and high-tech services, healthcare services, and wholesale trade reported roughly stable sales since the last survey period and anticipated activity to pick up in the coming months. Transportation companies reported stronger sales in February, and contacts were increasingly optimistic about future activity.\nReal Estate and Construction\nConstruction and residential real estate sales decreased slightly, while commercial real estate activity strengthened from the previous survey period. Residential sales declined slightly, while inventories remained low and fell further. Low- and medium-priced homes continued to drive sales, while higher-priced home sales remained sluggish in most of the District. Residential realtors reported additional home price gains, and expected residential real estate activity to improve in the near-term as demand increases due to seasonality. Builders reported that the number of starts was flat during the survey period, but construction activity was expected to strengthen in the coming months, with prices and buyer traffic both expected to increase. Mortgage activity fell slightly compared to the last survey period and compared to a year ago, but was expected to increase in the coming months as a rise in home purchase loans was anticipated to outweigh the decrease in refinancings. Commercial real estate contacts reported a decline in vacancy rates, a slight increase in absorption, and higher sales. Commercial real estate construction softened slightly but was still up over last year and was expected to increase in the coming months.\nBanking\nBankers reported steady overall loan demand, improved loan quality, and stable deposit levels in February. Most respondents reported steady demand for commercial and industrial loans, commercial real estate loans, consumer installment loans, and agriculture loans. Demand for residential real estate loans declined during the survey period. Bankers reported improved loan quality compared to a year ago, and all bankers expected the outlook for loan quality to either improve or remain the same over the next six months. Credit standards remained unchanged in all major loan categories, and respondents reported stable deposits.\nAgriculture\nCrop growing conditions deteriorated, while livestock prices strengthened since the last survey period. Slightly more than half of the winter wheat crop was rated in fair to poor condition as scattered snowfalls provided only marginal soil moisture. Crop prices edged up from recent lows due to an uptick in export demand and concern that South American corn and soybean production would be lower than previously expected. Feeder cattle prices rose further with historically low cow inventories, and strong export demand supported higher fed cattle prices. Hog prices rose amid an intensifying swine virus outbreak that was expected to constrain pork supplies. In addition, production costs for livestock feeders edged down due to lower feed prices. Agricultural bankers indicated that farmland price appreciation moderated from the rapid pace seen the past few years, and most expected values would level off in 2014.\nEnergy\nDistrict energy activity remained solid in January and February and was expected to remain steady in the coming months. Oil rigs increased slightly in the District, particularly in Oklahoma and Colorado. Natural gas rigs edged down despite the surge in natural gas spot prices and record-high withdrawals from storage. Although futures prices for March and April natural gas contracts have risen recently, energy contacts expected natural gas prices to decrease slightly in the coming weeks as storage is restocked. Crude oil prices were expected to remain steady. Propane prices increased significantly for many consumers due to already low propane stocks and unusually cold weather. Capital expenditures were projected to increase in the coming months, particularly in drilling for oil and natural gas liquids.\nWages and Prices\nPrices of finished goods increased modestly, while raw material prices rose moderately in January and February. Wages ticked up and were expected to continue to move higher in the months ahead. Retail, automobile, restaurant and manufacturing contacts noted price increases for both inputs and finished products. However, raw material prices were reportedly rising at a faster pace. These contacts anticipated additional price increases in the months ahead. Builders also reported an uptick in the price of construction materials, particularly roofing. Wages rose modestly in most industries, with transportation and automobile contacts reporting larger increases. Retail and restaurant respondents expected wages to increase at a faster pace over the next six months after minimal gains in recent months. Contacts in the professional and technical services, construction, and transportation industries expected the largest wage gains in the coming months. Some contacts continued to report difficulty finding skilled workers including technicians, engineers, construction trade laborers, and experienced supervisors.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nMarch 5, 2014\nThe Eleventh District Economy grew at a moderate pace over the past six weeks. Manufacturing activity increased overall, although there were a few reports of slowing demand. Retail and automobile sales were slightly weaker but contacts' outlooks were positive. Demand improved in most nonfinancial services industries with the exception of transportation services, which was negatively impacted by severe national weather. Sales of new single-family homes remained on an upward trend, and office and industrial real estate leasing activity remained strong. Loan demand held relatively steady. Energy activity remained solid, while agricultural conditions worsened. Price increases were noted in several industries, although most were modest. Outlooks were optimistic across most industries.\nPrices\nMost responding firms said prices were stable to up slightly over the reporting period. There were a few instances of accelerating prices. Fabricated metals producers noted continued increases in selling prices and expect more in the next six months. Food producers said that selling prices had moved up due to rising input costs, especially for dairy and beef. One airline reported a modest increase in ticket prices. Some transportation firms expected increases in shipping rates in coming months due to higher fuel costs. Retail prices were stable overall and auto selling prices were unchanged.\nNatural gas prices rose marginally over the course of the last six weeks, peaking at $7.63 in early February and ending the reporting period at $5.35. This was driven by the exceptionally cold winter, which led to a drawdown of inventories to the bottom of its 5-year range. The price of WTI also rose over the last six weeks, trading as high as $100.35 at the end of the period. This price behavior was driven in part by heating oil demand, which has also been bolstered by the severe winter, and debottlenecking at Cushing, OK.\nLabor Market\nEmployment levels held steady or increased slightly at most responding firms. Staffing firms said employment levels were up modestly and expected to hire additional workers. Accounting and legal firms reported a modest increase in employment levels. One transportation services firm expected to increase payrolls significantly this year while another one continued with an incentivized buyout to reduce employment. Fabricated metals and food manufacturing firms reported increased hiring due to stronger demand. A recreational vehicle producer noted employment was up moderately and expected to continue hiring. Labor shortages were reported for engineers, truck drivers, mechanics, machinists and construction workers.\nThere were some reports of upward wage pressure. High-tech respondents noted moderate wage pressure for high-skilled workers including electrical engineers. Primary metals contacts and food producers noted slight increases in wage pressures for skilled and technical workers. Airlines reported upward pressure on wages, and one airline had increased salaries modestly. In addition, a transportation services firm noted wages were up slightly, and accounting contacts reported marginal wage pressure. Single-family housing contacts continued to note rising wage pressures.\nManufacturing\nReports from manufacturers were mostly positive and outlooks were optimistic. Construction-related manufacturers said that demand increased since the last report, despite bad weather locally. Fabricated metals producers reported strong demand, a result of robust commercial and residential construction. Contacts noted demand is well above last year's levels. Demand for primary metals softened seasonally since the last report, although most contacts said demand was somewhat better than this time last year. Energy-related manufacturing contacts and food producers noted steady demand at healthy levels. Paper manufacturers said demand was flat to up and running slightly ahead of expectations. Demand for transportation equipment was mixed, in part due to bad weather in the region, but it was still well above year-ago levels.\nContacts in high-tech manufacturing reported a slight improvement in orders since the last survey period. Responding firms said that demand for memory chips remained strong and demand for logic devices remained weak but stable. Inventories were reported as stable and employment levels were flat to slightly up. Most contacts expect stronger demand this year as they expect the world economy to pick up moderately and replacement rates of high tech devices to increase.\nRefinery contacts noted that utilization rates fell slightly, in part due to weather effects. The production growth of major chemicals was mixed. Refinery and petrochemical margins remained healthy.\nRetail Sales\nRetail sales were a little weaker this reporting period due in part to bad weather nationally but year-over-year growth remained positive. According to three national retailers, demand in Texas slightly outperformed the nation since the last report. Contacts' outlooks for the rest of this quarter and the remainder of the year are positive.\nAutomobile sales softened slightly since the previous report. In north Texas, this was attributed to cold weather. Year-over-year demand ranged from down slightly to up slightly. Inventory levels varied by manufacturer, and generally were not a source of concern. Contacts' outlooks for the remainder of the quarter and the year were mostly optimistic.\nNonfinancial Services\nStaffing firms said demand was up more than expected, and that they plan to increase hiring. One contact noted requests for IT professionals started rising again after maintaining an already high level over the past several months. Contacts were more optimistic than at the time of the last report. Accounting firms said demand continued to trend upward, although there was some softness in tax services. Outlooks were cautiously positive. Legal firms noted a slight increase in demand over the past six weeks and it was up notably from last year. Transportation service firms noted mixed demand. Railroad cargo volumes fell slightly below year-ago levels, with severe weather nationally largely to blame. Coal, grain and nonmetallic minerals saw good growth, and chemicals and petroleum shipments rose modestly. Weakness was seen in shipments of lumber and wood and motor vehicles. The outlook remained positive with strong growth expected in the first part of 2014. Small parcel shipping decelerated since the last report but was up from a year ago. Retail trade continued to be the largest driver of growth, and the outlook was optimistic. Air cargo volumes were up since the last report but down slightly from a year ago. Respondents in the maritime shipping industry said loaded container volume declined slightly, but that for 2013 as a whole container volumes rose moderately.\nAirline demand was solid to slightly stronger according to contacts. Severe winter weather across the nation caused some temporary disruptions, but demand rebounded quickly. Demand was in line with or slightly above year ago levels. Outlooks were optimistic.\nConstruction and Real Estate\nSingle-family home sales remained on an upward trend over the past six weeks, although one contact noted a slight slowdown in the pace of new home sales in recent weeks. Inventories of new and existing homes remained at extremely low levels. One respondent noted the low inventory of developed lots could hamper single-family building activity later in the year. Apartment demand remained solid and construction activity continued at high levels. Rental rate growth was above the historical average in most major metros. One contact was concerned about possible overbuilding in urban areas.\nOffice and industrial leasing activity was strong. Sales activity remained at high levels and contacts expect it to increase this year, noting a more friendly lending environment. Outlooks were positive and commercial development is expected to continue to rise this year.\nFinancial Services\nFinancial sector performance remained relatively level over the past six weeks. Demand improved marginally for commercial real estate, middle-market, mergers and acquisitions, and consumer loans. Some softness was reported in residential real estate lending. Loan pricing remained relatively unchanged at competitive levels, and loan quality continued to strengthen. Deposit volumes increased slightly on net after fluctuations in the beginning of the year; rates remain low and static. Respondents' outlooks are hopeful for a better year, noting less client uncertainty and potentially growing interest in loans.\nEnergy\nEleventh District demand for oil field services remained healthy over the past six weeks. Contacts noted that activity in Texas is particularly strong, both inland and offshore, and they were moderately more optimistic for the first half of 2014 than in prior reporting periods.\nAgriculture\nAfter gradually easing throughout the fall, district drought conditions worsened slightly in January and early February. Wheat crop and pasture conditions deteriorated somewhat due to lack of sufficient rainfall. Cotton prices have rallied since December, which may lead more farmers to favor cotton over other row crops when making planting decisions this spring.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nMarch 5, 2014\nOverall business activity in the Fourth District continued at a moderate pace early in 2014. While the severe weather contributed to some temporary slowing across industry sectors, it was viewed mainly as an inconvenience. Demand for manufactured products remained at a moderate to robust level. Activity in the construction sector slackened a bit compared to the same time period a year ago. Post-holiday retail purchases were characterized as disappointing. In contrast, January's auto sales showed strong gains month-over-month. The energy sector was little changed: shale gas activity stayed at a high level, and coal production trended lower. Freight volume was slightly higher. Demand for business credit showed little movement, whereas consumer credit usage was somewhat better than expected.\nHiring was sluggish across most industry sectors, though we are seeing a pickup in manufacturing jobs. Staffing-firm representatives reported that the number of job openings is trending higher, while placements are flat. Vacancies were found primarily in manufacturing and healthcare. Wage pressures were contained. Input and finished goods prices saw little change, apart from some increases in building materials, energy, and diesel fuel.\nManufacturing\nReports from District factories indicated that demand stayed at a moderate to robust level during the past six weeks. Any production declines were attributed to the severe winter weather disrupting raw material deliveries or to seasonal variation. Supply chain disruptions were viewed more as an annoyance than an event that could negatively impact business activity. Compared to a year ago, production levels were generally consistent or somewhat higher. Almost all of our respondents expect production will rise relative to current levels in the upcoming months, with the strongest demand coming from the aerospace, capital equipment, housing, and oil and gas industries. Since the beginning of the year, steel shipments grew slightly--mainly a seasonal effect. Producers predicted that their industry will not exhibit strong growth until there is considerable strengthening in the construction sector and a greater sense of confidence in the economy at large. Steel shipments for the remainder of the first quarter are expected to pick up only slightly. Auto production at District plants increased along seasonal trends during January on a month-over-month basis. Compared to a year ago, production was moderately higher.\nSeveral factory representatives commented that capacity utilization rates were above their normal range or were increasing in the last six weeks, while steel producers noted significant open capacity. Capital budgets for 2014 are generally higher than last year, although very few contacts are allocating monies for capacity expansion. Outlays are being used primarily for equipment purchases, product development, and maintenance. Raw material prices were mainly flat to lower. We heard a few reports of an upward drift in scrap metal and agricultural commodity prices after coming off of last year's low level. Energy prices (electricity and natural gas) rose, which was attributed to the severe weather. Some producers of industrial durables raised prices at the beginning of the year with little pushback. Otherwise, most manufacturers reported that their ability to raise prices has been limited. Job markets are showing some signs of strengthening, with half of our respondents indicating that they are hiring production and salaried workers. Wage increases are expected to be slightly higher in 2014 compared to the past couple of years. A growing number of employers are passing through rising healthcare costs to their employees.\nConstruction\nSales of new and existing single-family homes across much of the District were significantly higher in 2013 relative to the prior year, while average sale prices showed a moderate increase. Builders reported that sales of new single-family homes slowed during the first few weeks of 2014, which they attributed to the extreme cold. Web traffic trended higher. New-home contracts were found mainly in the mid-price category, and the selling prices of new homes continued to stabilize. Reports indicated that multifamily housing remains the strongest segment in the District's construction sector, and some believe there is a risk of overbuilding. Nonetheless, rents are expected to rise 3 to 4 percent this year. Builders anticipate that the housing market will grow at a steady pace in 2014.\nThe pace of activity in nonresidential construction has slowed a bit relative to the same time period a year ago. Builders said that while inquiries, many from first-time customers, are strong, projects keep dropping out of the pipeline due to financing issues or a last minute decision not to proceed. Backlogs are down slightly, and the severe winter weather has slowed fieldwork. Demand was strongest for industrial and institutional building, including flex-space, distribution, manufacturing, student housing, and senior living. Our contacts remain fairly optimistic about near-term prospects, and they are anticipating moderate growth this year.\nPrices for drywall, steel, and plumbing fixtures are trending higher. General contractors reported satisfaction with current staffing levels and will only hire for replacement or if business activity rises above expectations. Reports of rising costs related to healthcare were widespread. There is concern among small builders that employees may lose their employer-paid insurance. One report indicated that a growing number of builders are offering employees a lump sum payment to purchase their own health insurance rather than offering it as a benefit.\nConsumer Spending\nAlmost all retailers we contacted expressed disappointment with January sales. Revenues were below those seen in December, and they were down compared to a year earlier. Cold-weather gear and consumables were in highest demand. Most of the decline was attributed to persistently poor weather conditions. However, two retailers commented that part of the decline is related to a fundamental shift in how consumers spend money. A furniture dealer reported that his customers are less inclined to buy quality goods that can be handed down. Rather, consumers are buying only what they need and are looking for the best value. Projections for the second quarter call for sales to be modestly higher relative to those in the first quarter. Vendor and shelf prices held steady, though a few retailers noted that they are running more promotions than normal. One contact reported that he has been introducing more products at a lower price point. This year's capital budgets will be mainly higher than in 2013. Most of the monies are allocated for opening new stores and e-commerce expansion. Hiring will be limited to staffing new stores and e-commerce support.\nThe number of new motor vehicles sold in January was significantly higher than in December. On a year-over-year basis, sales showed a modest increase. Buyers continued to shift from smaller, fuel-efficient cars to SUVs, crossovers, and light trucks. One dealer told us that truck sales in the southwest region of the District rose 11 percent last year, which he believes reflects an uptick in commercial and construction activity. New-vehicle inventories were described as slightly elevated, which was attributed to leftover 2013 models and the extreme weather. Used-vehicle purchases during January were slightly ahead of those in December and on a year-over-year basis. Expectations for sales of new and used vehicles are positive. Dealers cited the arrival of income tax returns and interest generated by regional auto shows. Used inventory will start building due to the expiration of 2011 leases. Payrolls held steady.\nBanking\nDemand for business credit showed little movement. Brisk competition continues to put downward pressure on loan pricing. Consumer credit demand grew slightly since our last report, primarily for auto loans and home equity products. Residential mortgage activity picked up a little, more so in the new-purchase market. Several bankers raised concerns about recently enacted regulations and their potential negative impact on lending. Delinquency rates were stable or trended lower. Bankers reported no significant changes to loan-application standards. On net, core deposits were flat: increases by consumers were offset by declines in commercial deposits. Little net growth in staffing is expected. Many new job openings are in the areas of regulatory compliance and IT.\nEnergy\nJanuary's aggregate coal production across the District fell below year-ago levels. Going forward, little change in output is projected. Spot prices for metallurgical and steam coal were flat. The number of drilling rigs in Ohio's Utica shale region has increased since the beginning of the year. Natural gas production was stable and continuing at a high level. Cold weather helped boost wellhead prices for natural gas and oil. Reports on capital spending were mixed, although one respondent commented that his firm plans to increase funding to its drilling-program in Marcellus and Utica shales by 80 percent year-over-year. Production equipment and materials prices were flat. Hiring was for replacement only.\nFreight Transportation\nFreight executives reported that it is difficult to gauge changes in shipping volume due to supply chain disruptions attributed to severe weather. Nonetheless, most respondents believe volume has risen slightly year-over-year. Shipments of motor vehicles and machinery were strong. The industry outlook for 2014 is somewhat less favorable than in our previous report. Most of our contacts now expect volume will be in-line or moderately higher than a year ago. Recently enacted environmental and safety regulations are constraining capacity and putting upward pressure on rates. Diesel fuel prices moved higher in January. Operators have been unable to pass through the entire increase via surcharges. Reports on capital spending plans for 2014 were mixed. The industry is hiring primarily for replacement and to maintain capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nMarch 5, 2014\nSixth District business contacts described economic activity as expanding slowly in January and early February. Some weather related effects were noted for a few sectors late in the period. However, the outlook remains generally optimistic as most contacts expect near-term growth to be sustained at, or slightly above, current levels.\nOverall, retailers cited sluggish sales growth for the beginning of the year. The District's tourism industry remained a bright spot with activity being bolstered by international visitors. 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 steady improvements. Manufacturers reported increases in new orders and production. Reports from bankers suggested that loan demand increased for purchases but decreased for refinances. On balance, District employment gains were subdued and prices generally remained stable.\nConsumer Spending and Tourism\nMerchants 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. Others indicated that increased healthcare premiums were having a negative impact. Sales for vehicles were lower than expected.\nHospitality contacts reported an increase in business and convention bookings. Reports also indicated that the favorable U.S. dollar exchange rate was a contributing factor to a rise in international visitors. However, contacts did convey that some of the region affected by the unusual winter weather in January and February experienced losses in revenue due to closures of attractions and restaurants, although most hotels were not as adversely affected. Hoteliers still expect only slight growth in occupancy rates for the first quarter of 2014 compared to the same period last year, while room rates and revenue per available room are expected to grow more robustly.\nReal Estate and Construction\nDistrict brokers indicated that growth in existing home sales had picked up modestly in recent months. 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 outlook among residential brokers continued to improve since our last report.\nReports from District builders were more positive than previous reports. Most contacts agreed that recent activity was in line with their plan for the period. 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. The outlook for new home sales and construction activity remained positive, although many builders expressed concern about dwindling lot inventories and their inability to secure the financing needed to develop new lots.\nDistrict brokers noted that demand for commercial real estate continued to improve. Absorption was picking up, although contacts cautioned that the rate of improvement still varied by metropolitan area, submarket, and property type. Construction activity continued to increase at a modest pace from last year; most contacts reported that their backlog was ahead of year earlier levels. Looking ahead, contacts expect that construction activity in apartments will continue to be somewhat strong in 2014 and that there will be a modest increase in construction activity across other property types. The outlook among District commercial real estate contacts remained positive with further improvements expected over the course of the year.\nManufacturing and Transportation\nManufacturing 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. That said, nearly two-thirds of purchasing managers polled expect production levels to be higher over the next three to six months.\nDistrict transportation firms reported mixed results. Air cargo contacts cited nearly double-digit declines in overall tonnage from a year ago. Port contacts reported year-over-year volume increases in container traffic, bulk cargo, and automotive and machinery. Total rail carloads were down slightly over the same period last year; however, intermodal volumes continued to experience modest gains.\nBanking and Finance\nBanking and credit union contacts expressed mixed concern about the implementation of the new Qualified Mortgage Rules. Some community bankers reported that they have exited the residential mortgage business altogether because of increased regulatory burdens, while others indicated that they do not believe it will have a negative effect on overall mortgage lending. A number of lenders reported increases in purchase mortgages, but not enough to offset the declines in refinances. Regional credit unions were reportedly offering highly competitive rates on CDs to attract deposits in order to sustain lending activity.\nEmployment and Prices\nSince the last report, job growth remained muted across the District. Contacts in construction, manufacturing, energy, hospitality, and real estate noted modest growth in employment. Trucking companies continued to cite driver shortages even amidst rising pay. Rather than adding to payrolls, businesses reportedly continued to rely on technology to enhance output. Some employers continued to show reluctance in large-scale hiring due to concerns about healthcare reform.\nMost 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 materials prices. According to the Atlanta Fed's February business inflation expectations (BIE) survey, costs were up 1.7 percent from a year ago and were expected to pick up slightly to 2.0 percent over the coming 12 months. In general, businesses continued to indicate that they had little to no pricing power.\nNatural Resources and Agriculture\nStrong production growth coupled with higher pipeline capacity continued to supply Gulf Coast refiners with ample light sweet crude. Natural gas storage levels were reported as notably low due to increased withdrawals that were exacerbated by the unusually severe weather. Commercial and residential demand for utilities increased significantly as a result of the weather, yet industrial usage remained fairly consistent with seasonal norms. The energy industry remains optimistic regarding their outlook for demand, pricing, and productivity.\nRecent rains improved soil conditions in parts of Florida and Georgia while portions of Alabama, Louisiana, Mississippi, and Tennessee experienced dry soil conditions. Meanwhile, freezing temperatures and cold winds had farmers and livestock producers taking precautions to mitigate damage to crops and livestock throughout much of the District. There were mixed reports of the impact on Florida crops with some indicating damage to vegetable and strawberry crops and others suggesting no damage to citrus. However, the Florida citrus crop continues to be adversely affected by citrus greening causing diminished production and increased expense battling the disease. On a year-over-year basis, prices paid to farmers for corn, soybeans, hogs, and broilers were down; while cotton, rice, oranges, beef, and eggs were up. The most recent domestic crop production forecasts for corn, rice, soybeans, oranges, and cotton were unchanged from a month ago. Similarly, pork and broilers projections were down moderately while beef projections were up slightly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nMarch 5, 2014\nSevere winter weather caused aggregate business activity in the Third District to decline slightly during the current Beige Book period (beginning with the first full week of January). Nearly all sectors were impacted; however, only a few sectors are expected to suffer permanent losses, according to contacts. For example, while many general retailers have had to realize their losses by heavily discounting their winter inventory, auto dealers anticipate a release of pent-up demand when spring arrives.\nThe general services sector was the only one to maintain some growth in this period, but even it slowed to a modest growth rate. After growing in the previous Beige Book period, general retail sales and residential construction declined moderately; auto sales, existing home sales, and commercial real estate construction declined modestly; and manufacturing, commercial leasing activity, and tourism declined slightly. Staffing services showed little net change after growing modestly over previous periods. Lending volumes also changed little change this period but credit quality continued to improve. Contacts reported slight overall increases in wages, home prices, and general price levels--similar to the last Beige Book period.\nDespite the temporary declines in many sectors, most contacts remained optimistic although they now expect only modest growth over the next six months. Contacts in most sectors continued to express confidence in the underlying economy. In regard to hiring and capital expenditure plans, firms continued to expand cautiously.\nManufacturing\nThird District manufacturers reported deteriorating levels of activity through the current Beige Book period, as severe winter weather repeatedly disrupted sales and production. A slight pace of growth in orders and shipments as reported for the last period continued for several weeks then gave way to slight overall declines by the end of this Beige Book period. The share of all firms reporting increases in general activity fell from about one-third to one-fourth, while the share reporting decreases rose from about one-fourth to one-third. The makers of paper products, fabricated metals, industrial machinery, and instruments have reported gains since the last Beige Book. Reports of decreases came from the makers of food products, chemicals, primary metals, and electronic and other electric equipment. About 40 percent of manufacturers cited negative impacts from the severe winter weather, including lower demand or sales, disruptions to supply channels and to deliveries, fuel and power outages, lost production days, and cost of snow removal.\nOptimism that business conditions will improve over the next six months remained nearly as high as last period and continued to be widespread across sectors. Over half of the firms continued to anticipate increases in activity; however, firms were somewhat less optimistic about new orders and shipments six months out. Contacts reported similar expectations of future hiring and greater expenditures for future capital spending plans than during the prior Beige Book.\nRetail\nThird District retailers reported that malls and stores lost shopping days to snow storms and power outages, including significant holiday weekends, resulting in an overall moderate decline in sales since the last Beige Book. According to one mall contact, Valentine's Day weekend typically accounts for 40 percent of February sales, but the holiday's sales were off 40 percent this year due to a weekend snowstorm. Retailers have engaged in heavy discounting to move winter gear due to a dearth of shoppers. Also, spring inventory is not moving yet. In addition, retailers' margins have eroded from higher heating bills and snow removal costs. Brick-and-mortar retailers expressed uncertainty as to whether consumers have held on to their holiday gift cards or used them at online retailers. Although most of the lost sales opportunities are gone, retailers are hopeful that some pent-up demand will emerge as temperatures rise and that the prior pace of retail sales growth will resume.\nAuto dealers have reported a modest decline in sales since the last Beige Book period--another casualty of the recurring winter snowstorms. Dealers' lots were covered with snow; car buyers were scarce. Pennsylvania dealers expect sales to be off at least 15 percent (year over year) in February, while January sales were up a little. New Jersey dealers reported relative softness, adjusting for seasonal trends through January, although last year's comparative sales were boosted by replacement vehicles following Hurricane Sandy. Contacts in both states described dealers as currently \"pretty grouchy, but upbeat for the year.\" Auto dealers harbor greater hopes than general retailers that spring sales will capture pent-up demand from the winter losses. The outlook for 2014 remains positive.\nFinance\nThird District financial firms reported little overall change in total loan volume. Many loan categories appeared to decline slightly in volume. Credit card lending fell faster; however, that is a typical seasonal trend as consumers pay down their post-holiday balances. In contrast, other consumer credit loans and home equity lines have grown slightly since the last Beige Book period. Contacts continued to characterize the lending environment as steady, very slow, and highly competitive. Real estate lending softened considerably as the wintry weather reduced the pace of new contracts. Despite this current softness, contacts described an improving lending environment with a stronger labor market, greater consumer confidence, and healthier balance sheets. Overall, most bankers remained optimistic for continued slow, steady growth and for some pickup from pent-up demand for housing, autos, and other loans when the spring thaw finally arrives.\nReal Estate and Construction\nThird District homebuilders have reported that both new home sales and construction activity were depressed by the unusually severe winter weather, generating moderate declines from the prior-period construction levels. One builder reported production at 60 percent of plan, while sales were only about 50 percent of plan. Builders expect to accelerate production and catch up with prior schedules as the weather permits, and they are hopeful that spring sales may rebound. However, extra overtime coupled with increased demand from future sales may create labor shortages and escalate other input costs. According to residential real estate brokers, sales of existing homes were flat to down (year over year) in many of the Third District's major metropolitan areas in January. Pending sales and new listings were also reported as declining at a modest pace; February closings, traffic, and sales are expected to be negative throughout most of the District. Brokers are somewhat less bullish for a significant increase in 2014 over 2013 levels.\nNonresidential real estate contacts indicated some weather disruptions have delayed ongoing construction activity. Modest declines in current construction are expected to be offset in the near future as contractors hustle to resume their schedules. Leasing activity was quiet--as businesses were often shuttered--but is expected to resume its modest pace next period. Little change was reported in leasing activity. Two more major buildings were announced for Center City Philadelphia since the last Beige Book: a 59-story major office tower and a 32-story residential tower. Added to the two 47-story office/residential towers already slated for groundbreaking in 2014, these four projects have caused most contacts to become increasingly optimistic for stronger growth as the year progresses. Meanwhile, most contacts speak of incremental improvement, despite the winter lull.\nServices\nThird District service-sector firms have slowed to a modest pace of growth since the last Beige Book--again with weather dampening demand for a variety of services. Although the District's ski resorts benefited from the additional snowfall, even they were plagued by the storms' timing, which made travel to the resorts difficult on several weekends. In addition, school districts that have amassed too many snow days may shorten spring breaks resulting in cancelation of vacation bookings. Some have already interfered with the Presidents' Day weekend by holding classes.\nOther service firms reported mostly modest growth rates--whittled down from recent moderate rates, as heavy snowfalls and power outages prevented workers from commuting and businesses from opening. As with general retail, some of the service-sector revenue will not be recouped after the snow has melted. For example, staffing firms cite the loss of billable hours that will not be made up. Other segments of the staffing industry offset those losses with slight growth. Overall, most of service-sector losses were viewed as manageable, and most contacts expect current activity to resume and grow.\nPrices and Wages\nOverall, Third District contacts reported no change to the steady, slight pace of price level increases, similar to other recent Beige Books. Manufacturing firms reported that prices paid and prices received tended to rise slightly, but more modestly than before. Auto dealers reported little change in pricing, general retailers reported deep discounting, and most builders reported holding prices steady. Many contacts continued to report tight, or narrowing, margins. Generally, real estate contacts continued to report rising prices for lower-priced homes, while higher-priced homes are aligned to local market conditions. Very few contacts are seeing wage pressures, other than for a few highly skilled occupations.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nMarch 5, 2014\nEconomic activity in the Twelfth District expanded at a moderate pace during the reporting period of late December through mid-February. Price increases for most final goods and services were minimal, and wage gains remained quite modest on net. The pace of retail sales stepped down, although demand for business and consumer services rose. District manufacturing activity was mixed. Production activity in agricultural and resource-related industries expanded on balance. Activity in residential and commercial real estate markets continued to expand. Financial institutions reported that loan demand increased overall.\nPrices and Wages\nContacts observed minimal price increases for most final goods and services. Fruit and produce prices moved up, and many contacts expect food and water price inflation to pick up in the near term as a consequence of the drought in California. Prices edged up for some construction-related inputs, including wood, insulation, and cement. A higher supply of recycled metals in Asia resulted in lower exports of such metals from the United States, which contributed to downward pressure on U.S. steel input costs and on final prices for steel products.\nWage gains remained quite modest on net, although contacts pointed to signs of building upward wage pressures in areas with particularly strong regional economic activity. Wages for some worker types, notably software developers and engineers, continued to increase rapidly. Reports suggested that the rising cost of living in the San Francisco Bay Area may be pushing up wage pressures.\nRetail Trade and Services\nThe pace of retail sales stepped down. Traditional brick-and-mortar retailers faced fierce competition from online vendors, but recent reports indicated that both in-store and online sales were soft. Retail grocers observed increasing price sensitivity on the part of consumers and noted that even upscale retail grocery establishments experienced pressure on margins. Despite the recognition of some weakness in current conditions, most contacts expect consumer spending to improve or stay the same over the next 12 months. In particular, contacts were optimistic in their outlook for spending on autos and home furnishings.\nDemand for business and consumer services rose. Demand for cloud computing services remained strong, although contacts noted that many small and medium-sized businesses have continued to invest in their own data centers. Contacts noted that activity in the food service industry continued to improve. Providers of health-care services expect increased demand for services as a result of expanded coverage under the Affordable Care Act. The level of Hawaiian travel and tourism activity in 2013 surpassed past-year records despite a slowdown in the fourth quarter. Contacts also indicated that tourism picked up in Southern California, with occupancy rates in San Diego hotels reaching historic highs. Overall tourism conditions in Las Vegas improved slightly.\nManufacturing\nDistrict manufacturing activity was mixed during the reporting period of late December through mid-February. Contacts noted that year-over-year growth in the electronic components industry resumed after several quarters of decline. Semiconductor sales hit record levels in 2013 and are expected to grow modestly in 2014. The sustained backlog of orders for commercial aircraft supported growth in the commercial aerospace industry, although contacts expect the pace of new orders to slow this year. Defense-related manufacturers reported sluggish overall conditions, and they expect sales, new orders, and capacity utilization to trend downward. Wood and steel product manufacturers noted that extreme weather conditions across the country created problems along their supply chains. Demand for steel used in private nonresidential construction projects continued to improve slowly, although contacts reported low capacity utilization rates at steel mills.\nAgriculture and Resource-related Industries\nProduction in agricultural and resource-related industries expanded on balance. Demand was stable for most crop and livestock products. Concerns about water costs and availability may cause farmers in the California Central Valley to scale back planting. Contacts expect growers to allocate water to more permanent plantings, such as almond and walnut orchards, before allocating water to annual crops, such as corn. In addition, dairy and meat producers may face higher feed costs due to water shortages. Year-over-year crude oil production increased robustly, although consumer demand for petroleum and gasoline rose more modestly. Demand for electricity and gas by industrial customers grew further.\nReal Estate and Construction\nActivity in residential and commercial real estate markets continued to expand. Home prices across most of the District climbed further, albeit at a bit slower pace, and contacts indicated that the pace of home sales was below historical averages in many areas. Contacts noted that while mortgage application volume in Idaho increased, completed sales transactions dropped. Most contacts expect homebuilding activity to strengthen this year. Occupancy rates for commercial real estate trended up in some areas, and increasing permit activity and sales of empty lots suggest that commercial construction may pick up further. In other areas, contacts noted that existing available square footage, especially in retail-oriented properties, has stifled new construction. Public infrastructure projects, as well as a large number of high-rise commercial construction projects, have been announced or are under way in Honolulu, Seattle, Los Angeles, and the San Francisco Bay Area.\nFinancial Institutions\nFinancial institutions reported that loan demand increased overall. Lending grew robustly in selected areas, and contacts noted that asset quality improved at most banks. Contacts noted that credit remains cheap and available for large firms but less accessible by smaller businesses. Ample liquidity in the marketplace continued to perpetuate substantial competition among lenders for business from high-quality commercial borrowers. Contacts indicated that some financial institutions relaxed underwriting standards in an effort to win new business or maintain existing business relationships. In the District's Internet and digital media sectors, there were several notable mergers and acquisitions during the reporting period, and the pace of initial public offerings picked up slightly. Private equity activity was mostly stable, and venture capital financing was strong. The volume of venture capital deals in the second half of 2013 reached mid-2007 levels, and the value of deals surged in the fourth quarter of 2013.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nMarch 5, 2014\nEconomic activity in the Second District declined modestly in the first few weeks of 2014, hampered by inclement weather. Contacts report some broadening of price pressures in the service sector, though retail prices remain mostly stable. Manufacturers in the District report that activity was stable whereas service-sector firms report some weakening, on balance. Labor market conditions have continued to improve gradually since the last report. General merchandise retailers report that sales were below plan and down sharply from a year earlier, due to unusually harsh weather in January and early February. New auto sales weakened noticeably in January but showed signs of rebounding in the first half of February. Tourism activity was mixed in January and early February, hampered by harsh weather but boosted by the Super Bowl. Housing markets were mixed, while commercial real estate markets firmed slightly. Finally, banks report some further weakening in loan demand from the household sector, little change in credit standards, and steady to declining delinquency rates.\nConsumer Spending\nGeneral merchandise retailers report that sales weakened noticeably in early 2014, running below plan and well below year-ago levels. Two major retail chains indicate that sales during the first six weeks of the year were down sharply from comparable 2013 levels, mainly due to the weather. One contact notes exceptionally low gift card redemptions--viewed as a likely harbinger that much of the shortfall in sales will be made up when warmer weather arrives. Similarly, contacts at major malls in upstate New York report that sales were weak in January and early February, due largely to heavy snow and extremely cold weather, particularly during weekends. Not surprisingly, one category that has performed reasonably well is cold-weather outerwear. Inventories are mostly at or modestly above desired levels. Prices are reported to be little changed, though some retail contacts describe the environment as increasingly promotional.\nAfter a strong 2013, auto dealers in upstate New York report that new vehicle sales weakened noticeably in January but showed some signs of rebounding in early February. Inclement weather is viewed as having been an inhibiting factor in January, but not the only one; conversely, some of the pickup in February is attributed to a major auto show in Buffalo, and an upcoming show in Rochester is expected to provide some boost as well. Wholesale and retail credit conditions for auto purchases remain favorable.\nTourism activity has been mixed thus far in 2014. Despite the bad weather, attendance at Broadway theaters is up about 7 percent year-to-date, form 2013 levels, and total revenues are up 12 percent; however, it should be noted that there are roughly 15 percent more shows running in 2014 than in 2013. Manhattan hotels report that occupancy rates were little changed from a year earlier in January, though room rates were up sharply--cold and snowy weather dampened demand but this was largely offset by business related to the Super Bowl, which buoyed occupancy and especially room rates in late January and early February. Hotels in northern New Jersey, where occupancy rates are typically much lower this time of year, reportedly saw a more pronounced boost during the weeks around the Super Bowl. Hotels in western New York State, on the other hand, report that winter storms depressed business in January--particularly in Rochester and Niagara Falls.\nFinally, consumer confidence improved in January: the Conference Board's surveys of residents of both the Middle Atlantic states (NY, NJ, Pa) and New York alone show confidence surging to a six-year high, while Siena College's survey of New York State residents indicates a more moderate increase, to a six-month high.\nConstruction and Real Estate\nThe District's housing markets have been mixed since the last report. Contacts in western New York State note some softening in both activity and prices in early 2014--largely a function of the unusually cold and snowy weather, but also reflecting increased difficulty obtaining credit. More broadly, though, home sales across New York State showed resilience in January, slipping only slightly from the elevated level of a year earlier, while prices reportedly rose 10 percent. Sales activity in New York City's co-op and condo market slowed somewhat in January and early February, as weather greatly inhibited buyer traffic. Sales prices for apartments were flat in Manhattan but continued to trend up in Brooklyn. Similarly, the market for apartment rentals has remained steady, with rents edging down in Manhattan but rising in Brooklyn. Weather has also been a factor in northern New Jersey since mid-December for both sales and new construction, though the underlying fundamentals also remain weak: mortgage delinquencies remain high, and a stubbornly high inventory of distressed properties is dampening market conditions. The multi-family market in northern New Jersey (mostly rentals) is reported to be faring well.\nCommercial real estate markets were stable to slightly stronger in early 2014. In New York City, office leasing activity was characterized as very brisk; but this was accompanied by several new spaces becoming available in both Downtown and Midtown Manhattan, leaving the overall availability rate little changed. Asking rents for office space, however, continued to rise and were up 6 to 9 percent from a year earlier. Elsewhere around the District both office availability rates and rents were little changed in early 2014. In general, the market for prime (Class A) space has underperformed the rest of the office market. Industrial vacancy rates were mostly steady to down slightly across the District, while asking rents were little changed.\nOther Business Activity\nThe labor market has shown further signs of gradual improvement in early 2014. Business contacts in both the manufacturing and service sector report steady to rising employment; and more firms plan to increase than reduce staffing levels in the months ahead--particularly in the manufacturing sector. Separately, a major employment agency specializing in office jobs reports that the market continues to improve gradually, though weather appears to have been somewhat of a deterrent to hiring. Many job postings are challenging to fill because they call for specialized skills; salaries generally remain flat.\nManufacturing firms in the District report a slight pickup in activity in early 2014, on net, whereas service sector businesses have seen a pullback--apparently driven, in large part, by the inclement weather. Still, business contacts remain widely optimistic about the near-term outlook. Overall, price pressures remain stable and generally subdued in the manufacturing sector but have grown increasingly widespread among service-sector businesses.\nFinancial Developments\nSmall to medium-sized banks across the District report a further decrease in demand for consumer loans and residential mortgages but no change in demand for commercial mortgages and commercial & industrial loans. Bankers also indicate a decrease in demand for refinancing. Respondents note that credit standards were unchanged across all loan categories. Respondents indicate a decrease in spreads of loan rates over costs of funds for commercial loans and commercial & industrial loans, but report no change in other categories. Respondents indicate little or no change in average deposit rates. Finally, bankers report modest declines in delinquency rates, on balance, for all loan categories.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nMarch 5, 2014\nThe economy of the Eighth District has continued to grow at a moderate pace since the previous survey. Recent reports of planned activity in manufacturing have been positive, while reports in services have been negative on net. Residential and commercial real estate market conditions have continued to improve. Lending at a sample of District banks was little changed during the fourth quarter of 2013. Wage increases have been moderate, while prices and employment levels have increased modestly.\nConsumer Spending\nContacts reported that retail sales in the past three months increased slightly compared with the same period last year. Two thirds of contacts noted somewhat higher sales, while one third saw no change. Half of the retailers reported that sales levels met their expectations, while the other half reported that sales were below expectations. Three fourths of contacts noted that inventories were at desired levels, and the rest noted that inventories were too low. Three fourths of contacts noted no change in the mix of high- and low-end products, while the rest noted more sales of high-end relative to low-end products.\nReports from auto dealers about sales in the past three months were mixed. One in four car dealers surveyed saw increased sales compared with the same period last year; half saw no change, and the rest saw decreased sales. Half of contacts reported an increase in used car sales relative to new car sales; 12 percent reported the opposite, and the rest saw no change. Thirty-eight percent of contacts reported increased sales of low-end vehicles relative to high-end vehicles; 25 percent reported the opposite, and the rest saw no change. Sixty-three percent of contacts noted that inventories were at desired levels, while 37 percent noted that inventories were too high.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our previous report. Several manufacturing firms reported plans to add workers or expand operations in the Eighth District, while a smaller number of manufacturers reported plans to reduce employment. Firms in automobile, plastic products, auto parts, appliance, food, alcoholic beverage, and machinery manufacturing plan to hire new employees and expand operations in the Eighth District. In contrast, firms that manufacture television sets, semiconductor devices, metal products, and carbonated beverages reported plans to lay off workers. According to a recent survey, manufacturers saw increased sales over the past three months, compared with a year ago. Several industrial contacts noted disruptions in operations because of cold weather; disruptions included gas or electricity outages, difficulty commuting to work, and delays in logistics.\nReports of planned activity in the District's service sector have been negative on net since the previous report. Firms in mortgage, telephone answering, disinfecting and pest control, pharmaceutical benefit management, and social security benefit management services reported plans to lay off workers or reduce employee hours. In contrast, firms in health care, telecommunication, computer-system consulting, legal, fitness and recreation, online shopping, and food distribution services reported new hiring and expansion plans in the District.\nReal Estate and Construction\nHome sales have continued to increase throughout most of the Eighth District on a year-over-year basis. Compared with the same period in 2012, December 2013 year-to-date home sales were up 16 percent in Louisville, 17 percent in Little Rock, 7 percent in Memphis, and 4 percent in St. Louis. December 2013 year-to-date single-family housing permits increased in the largest metro areas of the District, compared with the same period in 2012. Permits increased 8 percent in Louisville, 12 percent in Memphis, and 11 percent in St. Louis. In contrast, permits decreased 9 percent in Little Rock.\nCommercial and industrial real estate market conditions in the District have continued to improve. A contact in northwest Kentucky reported that office leasing continued to struggle while the demand for industrial space continued to improve. A contact in northeast Arkansas noted modest improvement in commercial real estate. A contact in northwest St. Louis County reported that office leasing in 2013 increased for the fourth consecutive year and expected a strong start in 2014. Commercial and industrial construction improved throughout most of the District. A contact in Louisville noted several on-going commercial construction projects in Hardin County, Kentucky, and in downtown Louisville. Contacts in Memphis continued to report new commercial construction in Jonesboro and Paragould. A contact noted a new office building project in northwest St. Louis County and a new industrial manufacturing plant in Wentzville, Missouri. A contact in Little Rock reported a plan for a mixed-use project that includes commercial space and a plan for an outlet mall in Little Rock.\nBanking and Finance\nA survey of District banks found little change in overall lending activity during the fourth quarter of 2013. During this period, credit standards and creditworthiness of applicants for commercial and industrial loans increased slightly, while demand improved moderately and delinquencies decreased moderately. Credit standards and creditworthiness of applicants for prime residential mortgage loans increased moderately. Demand was much weaker overall, with some respondents reporting substantial weakness, and delinquencies decreased moderately. Credit standards and creditworthiness for auto loans and credit cards remained mostly unchanged, while demand decreased moderately and delinquencies edged down slightly. Credit standards, creditworthiness of applicants, demand, and delinquencies for other consumer loans decreased.\nAgriculture and Natural Resources\nRed meat production in the District for 2013 was 1.2 percent higher than in 2012. The production increase was driven by the District's largest producers in Illinois, Indiana, and Missouri. Coal production in the District for January 2014 was 6.2 percent lower compared with January 2013.\nPrices, Wages, and Employment\nA survey of Eighth District businesses indicated that wages grew at a moderate pace, while prices and employment increased modestly over the past three months. Sixty-seven percent of contacts reported that prices during the past three months remained about the same relative to the same period last year, while 21 percent of contacts indicated that prices were somewhat higher. Fifty-seven percent of respondents indicated that wages during the past three months have stayed about the same relative to a year ago, while 33 percent noted somewhat higher wages. Finally, 72 percent of contacts reported that employment levels have remained the same over the past three months, compared with a year ago, while 20 percent reported an increase and 11 percent reported a decrease.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nJanuary 15, 2014\nEconomic activity in the Eighth District has grown at a moderate pace since the previous report. Recent reports of planned activity in manufacturing and services have been largely positive, although reports from some contacts in the retail sector have been mixed. Overall residential real estate market conditions in the District have continued to improve, and commercial and industrial real estate market conditions have also improved. Total lending at a sample of small and midsized District banks remained largely unchanged from mid-September to mid-December.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been largely positive since our previous report. Several manufacturing firms reported plans to add workers, expand operations, or open new facilities in the District. Firms in automobile, silicon metal, overhead distribution products, tanker barge, primary metal, furniture supply products, fiber board, air conditioner parts, laboratory equipment, oilfield equipment, medical device, automation equipment, and railroad tie manufacturing announced plans to hire new employees and expand operations in the District. In contrast, a firm that manufactures aluminum products reported plans to close a plant and lay off workers in the District.\nReports of planned activity in the District's service sector have also been positive since the previous report. Firms in health care, online shopping, information technology, telecommunications, restaurant, distribution, and insurance services reported new hiring and expansion plans in the District. In contrast, a firm in wholesale grocery services announced plans to lay off employees. Retail contacts across the District reported openings of new facilities. Retail contacts in the Louisville area noted that sales for 2013 were mostly flat to slightly higher than those in 2012, while retail contacts in the St. Louis area noted that Black Friday sales were lower than anticipated. In Louisville, restaurant contacts noted an increase in corporate dining. In St. Louis, tourism contacts reported the closure of a hotel in the downtown area.\nReal Estate and Construction\nHome sales have continued to increase throughout most of the District on a year-over-year basis. Compared with the same period in 2012, November 2013 year-to-date home sales were up 16 percent in Louisville, 17 percent in Little Rock, 8 percent in Memphis, and 5 percent in St. Louis. November 2013 year-to-date single-family housing permits increased in the majority of the District's metro areas compared with the same period in 2012. Permits increased 8.3 percent in Louisville, 16 percent in Memphis, and 13 percent in St. Louis. In contrast, permits decreased 8 percent in Little Rock.\nCommercial and industrial real estate market conditions have improved throughout most of the District. A contact in central Arkansas noted growing activity in the industrial real estate market. Contacts in both Louisville and St. Louis reported thriving downtown commercial markets. A contact in Memphis reported that office and retail vacancy rates declined during the third quarter of 2013. Commercial and industrial construction activity also improved throughout most of the District. A contact in Memphis reported a new commercial construction project in Horn Lake, Mississippi. A contact in Louisville reported construction of several new commercial buildings in the downtown area. A contact in northwest Arkansas noted an emerging market for medical office space. Contacts in St. Louis reported plans for a new commercial construction project in the midtown area, as well as multiple commercial development projects in the Grove neighborhood.\nBanking and Finance\nTotal loans outstanding at a sample of small and midsized District banks remained largely unchanged from mid-September to mid-December. Real estate lending, which accounts for 72.9 percent of total loans, saw no change. Commercial and industrial loans, accounting for 15.6 percent of total loans, decreased 0.6 percent. Loans to individuals, accounting for 5 percent of total loans, increased 0.9 percent. All other loans, accounting for 6.5 percent of total loans, increased 0.7 percent. During this period, total deposits at these banks decreased 0.5 percent.\nAgriculture and Natural Resources\nAs of late November 2013, around 98 percent of the District's winter wheat crop was rated in fair or better condition, as 89 percent of the winter wheat crop had emerged, on average, across the District states. This rate of progress was moderately faster than the average over the past five years. Year-to-date red meat production in the District for November 2013 increased by 0.5 percent compared with the same period in 2012. Arkansas experienced a noticeable 62.3 percent decline in red meat production over the same period; however, production in Arkansas accounts for less than one percent of total red meat production in the District. Year-to-date coal production in the District for November 2013 was 3.9 percent higher compared with the same period in 2012. On a monthly basis, coal production for November 2013 was 5.7 percent higher than in November 2012.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nJanuary 15, 2014\nBusiness contacts indicated that from late November through December overall economic conditions improved moderately in the Sixth District. The outlook among contacts was optimistic with most expecting modest growth for early 2014.\nDistrict merchants noted positive year-over-year holiday sales growth with on-line sales outpacing traditional store sales. The hospitality sector continued to experience the same solid pace of activity that it had all year long. Similar to the previous report, residential housing brokers noted that existing home sales growth continued to slow, while homebuilders experienced modest growth in new home sales. Commercial contractors described construction activity as improving, especially in the multifamily segment of the market. Manufacturers indicated that overall activity strengthened since the previous report. Banking contacts noted that applications for mortgage loans were down. Employment levels across the District grew at a mild pace, while cost pressures remained stable.\nConsumer Spending and Tourism\nPrior to the start of the holiday season, retailers expressed concerns about the fewer number of shopping days as compared to 2012 due to the timing of Thanksgiving. However, many merchants indicated that by offering deeply discounted merchandise and extended hours of operation, their stores experienced positive sales growth over the reporting period. Reports also indicated on-line retailers fared better than the traditional brick-and-mortar stores. Automotive dealers continued to cite solid vehicle sales.\nHospitality contacts noted that occupancy rates, revenue per available room, and room rates for the holiday season exceeded year-ago levels. Hoteliers anticipate that this winter season will outperform last year based on advanced bookings. In the coming months, some District cities are expecting an increase in visitors from the addition of new direct international flights as well as new area attractions.\nReal Estate and Construction\nDistrict brokers indicated that growth in existing home sales slowed in recent months. The majority of brokers said sales were flat to slightly up compared with a year earlier but below their plan for the period. By most accounts, inventory levels were flat to slightly down on a year-over-year basis. Most 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 outlook among brokers has improved since our last report with more contacts anticipating that sales will be slightly up on a year-over-year basis over the next several months.\nReports from District builders were more positive than broker reports. Most contacts agreed that recent activity was in line with their plan for the period. The majority of builders noted that construction activity and new home sales were ahead of the year earlier level. Reports indicated that unsold inventory levels were flat to slightly down. The majority of builders reported modest home price appreciation. The outlook for new home sales and construction activity remained positive among most contacts.\nDistrict brokers noted that demand for commercial real estate continued to improve, though they cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. Construction activity continued to increase at a modest pace from earlier in the year; contacts noted that apartment construction was still much more robust than construction in the other sectors. New build-to-suit projects continued to break ground across the region and landlords continued to update and reconfigure existing space to make it ready for tenants. The outlook among District commercial real estate contacts remained positive with further improvements expected early in 2014.\nManufacturing and Transportation\nManufacturing activity strengthened slightly during the reporting period. Contacts reported gains in new orders and production. Manufacturers also noted that commodity prices were relatively flat and employment modestly increased. Finished inventories decreased as businesses looked to reduce inventory levels, and purchasing agents experienced longer wait times for materials ordered from their suppliers. Optimism regarding future production continued as auto manufacturers experienced strong sales in November. Nearly half of contacts expect production levels to increase over the next three to six months.\nLogistics contacts noted year-to-date increases in the movement of industrial and healthcare-oriented goods. Delays in holiday shipments to consumers were reportedly due to the shortened shopping season, higher than expected on-line sales, adverse weather conditions, and lower inventory levels at distribution centers. Rail contacts cited year-over-year increases in intermodal traffic supported primarily by significant increases in the movement of petroleum products. Trucking contacts anticipate that tonnage will increase substantially over the previous year buoyed by growing sectors of the economy that generate heavier freight loads, such as residential construction and energy production.\nBanking and Finance\nCommunity bank contacts expressed continued concern about the implementation of qualified mortgage requirements in 2014 and the possible negative effect on mortgage lending, particularly as some mortgage lenders exit the mortgage lending business altogether or change their business models because of the added risks. Some lenders indicated they were shifting their focus from residential mortgages to small business and commercial real estate loans. Overall, applications for mortgage loans were down as refinancing activity slowed. Competition for qualified borrowers continued to increase and individual bankers attributed much of their increased market share of lending to luring loans away from other banks. Non-revolving credit continued to increase mostly due to robust vehicle sales.\nEmployment and Prices\nBusinesses did not indicate a significant pickup in hiring, nor did they report any staff reductions. Businesses continued to employ technology and utilized overtime and contract labor as an alternative to increasing permanent staff. Contacts in manufacturing, construction, professional, and energy sectors report persistent difficulty in finding qualified workers. On balance, many firms expressed continued hesitancy caused by concerns about healthcare reform in terms of their overall hiring plans.\nCost pressures remained mostly stable, according to business contacts. Healthcare was the most cited exception, with reports of larger cost and price increases than usual. Merit increases remained in the 1 to 3 percent range. However, skilled and professional positions in energy, construction, information technology, and logistics continued to see above-average wage increases and higher starting pay. Year-ahead unit costs expectations were 1.9 percent in December, unchanged for the fourth consecutive month, according to the Atlanta Fed's survey on business inflation expectations.\nNatural Resources and Agriculture\nCapacity utilization in the energy industry remained near historic highs, according to contacts. Deep water oil exploration in the Gulf of Mexico picked up, bolstered by the completion of recent pipeline infrastructure projects. Contacts noted that costs to transport domestic crude oil to refineries along the Gulf Coast via land or barge continued to rise. However, the outlook for demand, pricing, and productivity for the industry was optimistic on the whole for the coming year.\nRecent rains improved soil conditions in some areas of the District, while parts of Georgia, Alabama, Louisiana, and Florida experienced dry conditions. Monthly prices paid to farmers for rice and soybeans were up; prices for beef and broilers remained unchanged; and prices for corn, cotton, and hogs were down. The most recent domestic crop production projections for soybeans, corn, and rice were unchanged. Cotton and orange projections were down, although cotton was only down slightly. Similarly, projections for domestic beef and pork production rose, while broiler production remained unchanged.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nJanuary 15, 2014\nEconomic activity in the Twelfth District expanded at a moderate pace during the reporting period of late November through late December. Price inflation was subdued for most final goods and services, and upward wage pressures were modest overall. On balance, holiday retail sales increased relative to the year earlier. Demand for business and consumer services edged up. District manufacturing activity advanced. Output in agricultural and resource-related industries expanded. Demand for residential real estate climbed further, and commercial real estate activity improved. Reports from financial institutions indicated that loan demand increased.\nPrices and Wages\nPrice inflation for most final goods and services remained subdued on net. Contacts noted that some firms expect benefit-related cost increases, which may be passed through to final prices this year. Food industry contacts noted ongoing price gains for shrimp but sustained price decreases for other items, such as beef and coffee. Prices for branded drugs trended up as producers attempted to maximize revenues before facing a potential increase in competition from generic brands. Prices firmed for some construction-related inputs, including lumber, insulation, and asphalt. A few contacts mentioned slight concerns about deflation prospects.\nUpward wage pressures were modest overall. Many contacts observed wage gains of 2 to 3 percent in 2013 and projected a similar increase in 2014. However, contacts pointed to above-average wage growth in certain metropolitan areas, particularly those that have experienced robust employment growth in recent months. High-skilled workers in the technology industry experienced relatively strong wage gains. Most contacts indicated that end-of-year bonuses were flat compared with 2012.\nRetail Trade and Services\nDespite a short holiday shopping season in 2013, many retailers reported that holiday retail sales were up over 2012. However, contacts also noted that the level of promotional activity in 2013 exceeded that in 2012. Traditional brick-and-mortar retailers faced fierce competition from online vendors, and in-store sales were soft relative to online sales. Sales of home furnishings were robust, but sales of electronics, including televisions, personal computers, and cameras, were weaker than in recent years. Some contacts expect the market for personal computers to stabilize in 2014. While some retail grocers were hesitant to build up inventories prior to the holiday season in anticipation of weak demand, year-over-year sales in most areas exceeded expectations. New auto sales were robust while used auto sales were more moderate. Auto dealers expressed a positive outlook for sales in the year ahead.\nDemand for business and consumer services edged up. Strong demand for cloud services supported solid overall business conditions for providers of information technology services. Contacts in the quick-service and casual dining segment of the food service industry noted that sales expanded over the prior year, albeit at a slower pace than last year. Providers of health-care services were uncertain in their outlook for consumer demand. Travel and tourism activity stepped down in Hawaii and remained somewhat weak in Las Vegas.\nManufacturing\nDistrict manufacturing activity advanced during the reporting period of late November through late December. Semiconductor producers noted that business conditions improved gradually. Contacts from the commercial aerospace industry maintained a positive outlook based on strong financial performance of firms and further expansion in the backlog of orders for commercial aircraft. Defense-related manufacturers remained cautious, with many firms expecting to lay off workers as a consequence of delays or cutbacks in production contracts related to sequestration. Producers of pharmaceutical products were upbeat about growth prospects in the industry this year. A wood products manufacturer noted that orders and production activity expanded, spurring increased hiring. Relative to the previous reporting period, conditions held steady for steel producers; contacts reported stronger conditions for manufacturing of automobile and aircraft-related inputs than for nonresidential construction inputs. In addition, capacity utilization for steel producers was unchanged.\nAgriculture and Resource-related Industries\nOutput in agricultural and resource-related industries expanded on balance. Demand remained strong for most crop and livestock products. A healthy corn harvest in the District contributed to a decline in feed costs. Water resources were adequate in most areas. Demand for petroleum and gasoline was strong, with contacts reporting the highest deliveries by refineries in three years. Builders noted that timber supplies were sufficient to meet rising demand. However, in some areas, availability was limited due to seasonal weather factors. Sales of electricity and gas to industrial customers ticked up, and power companies reported ample energy inputs.\nReal Estate and Construction\nDemand for residential real estate climbed further, and commercial real estate activity improved. Home prices increased further across most of the District. Prices stagnated in selected spots, with some contacts citing seasonal factors. The pace of home sales picked up in a few areas that had seen a drop-off earlier in the year. However, some builders were concerned that further increases in mortgage interest rates would dampen home sales. Some contacts reported strong growth in stand-alone and condominium residential construction, and increases in permit issuance suggest that growth will be sustained in 2014. Public infrastructure projects, as well as a large number of high-rise commercial construction projects, have been announced or are under way in Honolulu, Los Angeles, and the San Francisco Bay Area.\nFinancial Institutions\nReports from financial institutions suggest that overall loan demand increased. Lending grew robustly in selected areas, and some regions that had experienced declining loan volumes for several years saw a modest uptick. Several contacts also reported an increase in projects in planning stages and expect healthy loan growth this year. However, contacts from other areas reported that businesses remain cautious about the future and desire little credit, perpetuating substantial competition for high-quality commercial borrowers. Contacts continued to observe instances of other financial institutions relaxing their underwriting standards to retain or capture loan business. In the District's Internet and digital media sectors, mergers and acquisitions activity was moderate. The pace of initial public offerings slowed, following a surge of activity earlier last year. Private equity activity was on par with recent months, and venture capital financing in the third quarter of 2013 reached its highest volume since mid-2007.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nJanuary 15, 2014\nThe Ninth District economy experienced moderate growth since the last report. Increased activity was noted in consumer spending, tourism, residential and commercial construction, commercial real estate, professional services, manufacturing, and energy and mining. Residential real estate was mixed, while agricultural conditions weakened for farmers. Labor markets showed signs of tightening since the last report, and wage increases were moderate. Prices generally remained level, although contacts expected prices to pick up modestly in 2014.\nConsumer Spending and Tourism\nConsumer spending increased moderately. A Minnesota-based retailer noted that electronics and gaming product sales were particularly strong during the holiday season. A couple of snowmobile and all-terrain vehicle dealers in Minnesota reported strong sales during November and December compared with a year earlier. Recent car and truck sales were above year-ago levels in Minnesota. Meanwhile, in Montana a mall manager noted that December sales were about the same as last year. According to a mall manager in North Dakota, holiday sales were about level with last year's very strong numbers.\nWinter tourism activity was off to a solid start due to snowy weather. A ski resort in Minnesota noted that lodging and early reservations were up from a year ago; however, frigid weather during late December slowed ski admissions. Snowmobiling and cross country skiing have benefited from early snow in northwestern Wisconsin, according to a representative of a chamber of commerce.\nConstruction and Real Estate\nCommercial construction activity continued to grow since the last report. Construction sector respondents to the Minneapolis Fed's annual business outlook poll expect sales volumes to increase but capital investment to remain flat at their firms in 2014. \"Our local economy looks better all the time,\" commented a Minnesota commercial construction firm. Overall residential construction activity was up slightly. In the Minneapolis-St. Paul area, the value of December residential permits grew by 20 percent from December 2012. The value of December residential building permits in Sioux Falls, S.D., increased from 2012. The value of November residential building permits in Billings, Mont., grew significantly from November 2012. However, a housing construction firm in the Upper Peninsula of Michigan and northwestern Wisconsin noted that the industry was \"not looking good.\"\nActivity in commercial real estate markets increased since the last report. Recently, several office and industrial buildings were sold in the Minneapolis-St. Paul area. A Sioux Falls commercial real estate firm noted a lot of corporate leasing and sales activity. Residential real estate markets experienced mixed activity since the last report. In the Sioux Falls area, November home sales were up 14 percent, inventory was down 3 percent and the median sale price increased 7 percent relative to a year earlier. In La Crosse, Wis., November home sales decreased and the median price increased from November 2012. Meanwhile, November home sales were down 9 percent from the same period a year ago in Minnesota; the inventory of homes for sale increased by 3 percent, and the median sale price rose 10 percent. The University of St. Thomas Minneapolis-St. Paul residential real estate report predicts a solid year in the housing market for 2014.\nServices\nActivity at professional business services firms increased since the last report, and the 2014 outlook is positive. Services sector respondents to the business outlook poll expect sales volumes and capital investment at their firms to grow in 2014; four out of five were optimistic for their community's economic performance. Several contacts in the technology sector noted increased demand for consulting services, especially for information analytics. Contacts from the health care sector reported increased capital expenditures.\nManufacturing\nManufacturing activity grew at a solid pace since the last report. A December survey of purchasing managers by Creighton University (Omaha, Neb.) showed that manufacturing activity increased in Minnesota and the Dakotas. The Minneapolis Fed's 2013 manufacturing survey results indicate that respondents on average expect orders, production, employment, capital investment and profits at their operations to increase in the coming year. A new wool mill in Minnesota will be the second-largest such operation in the nation. A manufacturer of hoses for the automotive industry will open a new production facility in the Upper Peninsula.\nEnergy and Mining\nActivity in the energy and mining sectors increased. Late-December oil and gas exploration activity increased in North Dakota and decreased in Montana from a month earlier. A proposed $250 million solar power project in Minnesota came closer to development, due to a judge's ruling. Most Minnesota iron ore mines continued to operate at near capacity. Minnesota released an environmental impact report on a proposed copper-nickel mine showing substantial long-term costs, bringing the future of the project into question.\nAgriculture\nOverall conditions for District farmers weakened, although livestock and dairy producers saw improvement. Annual production decreased from a year earlier in District states for wheat, soybeans, dry beans and sugar beets; District corn production increased, but price reductions likely outweighed the benefits to farmers. A farm equipment retailer saw a reduction in sales revenue sooner than expected, due to falling crop prices. District sugar beet farmers are facing steep losses this year due to a decline in sugar prices. December prices received by farmers fell from a year earlier for corn, soybeans, wheat, hay, hogs and chickens; prices increased for cattle, turkeys, eggs, milk and dry beans.\nEmployment, Wages, and Prices\nLabor markets showed signs of tightening. According to the business outlook poll, 30 percent of respondents expect to hire more full-time employees in 2014, while 18 percent expect to have fewer full-time employees. According to a recent St. Cloud (Minn.) Area Quarterly Business Report, 47 percent of survey respondents expect to increase the number of employees over the next six months, while 8 percent expect decreases. An air distribution product firm announced plans to open a facility in Minnesota that is expected to hire 40 workers. Meanwhile, a representative of a North Dakota employment service agency reported more long-term jobs offered in response to the strong state economy.\nOverall wage increases were moderate since the last report and are expected to remain moderate during 2014. According to the business outlook poll, 93 percent of respondents expect wages and salaries in their communities to increase 3 percent or less in 2014, the same percentage as last year. However, a Minnesota company was reporting offering signing bonuses and moving expenses to attract manufacturing workers.\nOverall prices remained level. Late December Minnesota gasoline prices were up only about 10 cents per gallon from the month earlier and a year earlier. Pressure to increase prices is expected to pick up modestly in 2014, as a somewhat larger share of respondents to the business outlook poll and survey of manufacturers expect to increase prices for their own products and services compared with the previous year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nJanuary 15, 2014\nThe First District economy continues to expand modestly, according to business contacts. All but one retailer and most manufacturing and selected business services contacts cite sales or revenue increases in recent months. While existing home sales were below year-earlier levels in three of the six New England states, home prices continued to rise; at the same time, commercial real estate in the region maintains modest strength. Economic and health care consulting is the only sector citing significant net hiring. Most contacts indicate that price pressures are a non-issue. The outlook is generally positive.\nRetail and Tourism\nRetail respondents in this round report December year-over-year sales changes ranging from a low single-digit decrease to an increase of 10 percent. Two contacts ended their fiscal years on December 31 and cite preliminary tallies showing 2013 sales up 1.5 percent and 5.0 percent compared to 2012. The latter result exceeded earlier expectations of 2013 comp store sales increases of 1.7 percent to 3.0 percent over 2012; this contact attributes the better-than-expected performance to increasing consumer confidence observed since late August. Respondents say demand is strong across all apparel categories, home furnishings, and items related to home improvement. One contact reports that inventories were down significantly due to stronger-than-expected sales, while others report \"good\" inventory levels.\nRetail contacts continue to cite steady prices and predict modest price increases for 2014 in the range of 1.25 percent to 2.0 percent. As noted in the previous round, respondents say consumer sentiment is improving based on a better outlook for the U.S. economy. One contact expects consumer spending in 2014 to be constrained by rising financing costs for mortgages and automobiles, given that wage increases remain modest at best.\nManufacturing and Related Services\nOf the 11 firms contacted in this round, none reports falling sales and eight report increasing sales. Among the three firms reporting no change were a chemical firm for whom the flat demand was an improvement after falling sales and a publisher who cited falling demand for information from the financial services sector. Another firm, a manufacturer of storage devices for computers, said that they had lowered their earnings guidance for the fourth quarter. Many other contacts report relatively strong sales. A medical equipment manufacturer says that growth was strong not just for its new products, which typically grow at double-digit rates, but also for legacy products where there was pent-up replacement demand. A manufacturer of semiconductor equipment cites very strong demand, suggesting that the semiconductor industry is on an up-cycle after weakness in recent quarters.\nMany contacts say they are attempting to reduce inventories. A manufacturer of medical equipment indicates that an exceptionally large backlog has allowed them to tailor production more precisely as well as to lower inventories. In general, respondents report little pricing pressure from either suppliers or customers. One exception is a frozen fish producer for whom prices of shrimp and haddock were \"through the roof.\" Another exception is a producer of parts for the commercial aircraft industry who said that Boeing has been putting exceptional pressure on its suppliers to lower prices, something reported earlier by other firms in that industry. A publisher plans employment reductions, but most manufacturing contacts report modest hiring plans, in line with or below sales growth.\nAll but three contacted manufacturers cite increased capital expenditures. A firm that makes parts for commercial aircraft said it had revised up its capital expenditures by 20 percent in the fourth quarter after a similar-sized increase earlier in the year. A drug firm says uncertainty about the manufacturing R&D tax credit had negatively affected investment plans. Another drug company says capital expenditures are falling because of financial problems at their parent company in Japan.\nThe outlook is positive for all respondents except the publisher who is concerned that demand from the financial services industry will remain problematic in 2014.\nSelected Business Services\nConsulting and advertising contacts report a strong fourth quarter, consistent with a sustainably, but not rapidly, growing economy. The strongest business is driven by the healthcare industry, where demand has come from providers who need help preparing for and complying with the Affordable Care Act (ACA) and from providers and insurers who desire to use IT and analytics to improve efficiency. Economic consulting remains a strong growth industry and strategy consultant's report mixed results, with the industry split between larger firms who have done very well and smaller firms whose revenues are flatter. Marketing contacts estimate industry-wide growth of 6 percent to 7 percent, driven by large corporate orders and a continued shift in demand towards higher-value items as companies have more to spend on marketing and branding. Overall, consulting and marketing contacts report that large corporate clients have cash and are increasingly willing to spend it. Finally, a government consultant reports a slight drop in revenues and a reduced backlog as the sequester and federal budget uncertainty continue to reduce agencies' ability to purchase his firm's services.\nContacts cite minimal cost increases, with the exception of a healthcare consulting contact whose regulatory compliance costs have skyrocketed due to fragmented state regulatory frameworks. Wages generally rose from zero to 3 percent, although several firms paid high bonuses because employees were busy. Firms raised the rates charged clients between zero and 4 percent, with firms facing stronger demand at the higher end of that range. Healthcare and economic consulting contacts report either rapid hiring (restrained by the difficulty of recruiting some skills) or a lull after recent rapid hiring. Strategy consultants, marketing contacts, and the government contractor cite flat employment. Firms say they are generally able to find qualified workers, with the exception of software engineers and IT personnel.\nContacts are positive about 2014 and expect their recent growth to either continue or increase. Contacts express minimal concern about macroeconomic factors, with the exception of a healthcare consultant who worries that persistent high unemployment will reduce healthcare utilization. Several contacts mention some concern that Congressional decisions may yet cause a crisis. Overall, respondents are bullish about the future and worry primarily about idiosyncratic firm-specific factors.\nCommercial Real Estate\nCommercial real estate leasing activity in the First District held roughly steady on average in December, while investment sales activity and construction remained robust or strengthened significantly, according to contacts from across the region. In the Boston area, the Seaport District maintained a steady, \"impressive\" leasing pace, and office leasing activity picked up in some suburban areas. In Boston's Financial District, however, the vacancy rate remains in the mid-teens, allowing modest rent increases that are, according to one contact, probably only large enough to cover rising costs. Investment sales activity saw a year-end burst of activity in Boston, with strong contributions from foreign investors, pushing capitalization rates and loan spreads to historically low levels and reigniting concerns that prices are too high relative to reasonable expectations of rent growth. In Rhode Island, commercial leasing inquiries picked up modestly in December, but new tenants are still scarce. Investment sales activity in the state remains brisk and new developments--driven by the education sector--are slated for downtown Providence. In Connecticut, investment sales activity remained strong in December and, while leasing activity held roughly steady, contacts say some large, vacant tracts of office space in greater Hartford may be effectively obsolete and unlettable.\nConcerning construction activity, the pipeline of planned multifamily properties in greater Boston continued to dwindle, consistent with the perception among some contacts that the large number of unit's currently awaiting delivery may produce a glut. At the same time, planned construction in the education, health care, and life sciences sectors increased significantly in recent months, and the number of retail projects under construction in greater Boston appears to be rising, according to contacts. A regional lender closed a higher volume of commercial real estate loans in 2013 than in 2012, despite facing brisk competition and steady, intense pressure on interest rate spreads. The outlook among contacts for 2014 is generally optimistic. As reasons for optimism, one contact perceives that recent developments in Washington have reduced economic uncertainty, while some others say that macroeconomic \"momentum\" is on the rise. Downside risks include the upcoming costs to businesses of compliance with the ACA and the trend toward office downsizing on a space-per-person basis.\nResidential Real Estate\nResidential real estate markets in three New England states followed national trends, as October or November sales of single family homes and condominiums came in below year-earlier levels in Massachusetts, New Hampshire, and Connecticut; meanwhile home sales increased year-over-year in Maine, Rhode Island, and Vermont. As happened nationwide, the median sales price for single family homes rose in four of the six states. After many consecutive months of year-over-year sales increases, regional contacts attribute the recent sales declines to lower consumer confidence as a result of the most recent government shutdown, to a shift in sales toward earlier quarters due to lower interest rates at the time, and to a lack of inventory. One source notes, \"[the market] lost a little steam in Q3 and continued at a slower pace in Q4.\" A Massachusetts contact says limited inventory is constraining the market, as the available months of supply for single family homes and condominiums were 4.3 and 2.8 months respectively in November. \"New listings are up, but we have been burning through inventory,\" reports a source in Massachusetts. Despite the recent decline in unit sales, New England realtors agree that 2013 has been a good year overall and they remain optimistic about sales increases looking forward.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nJanuary 15, 2014\nThe rate of growth in economic activity in the Seventh District increased in late November and December, though the overall pace was still moderate. Furthermore, contacts were more optimistic about 2014 than they were during the previous reporting period. Growth in consumer and business spending picked up to a moderate pace. Manufacturing production growth was solid, while construction activity increased modestly. Credit conditions loosened slightly. Cost pressures were up slightly, but remained mild. Corn, soybean, and milk prices increased some, while hog prices moved lower and cattle prices were little changed.\nConsumer Spending\nGrowth in consumer spending picked up to a moderate pace in late November and December, with holiday sales modestly exceeding expectations. Total holiday spending was lower this year, though contacts indicated that improving consumer confidence and falling unemployment boosted retail activity in many areas. Luxury goods continued to sell better than non-luxury discretionary items. Severe winter weather, while reducing store traffic in some locations, spurred sales of winter-related items. Contacts also noted a negative impact on late holiday sales as some customers were hesitant to use debit and credit cards after a data security breach at a large national retailer. Light vehicle sales moved up in the District, with mid-size sedans, larger SUVs, and pick-up trucks some of the strongest-selling segments.\nBusiness Spending\nBusiness spending also picked up in late November and December. Inventories remained at comfortable levels for most retailers. Auto dealers continued to report that they were keeping inventories slightly higher than normal in anticipation of increased demand in the coming months. Manufacturer's inventories were somewhat lean. Growth in capital expenditures picked up slightly, led by spending on structures; examples included grocery stores, automobile dealerships, and expansions at auto supplier plants. Contacts also reported investing in equipment, information technology, and vehicles. Capital spending plans for the next six to twelve months declined slightly, and a few contacts noted plans to either pay down debt or halt further expansion after significantly ramping up capital expenditures in previous years. The pace of hiring picked up, as did expectations of future hiring. A staffing firm reported continued growth in demand, with improvement in both industrial and professional sectors. Many contacts noted continuing strength in demand for skilled and experienced workers, with positions often difficult to fill in engineering, technology, accounting, and other technical occupations. Several contacts also reported difficulty retaining skilled workers because of improving job and income prospects in the labor market.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly in late November and December. Demand for residential construction continued to expand, with strong growth again in the multifamily sector. Contacts expected that record low vacancy rates for apartments would continue to boost new multifamily construction over the coming year. Home sales, prices, and rents all rose, though the slow foreclosure process continued to impede existing home sales. Contacts noted an increase in the number of single-family homes purchased for rental or investment purposes. Demand for nonresidential construction remained modest, but picked up some from the previous reporting period. Commercial real estate activity also improved, with vacancies declining and rents increasing. Contacts noted especially strong growth in high-end retail and investments in income generating properties.\nManufacturing\nManufacturing production growth was solid in late November and December. Contacts were generally optimistic about the outlook for manufacturing in 2014, pointing to expected strength in the auto, aerospace, and energy industries. The auto and aerospace industries in particular were a source of strength for the District in the second half of 2013. Low steel service center inventories continued to boost the demand for steel, and contacts noted that demand for other industrial metals also increased. Manufacturers of construction materials reported a moderate increase in demand as the housing market continues to improve. Increasing construction also led to some improvement in the demand for heavy equipment, though the overall level of activity remained soft. Demand for heavy- and medium- duty trucks was down following the pull-forward of spending earlier in 2013 in response to new EPA emissions standards. Manufacturers of durable consumer products and recreational vehicles also expected to see faster growth in 2014, with wealth gains from the rising stock market and home prices boosting demand.\nBanking and Finance\nCredit conditions loosened slightly over the reporting period. Equity markets continued to rise, with investors' risk appetite increasing according to financial market contacts. Corporate borrowing spreads narrowed, especially in the high-yield debt market. In addition, banking contacts reported increased competition from local and regional banks was leading to downward pressure on pricing and looser and fewer covenants in deal structures for both small and middle market firms. Aggressive lending in the institutional leveraged loan market was also cited, increasing debt-to-equity multiples. Business loan demand improved, with higher utilization of lines of credit and an increase in borrowing for purchases of equipment and to tenants looking to purchase properties that they were currently leasing. However, contacts noted some softness in loan demand from agricultural and mining firms. Household loan demand was more mixed, with a decrease in mortgage refinancing and a slight increase in auto lending. Furthermore, contacts indicated that tight lending standards remain a barrier to new mortgage finance.\nPrices and Costs\nCost pressures increased slightly over the reporting period, but remained mild. Contacts reported increases in commodity prices, in particular for cement, concrete, brick, natural gas, steel, and other industrial metals. Overall, wage pressures were down slightly, though several contacts indicated rising wage pressures for skilled workers. Non-wage labor costs also increased, with a number of contacts reporting higher healthcare premiums.\nAgriculture\nCorn and soybean prices moved a bit higher over the reporting period, but remained well below their levels of a year ago. Current prices for corn will not cover expected costs for 2014 production, whereas soybean prices would. This may lead to increased soybean planting in the spring. Farmers continued to store crops in anticipation of future price increases. In some locations, however, there was an incentive to sell corn sooner, in part because of an increase in demand for ethanol production, which has returned to profitability. Hog prices moved lower, while cattle prices were little changed. Milk prices edged up, and there was evidence of some expansion in District dairy herds. Parts of the District remained in a drought, which makes the timing of spring precipitation more critical. In addition, there was less fertilizer application last fall due in part to cleaner water regulations.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nJanuary 15, 2014\nThe Fourth District's economy continued to expand at a moderate pace during the past six weeks. Most of our contacts have a positive outlook for the New Year, and they expect demand for their products and services to remain at current levels or rise. On balance, demand for manufactured products stayed at a higher level relative to a year ago. Housing market activity was strong, while nonresidential builders saw an overall pick-up in business. Retail purchases during the holiday shopping season were above year-ago levels. New-motor-vehicle sales posted moderate gains on a year-over-year basis. The number of drilling rigs rose across the District, while natural gas output was stable. The rate of decline in coal production is slowing. Freight volume was in line with or exceeded expectations. Demand for business and consumer credit weakened slightly relative to our previous report.\nHiring was sluggish across most industry sectors, though the pickup in construction jobs continued. Staffing-firm representatives reported that the number of job openings and placements rose slightly, with vacancies found primarily in healthcare, information technology, and oil and gas. Wage pressures were contained. Input and finished goods prices saw little change, apart from some increases in metals and residential construction materials.\nManufacturing\nReports from District factories indicated that demand continued at a moderate to robust level during the past six weeks. Firms seeing the strongest activity were suppliers to the aerospace, housing, motor-vehicle, and oil and gas industries. Declines in demand were attributed to seasonal variation The recently enacted federal budget agreement is viewed as providing a boost to defense contractors in the upcoming year. Compared to a year ago, manufacturing production levels are mainly higher. Almost all of our respondents expect demand will remain at current levels through at least the first quarter of 2014. Steel shipments during the fourth quarter were generally characterized as stable or slowly increasing. Demand is strongest from the transportation and oil and gas industries. Defense orders were still described as weak. Shipments in the first quarter of 2014 are expected to be higher relative to the previous quarter. Several contacts in the steel industry noted that confidence on the part of their customers is improving. District auto production showed a seasonal decline during November. However, November production numbers were moderately higher than those recorded a year ago.\nMost manufacturers reported that their capacity utilization rates were within a normal range. Numerous respondents said that they have excess production capacity and could easily absorb any demand spikes. Auto parts suppliers were described as operating near capacity. One industry executive estimated that 85 percent of all parts suppliers need to increase capacity, but many are reluctant to do so. In contrast, aerospace suppliers have invested heavily in capacity expansion during the past year. A few steel producers reported lowering capacity utilization, due in part to excess global capacity. Capital expenditures for the upcoming fiscal year are expected to be in line with current year outlays or somewhat higher. Monies are being allocated primarily for rehabbing production lines, technology enhancements, and new equipment. Raw material prices were stable, except for a modest increase in metals. Several of our contacts announced price increases across their product lines, which will go into effect during the first quarter of 2014. On balance, factory payrolls were stable. A majority of our contacts cited rising healthcare insurance premiums as a concern.\nConstruction\nSales of new single-family homes have been trending slightly lower since October. Nonetheless, single-family construction starts continued at a robust pace and were significantly above year-ago levels. Multifamily construction remains strong. We heard several reports about the inventory of improved lots being at a low level. New-home contracts were found mainly in the move-up price-point categories. Only a few starter homes are being built. Selling prices of new homes have stabilized. One builder observed that he has now reached the limit of how much he can raise prices before impacting demand. Existing home values rose moderately year-over-year. Builders are confident that demand for new homes will persist into 2014, especially in the higher-end segments of the market.\nNonresidential building activity continued to improve, although builders reported that some high-value projects remain stalled in the pipeline. This project stagnation was attributed mainly to lingering uncertainty. Most builders indicated that they are comfortable with their backlogs and that the number of inquiries is rising. Demand was strongest for distribution facilities, industrial buildings, and multifamily housing. Our contacts are cautiously optimistic about near-term prospects, and they are expecting slow, but steady growth during 2014.\nPrices for residential construction materials--lumber and drywall--has increased substantially in the past year, but the rate of increase is slowing. A majority of general contractors we spoke with reported hiring some field and back-office personnel since our last report. Most of our contacts experienced increases in health-insurance premiums, generally around 5 percent. Builders reported a scarcity of high-skilled trade workers. As a result, there is upward pressure on wages, and subcontractors are demanding and getting higher rates.\nConsumer Spending\nRetail sales at the start of the holiday shopping season were above year-ago levels. Electronics, cold-weather apparel, and footwear were selling especially well. In some regions of the District, retailers experienced a tapering off as December progressed. They attributed the decline in part to persistently poor weather conditions. One contact reported a slowdown in sales of teen clothing and school items throughout 2013, which he believes is due to a high level of teen unemployment. A furniture dealer observed that his sales started to pick up recently following a large drop-off that began midway through the third quarter. His outlook is optimistic. Overall projections for the month of January call for sales to be slightly too significantly higher relative to the same time period in 2013. Inventories were described as being in good to great shape. Vendor and shelf prices held steady. Several of our respondents noted that the use of promotions was higher than normal for this time of year. Hiring during 2014 will be mainly limited to staffing new stores and for e-commerce support.\nYear-to-date sales through November of new motor vehicles showed a moderate increase when compared to the same time period in 2012. On a month-over-month basis, November purchases of new vehicles exhibited a seasonal decline. Buyers continued to shift from smaller, fuel-efficient cars to SUVs, crossovers, and light trucks. Some of the increase in truck sales was attributed to growing demand for vehicles by residential builders. Reports on new-vehicle inventories were mixed. The rate of growth in new-vehicle sales during 2014 is expected to be positive, but not as strong as in 2013. Used-vehicle purchases declined from October to November, but year-to-date sales were higher when compared to 2012. Dealers are planning fewer capital projects in 2014 relative to the past couple of years. Payrolls held steady since our last report.\nBanking\nDemand for business credit was stable or down slightly during the past six weeks. No loan category is performing considerably better than others, although many bankers said that commercial-real-estate lending continued to pick up. Organic loan growth was characterized as slow, due in part to businesses holding excess cash. Several respondents commented that long-term interest rates need to rise more than 200 to 300 basis points before any meaningful impact will be seen on spending decisions by businesses. Consumer credit demand was described as steady or down slightly. Auto lending drew the highest demand, while home-equity products slowed. A few bankers saw a pickup in credit card usage, which they attributed to holiday shopping. Most contacts reported a net slowdown in residential mortgage activity. While there was an increase in new purchase applications, they did not offset the decline in refinancing's. Several bankers raised concerns about new banking regulations related to real estate--residential and commercial--and their potential negative impact on lending and operating costs. For the most part, delinquency rates were stable. No significant changes to loan-application standards were reported. Core deposits by businesses and consumers grew. We heard a few reports about staffing cuts due to branch closures and cost containment.\nEnergy\nAggregate coal production across the District remains slightly below year-ago levels. A large decline in eastern Kentucky is being offset by increases in Ohio and northern West Virginia. Going forward, little change in output is projected. Spot prices for steam coal increased, reflecting seasonal variation, while metallurgical coal prices held steady. The number of drilling rigs increased across the District since our last report. Natural gas production was stable, but at a high level. Well-head prices for natural gas rose slightly, while oil prices declined. No change was reported in the cost of production equipment and materials. Payrolls held steady.\nFreight Transportation\nFreight executives reported that shipping volume was in-line with or exceeded expectations during the past six weeks. The industry outlook for 2014 is more favorable compared to our last report, with year-over-year volume expected to grow at a moderate to strong pace. One respondent attributed the upbeat outlook to the rebound in manufacturing. A few contacts noted that the limited availability of qualified drivers and the recently enacted hours of service (HOS) regulations have resulted in a tightening of capacity during the fourth quarter. They believe this issue will intensify during 2014. Operating costs were mostly stable. Capital outlays for the fiscal year were in line with budgets. Little change in capital spending is forecast, with monies allocated more toward replacement. The industry has been hiring for replacement and, as a result of HOS, to maintain current capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nJanuary 15, 2014\nAggregate business activity in the Third District continued to rise at a modest pace during this current Beige Book period (beginning with the last full week of November). Reports from most sectors changed little. However, auto dealers reported somewhat slower growth at a moderate pace, and existing home sales slowed further than expected, to a slight pace for the winter season. Sectors that continued to expand at a modest pace included general retail sales, tourism, and commercial real estate leasing. Residential and commercial real estate construction and manufacturing continued to expand only slightly. The broad general services sector continued to grow at a moderate rate and transportation services were described as \"booming.\" Loan volumes at Third District banks continued to grow at a modest pace across most categories, and credit quality continued to improve. Contacts reported little change to the slight overall increases in wages, home prices, and general price levels--similar to the last Beige Book period.\nDespite a slower pace of growth in some sectors, contacts overall maintained an outlook for moderate growth--similar to the last Beige Book. Contacts in most sectors continued to express confidence in the underlying economy. Confidence was bolstered for some as the climate for a less volatile federal fiscal policy seemed to improve. In regard to hiring and capital expenditure plans, firms continued to expand cautiously and will do so until the pace of growth strengthens and exhibits sustainability; in addition, they face ongoing uncertainty from implementation of the Affordable Care Act.\nManufacturing\nThird District manufacturers have reported continued increases in orders and shipments at a slight pace of growth overall since the last Beige Book. The share of all firms reporting increases or decreases in general activity was about the same as before, with nearly one-third reporting increases in general activity and a little less than one-fourth reporting decreases. The makers of food products, fabricated metals, and industrial machinery have reported gains since the last Beige Book. Reports of decreases came from the makers of paper products, chemicals, and electronic and other electric equipment. Some firms noted the impact of seasonal trends on business, which were positive for some but negative for others. One contact reported, \"We are experiencing the usual holiday increase, but not at the levels of previous years.\" Most firms reported steady conditions.\nOptimism that business conditions will improve over the next six months remained high and was widespread across sectors. Over half of the firms continued to anticipate increases in activity, though some firms expected decreases in activity, new orders, and shipments. Optimism is also evident from two recent announcements: a Pennsylvania-based firm will acquire one of China's largest confectioners--greatly expanding its market presence in Asia, and a large Chinese firm announced $40 million of investments in Pennsylvania--$30 million to build a high productivity (heavily automated) 500-employee manufacturing plant in the Harrisburg area (products were unspecified), plus $10 million for research in collaboration with a Pittsburgh-based university. Firms also expected to see the largest increase in health benefits costs compared with other input and labor costs in 2014. Though still positive overall, contacts have reported lower expectations of hiring and capital spending plans since the last Beige Book.\nRetail\nThird District retailers have continued to report modest growth overall since the last Beige Book. According to one contact, the shorter holiday shopping season and the winter weather disruptions created more motivated buyers: \"Traffic was down about 10 percent in December, but the average purchase almost doubled.\" Retailers reported that people bought more \"gifts for the home\" this holiday season; the home improvement segment had been largely overlooked since the recent recession. Jewelry and cold-weather wear also sold very well this season. Some retail contacts reported lower inventory levels in the wake of the holiday sales--a good problem that may reduce January sales. Results of the post-holiday gift card sales remain uncertain. Retailers remain optimistic for 2014. Outlets operators anticipate opening seven to 10 new centers this year.\nAuto dealers have reported a moderate pace of sales since the last Beige Book period--a little off the strong growth they reported for most of the past year. Pennsylvania dealers reported that sales fell off the year's pace in November but remained a little better than last year; December sales were \"just OK,\" although the final week was strong. New Jersey dealers reported that December sales were slightly softer than a year ago; however, last year's sales were boosted by sales of replacement vehicles in the aftermath of Hurricane Sandy. Year-end sales in 2012 were also strong due to higher-than-normal year-end bonuses and to accelerated purchases for tax purposes. The outlook for 2014 is very positive; however, some retailers are beginning to take note that the pent-up demand accrued during the recession may be abating.\nFinance\nOverall, Third District financial firms continued to report modest increases in total loan volume. Most loan categories appeared to grow somewhat; however, contacts reported slight decreases in commercial real estate loan volumes and some small consumer credit lines. Credit card utilization increased seasonally for holiday shopping and grew through the month of December at a slightly faster pace than last year. Contacts were heartened by \"better economic news\" and a sense of \"greater government fiscal stability.\" However, some continued to express caution--for their part and on behalf of their customers--that they need to see a sustained pickup of activity, especially among small businesses. Contacts continue to see credit quality improvement; one expressed an expectation that as mortgages flow into the seriously delinquent category, they will perform better than those from the recent past. \"Many of these newer loans will cure,\" as the job market is improving, housing is appreciating again, and the underwriting is better. Overall, most bankers remained optimistic for continued slow, steady growth and an opportunity for some acceleration.\nReal Estate and Construction\nThird District homebuilders have reported that construction has continued at a slight pace of activity since the last Beige Book. One builder reported significantly greater activity in the past few weeks after securing a partially developed subdivision on which to build. Land acquisition at marketable prices remained an oft-cited challenge. Competition for labor from rebuilding projects along the Jersey Shore remained a problem for New Jersey homebuilders; in central Pennsylvania, the labor availability has improved somewhat, as competition from Marcellus shale activity has abated. According to residential real estate brokers, sales of existing homes declined (year over year) in most of the Third District's major metropolitan areas. Reported decreases ranged from barely negative in southern New Jersey and the Lehigh Valley to about 10 percent in the Harrisburg and Philadelphia metropolitan areas. However, reports of pending sales remained positive, and the inventory of homes for sale continued to fall in most markets. Contacts remained bullish for a \"continued, gradual rise\" in 2014 despite the somewhat deeper lull than is normal for December.\nNonresidential real estate contacts indicated little change in the slight growth rate of construction and the modest pace of overall leasing activity during this seasonally slow period of the year. New construction of industrial warehouse buildings remains in strong demand, as does new construction of institutional buildings. The summer/fall of 2014 is slated to bring groundbreakings for two major 47-story construction projects: an office/residential tower in University City Philadelphia anchored by the corporate headquarters of a specialty chemical firm and a hotel/condominium tower for Center City Philadelphia. Based on these and other projects, most contacts reported good results for their respective firms in 2013 and expectations for stronger growth in 2014.\nServices\nThird District service-sector firms continued to report a moderate pace of growth, and tourism received a boost from an early winter snowstorm. Overall, more firms reported increases in sales and new orders than reported decreases, although the trend was slightly less positive than reported in the last Beige Book. The early December storm that interrupted retail shoppers laid a solid base of snow for mid-Atlantic ski resorts; tourism along the Delaware and New Jersey shores remains seasonably slow.\nOther service firms reported modest to moderate growth rates. Business information technology service contacts reported strong activity, while contacts for defense-related firms continued to adjust staffing for lower budget allocations. A transportation services contact described \"booming\" growth for most modes and support facilities in the primary corridor through central and eastern Pennsylvania that serves the Northeast. A concern was expressed that small manufacturers could be forced into costly plant shutdowns if shippers were unable to expand rapidly enough to meet demand for intermediate goods from a potential economic surge. Overall, nearly all service-sector firms reported an expectation that current activity will continue to increase.\nPrices and Wages\nOverall, Third District contacts reported no change to the steady, slight pace of price level increases, similar to other recent Beige Books. Manufacturing firms reported that prices paid and prices received tended to once more rise slightly. Auto dealers and general retailers reported little change in pricing, and most builders reported holding prices steady. Many contacts reported coping with tight, or narrowing, margins. Generally, real estate contacts continued to report rising prices for lower-priced homes, while higher-priced homes are aligned to local market conditions. Very few contacts are seeing wage pressures, other than for a few highly skilled occupations.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nJanuary 15, 2014\nThe Eleventh District economy expanded at a moderate pace over the past six weeks. Manufacturing activity continued to increase overall and outlooks were quite positive, although there were a few reports of weaker demand. Retail and automobile sales reports were mixed, and nonfinancial services firms generally reported improved demand. Sales of single-family homes improved slightly, and apartment, office and industrial leasing activity held steady. Loan demand edged up at financial institutions. Prices increased mildly at several responding firms, and employment held steady or rose modestly. There was a pickup in reports of pay increases and wage pressures. Industry outlooks were positive, and several were more optimistic than during the prior reporting period.\nPrices\nMost responding firms said prices were stable to up slightly over the reporting period. Fabricated metals producers noted rising prices and input costs, and some food producers said prices rose slightly. Some transportation service firms said prices were up slightly, partly due to rising fuel costs, and an airline respondent noted an increase in ticket prices. Accounting and legal firms expected to raise rates in the near term. Retail and auto contacts said prices were stable, and retailers anticipated normal holiday markdowns. A housing contact noted an increase in builder costs was leading to higher new home prices, although some contacts said home prices were rising at a somewhat slower pace.\nEnergy prices increased over the reporting period. The price of West Texas Intermediate crude oil rose since the last report, and natural gas prices increased to the highest level since mid-2011. Domestic prices for gasoline and diesel also moved up.\nLabor Market\nEmployment levels held steady or increased slightly at most responding firms. Staffing firms said employment levels were up, particularly in professional and technical recruiting areas. Some food, fabricated metals, and transportation manufacturing firms noted continued hiring, and scattered reports of adding workers came from auto dealers and high-tech and accounting firms. Other respondents noted steady employment levels while one high-tech firm made cuts and a transportation services firm continued with an incentivized voluntary buyout to reduce employment levels. Acute labor shortages were reported for auditors, engineers, construction workers and truck drivers.\nReports of upward wage pressure increased. Staffing firms said there was pressure on wages and one began offering signing bonuses. Legal firms cited increased pressure on compensation for corporate associates. Wages rose in metals manufacturing, and petrochemicals producers noted rising wages for plant maintenance and heavy construction as well as several skilled positions. A Houston housing contact said labor shortages were pushing up wages for construction workers.\nManufacturing\nReports from manufacturers were mostly positive with a few occurrences of seasonal or weather-related weakness. Construction-related manufacturers reported slow demand in early December due to poor weather, but business bounced back soon after. Demand for primary metals softened seasonally over the reporting period but was slightly better than what is typical for this time of year. Fabricated metals manufacturers reported very strong demand and said sales were up notably from last year. One contact said his company is able to pick the work they will bid on for the first time in a few years. Energy-related manufacturing increased slightly over the reporting period and demand growth continued for food producers, with sales up about 10 percent from a year ago. Paper producers noted that demand was flat to down from six weeks ago yet was slightly stronger than normal. Contacts across the board said sales outlooks were positive.\nHigh-tech manufacturers said sales have been flat to down slightly since the last report. One contact noted that sales of memory chips continued to grow at a strong pace but that sales of logic devices remained weak. Respondents said they were cautiously optimistic about the outlook for the first half of 2014. Most expect modest growth and some reported that they were more likely to be surprised by strong growth rather than a sharp decline.\nContacts noted that petroleum refinery utilization rates strengthened with the end of the fall maintenance season and rising exports. Chemical production was flat to up depending on the product, and year-over year growth in Gulf Coast chemical production continued to slow.\nRetail Sales\nRetail sales reports were mixed over the past six weeks, ranging from much stronger due to holiday shopping, to a slight decline. Texas' sales performance was in line with or better than the nation, according to national retailers. Gift items were, as normally, strong sellers, while big-ticket items experienced weakness. Contacts were optimistic in their 2014 outlooks.\nAutomobile sales reports were also mixed. Dealers in the Dallas-Fort Worth area were negatively impacted by the ice storm in early December, but other areas saw slightly improved demand. Year-over-year demand was up. Respondents expected a good finish to 2013 and were optimistic for 2014.\nNonfinancial Services\nMost nonfinancial services contacts reported stronger demand. Staffing firms said demand increased over the past six weeks, with one contact reporting a significant rise in demand for workers in engineering and technical professions. Another contact noted the highest demand for temporary workers in the past 10 years. Outlooks were positive for the first part of 2014, but some contacts remained concerned about the impact of the Affordable Care Act on business. Accounting firms said demand increased modestly across most lines of business, and contacts noted transactions work was extremely busy. Outlooks remained positive, with a healthy pipeline for future business. Legal firms saw steady growth over the past six weeks. Demand increased slightly in litigation and corporate work, and real estate work continued to grow at a strong pace. Contacts were cautiously optimistic in their outlooks.\nTransportation service firms noted mixed demand. Intermodal cargo volumes fell slightly during the reporting period but were even with year-ago levels and air cargo volumes fell slightly. Railroad contacts said cargo volumes grew fairly strongly compared with the same period a year earlier as most categories showed positive growth, including petroleum, chemicals and motor vehicles. Small parcel shipping accelerated during the reporting period, with retail trade remaining the strongest driver of growth. Outlooks were mixed; rail volumes are expected to see strong growth heading into 2014, while other contacts expect slower growth.\nAirline demand was mostly unchanged. One contact noted broad-based growth across most customer segments while another noted that demand had slowed seasonally but was up from last year. Outlooks were generally more optimistic than six weeks ago.\nConstruction and Real Estate\nSingle-family new home sales and buyer traffic picked up over the past six weeks, although sales remained below year-ago levels. Houston was an exception, with contacts reporting sales above last year's strong activity. While new home construction slowed in some parts of the District, contacts expect it to increase in early 2014 because of extremely low home inventories. Apartment demand remained steady, and contacts said multi-family construction remained at elevated levels. Some respondents said increases in building costs could slow activity going forward.\nOffice and industrial leasing activity remained stable, according to contacts. Investment activity slowed, however, and rising rents and high occupancy levels may be keeping some building owners from selling. Outlooks remained positive, and one respondent expects a large increase in commercial construction activity in 2014.\nFinancial Services\nLoan demand ticked up for most lines of business over the past six weeks. Auto lending, personal loans, mortgages, and mergers and acquisitions increased slightly, but retail was mostly flat compared with last year. Loan pricing remained competitive, with mortgage rates only rising slightly. Respondents said the quality of loans continued to strengthen, and deposit volumes increased moderately with no corresponding changes in deposit rates. Outlooks were cautiously optimistic as year-end reports showed steady improvement, albeit at a mild pace, and regulatory changes continue to take effect.\nEnergy\nDemand for oil-field services increased slightly over the last six weeks. Drilling activity in Texas was particularly strong, both inland and offshore, according to respondents. Shale-driven activity was heating up in the Permian Basin, and that play is a bright spot for growth in 2014 for North America. Contacts expect 2014 energy activity to be better than 2013 but not as good as 2012.\nAgriculture\nDrought conditions in the District continued to ease slightly. The winter wheat crop has had a good start, with crop conditions in better shape than they were a year ago. Severe winter weather in many parts of the state in late November and early December slightly delayed some of the cotton harvest, but the moisture improved soil conditions. Cattle producers continued to benefit from low feed prices and high selling prices, prompting optimism for the industry outlook.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nJanuary 15, 2014\nEconomic growth in the Second District continued at a moderate pace in late 2013. Contacts note that cost pressures have increased somewhat, while selling prices are mixed but generally stable. A growing proportion of business contacts cross the District--in both manufacturing and other sectors--report increased activity. Labor market conditions have continued to improve modestly since the last report. General merchandise retailers indicate that holiday season sales were mixed but moderately strong, on balance, with steeper discounting than last year. New auto sales remained fairly robust in November but there were preliminary signs of slowing in December. Tourism activity showed some signs of slowing in late 2013. Home sales activity picked up in the final months of 2013, while commercial real estate markets have been mixed. Finally, banks in the District report declining loan demand--particularly for residential mortgages--as well as widespread reductions in delinquency rates.\nConsumer Spending\nRetailers report that sales were on or ahead of plan over the holiday season, with same-store sales steady to up moderately from a year earlier. Contacts at major malls in upstate New York report that business was strong in November but mixed in December; overall, holiday season sales were roughly on par with 2012 levels. More broadly, a trade association survey of retailers across New York State indicates that sales overall were up 1-3 percent from a year earlier and roughly on plan. Contacts report that sales were hampered by harsh weather in late November into early December across much of New York State. Contacts at major retail chains indicate that sales in the region were somewhat ahead of plan and up roughly 5 percent from comparable year-ago levels, though one notes that post-holiday sales were somewhat disappointing. There was a broad consensus among retail contacts that there was heavier promotion and deeper discounting than in the 2012 season.\nAuto dealers in upstate New York report that new vehicle sales were quite strong in November but there were preliminary signs of weakening in December. There are scattered reports of inventory accumulation. Sales of used automobiles have continued to be soft since the last report. Wholesale and retail credit conditions for auto purchases continue to be characterized as favorable.\nTourism activity has been mixed in late 2013 with some signs of softening. Manhattan hotels report that revenues per room fell more than 10 percent from a year earlier in November--the first 12-month decline since the fall of 2012. Occupancy rates slipped by more than the seasonal norm in November, and room rates were down from a year earlier. While November 2012 hotel metrics were distorted by Superstorm Sandy--with some hotels shut down for part of the month but others accommodating displaced residents and rescue workers--this does not account for the more recent weakness. Broadway theatres, however, continue to report brisk business: attendance and revenues were fairly strong in December, running 4 and 10 percent, respectively, ahead of 2012 levels.\nConsumer confidence has been mixed but generally a bit improved since the last report. The Conference Board's survey of residents of the Middle Atlantic states (NY, NJ, Pa) shows confidence falling to a more than one-year low in November--following the government shutdown--but rebounding briskly in December. Based on Siena College's survey of New York State residents, confidence, which had fallen to a more than one year low in October, rebounded tepidly in November and held steady in December.\nConstruction and Real Estate\nResidential real estate markets in the District have seen increased activity since the last report, while prices have been mixed. Contacts in western New York State report that sales activity has continued to be brisk, and inventories remain low; home prices have retreated from their recent highs, though there are still reports of multiple offers. Manhattan's co-op and condo market registered its strongest 4th quarter sales activity on record; one contact surmises that a spike in mortgage rates drove many fence-sitters to buy. Sales prices of Manhattan apartments were little changed in the 4th quarter and up around 2 percent from a year earlier; price increases have been more pronounced in Queens and especially Brooklyn. Manhattan's rental market appears to have reached a plateau, with rents essentially flat and down slightly from a year earlier. A contact in New Jersey's housing industry describes the market as stable to improving gradually, with an overhang of distressed properties continuing to restrain prices of both new and existing homes.\nCommercial real estate markets were mixed at year end. In Manhattan, the outer boroughs, and Long Island, office availability rates were steady to down slightly in the fourth quarter, ending 2013 at multi-year lows; Midtown Manhattan registered particularly brisk leasing activity in the 4th quarter. In Northern New Jersey, Westchester and Fairfield counties, and across upstate New York, office availability rates were little changed at or near multi-year highs. Asking rents for office space were generally steady across the District and little changed from a year earlier. Industrial markets weakened slightly in the fourth quarter of 2013: vacancy rates across the New York City metro area moved up from multi-year lows, though rates across upstate New York were little changed at elevated levels.\nOther Business Activity\nThe labor market has continued to improve gradually since the last report. A major employment agency reports that hiring activity was more robust than usual in December, particularly in the finance industry, though it is difficult to gauge the labor market from December, which is typically a slow month, they are optimistic about prospects for early 2014. One employment agency contact, however, has noticed more resumes from job applicants previously employed in the health care industry, and still a number of applicants from the legal industry. More broadly, the vast majority of business contacts report that staffing levels have been flat in the final months of 2013. However, substantially more businesses plan to expand than reduce their workforces in 2014.\nMore generally, firms in a variety of industries in the District, including manufacturing, report some pickup in activity in recent weeks. Business contacts also express increasingly widespread optimism about the near-term outlook. Overall, price pressures remain stable and generally subdued; though a growing number of service sector firms plan to raise their selling prices in the months ahead.\nFinancial Developments\nSmall to medium sized banks across the District report decreased demand for consumer loans and, especially, residential mortgages, while they reported no change in demand for commercial loans and mortgages. For residential mortgages, half of the bankers reported a decrease, while the other half reported no change. Bankers also report decreased demand for refinancing. Credit standards are reported to be unchanged across all loan categories. Respondents note a decrease in spreads of loan rates over costs of funds for all loan categories--particularly residential mortgages. Most bankers indicate that average deposit rates are unchanged. Finally, bankers report widespread declines in delinquency rates for all loan categories--particularly commercial loans and mortgages.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nJanuary 15, 2014\nThe Tenth District economy held steady in December after expanding modestly during the previous survey period. Consumer spending was mixed due to a slowdown in automobile sales and hotel occupancy, but retail sales increased somewhat. Manufacturing activity declined slightly, while expectations for future activity improved. Activity in the residential real estate sector continued to slow slightly, while commercial real estate activity remained mostly flat. Both residential and commercial real estate activity, however, were above the levels this time last year. Bankers reported steady overall loan demand, improved loan quality and stable deposit levels. Agricultural growing conditions for winter wheat improved in late November and December, but low crop prices limited farm income expectations. Energy activity in the District rose modestly as contacts reported more drilling, hiring, and capital expenditures over the last month. Wage pressures edged down since the last survey, even though a mild rise in labor shortages was reported. Prices for final goods held steady despite an increase in the price of raw materials.\nConsumer Spending\nConsumer spending was mixed in late November and December as automobile sales and hotel occupancy declined, while retail sales slightly increased. Most contacts reported sales activity as lower than they had expected although retail sales increased compared to the prior month and were higher relative to the same time last year. However, district retailers had expected higher levels and attributed the lower than expected sales to a shorter and slower holiday shopping season, and harsh weather conditions. Sales of appliances and lower-priced items continued to be strong, while sales of hardware, outdoor, as well as higher-priced items lagged. Auto sales declined and were lower than anticipated, but auto dealers foresaw higher sales in the coming months. The strongest sales came from light pickups, small SUVs, and crossovers. Auto inventories increased moderately from a month ago, and dealers expected an elevated level going forward. Restaurant sales were unchanged and remained steady compared to their levels last year. Restaurant contacts restated their concern about increasing food prices and anticipated a further rise in the near future. Tourism activity grew slightly since the last survey and increased moderately compared to the same time last year. Occupancy and room rates were down in the survey period, but held steady compared to year-ago levels.\nManufacturing and Other Business Activity\nManufacturing and transportation activity fell slightly in December, while sales at high-tech service firms remained stable. Durable manufacturing production, shipments and new orders decreased modestly since the last survey. Nondurable goods manufacturing activity also decreased slightly, with the exception of new orders. Some contacts cited poor weather, and continued fiscal and regulatory uncertainty as reasons for the December slowdown. However, activity in the manufacturing sector remained well above year-ago levels and expectations for future activity rose modestly, with the majority of contacts expecting to increase or maintain current levels of employees and capital expenditures. Sales at high-tech companies held at previous reporting period levels, with most contacts expecting higher levels of activity in the future. Transportation companies reported slightly lower sales compared to the previous month and to the previous year though expectations for future activity were also little changed.\nReal Estate and Construction\nActivity in the residential real estate sector showed signs of a slight decline, while commercial real estate activity remained mostly flat, with the exception of construction, from the previous survey period. Residential realtors reported strength in sales of low to mid-range priced homes, but condos and higher-end home sales were sluggish in parts of the District. Residential and commercial real estate prices maintained their upward trend and they were expected to rise further. Housing starts remained unchanged in late November and December, though they were higher compared to last year. Contacts anticipated positive future home building. Some builders indicated difficulties finding qualified labor and said it impeded their ability to start new projects. Construction supply companies' sales slowed, but firms were optimistic about future sales. Mortgage activity was again lower this period and also as compared to a year ago, caused primarily by a decline in refinancing. However, lenders expected mortgage activity to increase in the future. Commercial real estate construction rose, and vacancy rates remained low. Commercial real estate prices and rents were also higher, and contacts expected the rise to continue.\nBanking\nBankers reported steady overall loan demand, improved loan quality and stable deposit levels in December compared to the prior survey period. Respondents reported increased activity in agricultural loans, and steady demand for commercial and industrial loans and commercial real estate loans. Demand for residential real estate loans declined further during the survey period. Bankers remained positive concerning loan quality compared to a year ago, and nearly all bankers anticipated loan quality to either improve or remain the same in the near future. Credit standards remained unchanged in all major loan categories, along with stable deposits reported.\nAgriculture\nAgricultural growing conditions improved in late November and December, but low crop prices limited farm income expectations. The winter wheat crop was rated in mostly good condition with winter storms providing soil moisture and protective snow cover. However, wheat prices fell slightly since the last survey period, and corn and soybean prices remained at their lowest levels since 2010. Some farmers were holding fall crop inventories rather than selling at current prices. Lower income prospects boosted demand for farm operating loans and dampened farm capital spending at year-end. In the livestock sector, weaker demand for pork from Asian markets placed downward pressure on hog prices. While cattle prices were relatively flat, profit margins for cattle producers may improve as better pasture conditions lessen the need for supplemental feed.\nEnergy\nEnergy activity rose modestly in late November and December. Contacts indicated greater drilling and business activity. Capital expenditures in the energy sector also increased modestly. Hiring by contacts in the sector grew at a stronger pace compared to the prior survey period. The number of oil rigs in District states increased slightly. Natural gas prices increased during the survey period, but were expected to decline in the coming months. Oil prices also increased slightly and were anticipated to hold steady. Wyoming's coal production increased modestly, but remained lower than year-ago levels.\nWages and Prices\nContacts reported prices for most raw materials were on the rise, yet prices for final goods were mostly unchanged. In general, wage pressures edged down in late November and December, despite a mild rise in labor shortages. However, wage pressures were noted for some positions including skilled construction positions, software developers, and technicians. Retailers reported a slight increase in prices and expected modest price growth in the coming months. The prices manufacturers received for final goods were lower, though the prices they paid for raw materials were higher than in the last survey period. Most manufacturing contacts foresaw both of these prices rising in the months ahead. Transportation companies also saw their input prices rise while keeping their prices mostly unchanged. Builder input prices were steady over the last month. Restaurant menu prices went up only slightly last month, but contacts anticipated moderate price growth in the near future. Restaurants continued to see a rise in food costs, and expected the trend to continue.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nJanuary 15, 2014\nThe District economy grew at a moderate pace in recent weeks. Manufacturing shipments and new orders had mostly solid increases, although there were also a few reports of weakness. Retail sales softened, with the exception of big-ticket items. Demand for non-retail services was little changed. Tourism generally flattened, with the exception of resorts specializing in winter activities. Borrowing by consumers slowed, except for new home construction and car loans. Commercial lending picked up, particularly for large projects. Residential real estate improved since our last report, with some areas reporting more residential construction. Commercial construction expanded for educational, medical, and some retail projects, and remained strong in multi-family. Commercial leasing reports varied across the District. Agricultural yields exceeded expectations, particularly for crops that were put at risk by excessive rains in this growing season. The energy sector remained stable, with minimal change in production since our last report. Hiring in the District continued to improve, despite lingering concerns about costs related to the Affordable Care Act and difficulty finding highly skilled workers. Average wages declined in the service sector while manufacturing wages increased moderately. Service sector prices rose at a faster pace, while manufacturing price growth slowed.\nManufacturing\nManufacturing grew moderately overall in recent weeks, although there were scattered reports of weakness. According to the latest manufacturing survey, shipments and new orders had solid growth. In addition, a West Virginia cabinet manufacturer remarked that steady growth in new construction boosted sales for his firm's higher-end cabinets. Further, an electrical components manufacturer in Virginia and a custom plastics executive in North Carolina reported stronger new orders. Food production executives in Virginia also reported a slight increase in demand for their products. In North Carolina, textile and composites manufacturers broke ground for new plants. On the other hand, a Maryland machine tool manufacturer stated that orders from builders and distributors were down. Also, a copper and aluminum materials producer in South Carolina noted a softening in sales, and a South Carolina food manufacturer reported a slight decline in shipments. Prices of raw materials and finished goods rose at a slower pace, according to our survey respondents.\nPorts\nPorts reported strong year-over-year traffic, even after eliminating effects of diversions to the Fifth District from northern ports as a result of last year's major hurricane. Paper, pulp, and agricultural exports were especially robust. Auto units were down slightly from a year ago, but remained strong. Exports of agricultural and construction machinery increased compared to earlier this fall, but declined mildly from a year ago. In contrast to softer demand in domestic markets, foreign coal shipments were up slightly year over year. On the import side, manufacturing supplies such as pipe and wire have risen significantly and port administrators expect that re-shoring of manufacturing will continue to build demand for such imports.\nRetail\nRetail sales growth generally slowed, with a few exceptions in recent weeks. A retail representative in central Virginia remarked that the pace of sales at small merchants in that area was \"pretty depressing.\" In addition, a discount department store manager commented that holiday sales were slightly below last year's. Auto sales remained strong, ending the year slightly above year-ago levels, as manufacturers of both domestic and foreign cars offered incentives to move the 2013 inventory. A dealer commented that people have more confidence in the economy and are now willing to get that new car \"they've been hankering for.\" He expected prices of used cars to decline as trade-ins continue to flood the market. In addition, sales of heavy trucks in West Virginia are being driven by increased natural gas production in that state. Furniture sales were strong, with an upscale furniture retailer reporting customer preference shifting to products produced in the U.S. and Canada. Pharmacy and apparel sales also rose. Survey responders indicated that average retail prices increased more quickly in recent weeks.\nServices\nNon-retail services contacts reported little change since our last report. An executive at a national trucking firm said demand had slowed in recent weeks, which would result in capacity tightening as some smaller firms shut down or idled trucks rather than renew vehicle registrations for 2014. An accounting firm in West Virginia reported generally flat demand for services, with the exception of an increase in audit work for non-profits due to federal grant requirements. Demand was generally soft at hospitals and other healthcare organizations, and administrators reported that they expect decreasing utilization along with declining Medicaid and Medicare reimbursement under the Affordable Care Act. One executive reported that the only change was an increase in flu and Norovirus cases in central North Carolina. Prices rose at a slightly faster pace at non-retail services firms.\nThe tourism industry had slow to flat bookings in recent weeks, outside of resorts specializing in winter activities. In Virginia, a resort manager remarked on the good skiing weather this season, having already sold several times the number of passes as last year at this time. Tourism was moderate on the outer banks of North Carolina, where the re-opening of the Hatteras Bridge reduced the need for ferrying tourist traffic. In Charleston, South Carolina, the restaurant industry is growing, but parking and congestion remain a problem. Rates were unchanged at most hotels.\nFinance\nConsumer borrowing generally weakened in recent weeks, while commercial lending strengthened. Reports across the District indicated low demand for mortgages on existing homes and refinance loans. In contrast, new construction lending improved. A South Carolina lender noted that loans for luxury autos were robust as consumers took advantage of low interest rates. According to a Virginia lender, mortgage interest rates rose recently, while consumer credit standards were unchanged. Another lender commented on the competitive atmosphere, and said he expects lenders to become more aggressive. Additionally, a Virginia bank executive reported that underwriting exceptions were more prevalent, especially in nonrecourse lending. In commercial lending, applications for large business expansion loans have increased. A North Carolina banker noted a pick-up in capital investments, particularly for construction projects. However a central Maryland banker reported that small business lending slowed.\nReal Estate\nResidential real estate grew moderately in the past four to six weeks. Brokers reported a mild increase in sale prices, steady buyer traffic, and a slight uptick in property sales. According to a central Virginia Realtor, cash sales increased and higher end houses were \"selling fast.\" However, a few agents stated that prices remained flat, and reports on higher end home sales were mixed. On balance, the average days-on-market and inventory decreased. In addition, brokers reported a positive outlook for the spring market, noting higher inventory of better quality homes as well as fewer short sales and foreclosures. Overall, residential construction remains tepid. A few brokers stated that single family home construction is picking up, primarily where developers are completing previously started projects.\nCommercial construction increased, with a contact reporting new projects underway for college campus housing and small medical centers in Maryland and the District of Columbia. Brokers also reported continued growth in grocery-anchored commercial construction. Multi-family housing remains active, while office building continues to be depressed. Commercial leasing was mixed since our last report. Most Realtors reported little change in demand for Class A office space, although a Virginia Beach broker reported relatively high vacancies. Demand for retail space in the Tidewater area of Virginia was mixed. A broker in the District of Columbia retail market reported that large blocks of space are in short supply. In North Carolina, a Realtor has received steady inquiries for industrial distribution space. Realtors indicated a slight increase in commercial sale prices, and little change in lease rates.\nAgriculture and Natural Resources\nAgricultural reports were generally positive in recent weeks. A few sod and seed companies reported a decline as a result of poor weather conditions. A vegetable farmer in North Carolina said that the excessive rain this season was less destructive than expected, and with increased demand, the year ended better than anticipated. Additionally, a Maryland fruit farmer reported excellent fruit yields due to the cold weather. Another Maryland contact remarked on this season's increase in corn sales, and added that corn was the leading export crop in his region this year. In animal farming, a West Virginia source noted strong growth in poultry processing. Reports regarding input and output prices were mixed.\nNatural gas production edged up slightly. A West Virginia contact stated that the industry continued to grow in all facets of production. Growth in natural gas was also said to be helping other businesses in the region. Coal miners indicated little change in production since our last report, but said output was slightly down compared to a year ago. A contact commented that Central Appalachian coal producers were struggling with low coal prices, regulation, and a decrease in employment.\nLabor Markets\nConditions continued to improve throughout the District in the last several weeks with numerous reports of strong labor demand. However, few of our contacts offered permanent positions to seasonal workers, and many employers remarked on the high turnover among low-skill workers. A staffing consultant in Maryland noted that \"there is a greater sense of confidence going into 2014,\" and that the highest demand is for IT and engineering skills. Elsewhere in the District, a Virginia contact reported that skills related to healthcare were in high demand. According to our manufacturing survey, hiring expanded robustly while the service-sector survey reported marginal growth on the retail side and only small increases in the non-retail subsector. In addition, several sources continued to report difficulty finding qualified workers or having to pay a premium to get them. In fact, one manager suggested that qualified candidates seemed to be basing employment decisions on more than just salary, and were also considering factors such as the work environment. Employers continued to express concern about potential cost increases related to the Affordable Care Act. Average wages rose moderately at manufacturing establishments, but declined at services firms, according to our latest survey.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nJanuary 15, 2014\nPrepared at the Federal Reserve Bank of Boston and based on information collected on or before January 6, 2014. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts suggest economic activity continued to expand across most regions and sectors from late November through the end of the year. Nine Districts indicated the local economy was expanding at a moderate pace; among these, the Atlanta and Chicago Districts saw conditions improve compared with the previous reporting period. Boston and Philadelphia cited modest growth, while Kansas City reported the economy held steady in December. The economic outlook is positive in most Districts, with some reports citing expectations of \"more of the same\" and some expecting a pickup in growth.\nThree-quarters of the Districts indicated that retail activity had increased since the last Beige Book report. The exceptions were St. Louis and Kansas City, where retail results were mixed, and the Richmond District, which cited a softening of retail sales. Richmond, Atlanta, and San Francisco noted strong auto sales. Districts mentioning nonfinancial services noted increased activity, except for Richmond, which cited \"little change\" in demand for non-retail services. All Districts reported year-over-year increases in manufacturing activity, although Kansas City noted slower growth in December.\nReal estate markets generally continued to improve, according to District reports. Although a few Districts indicated home sales or residential construction in some areas had slowed or declined in recent months, most cited increased residential sales activity and construction as well as rising home prices. Reports on commercial real estate were also positive, with commercial construction generally increasing. Two-thirds of the Districts reported increases in commercial sales and leasing activity. According to District reports that mention banking, loan volumes have not changed substantially since the last reporting period. The eight Districts reporting on energy indicated that activity continued increasing; Cleveland and Atlanta cited robust growth in the energy sector. Reports on agriculture were also mostly positive.\nAlmost half the Districts reported that prices were stable; most other Districts noted small increases in prices. Upward movements in wages were cited by 8 of the 12 Districts; the increases were described as small to moderate. Two-thirds of Districts noted increases in hiring; the Richmond District cited \"numerous reports of strong labor demand.\"\nConsumer Spending and Tourism\nMost Districts reported that retail spending was up, with activity described as modestly to moderately higher and holiday sales on plan or up a bit compared with 2012. However, Richmond noted a general slowdown in retail spending in recent weeks and the Kansas City District cited lower than expected holiday sales, which retailers there attributed to a shorter selling season and harsh weather conditions. Atlanta and San Francisco both noted that in-store sales were softer than online sales. Apparel sales were reportedly strong in Boston and Richmond, while Philadelphia, Cleveland, and Chicago indicated that cold-weather gear and winter items were selling well. Home furnishings, home improvement items, and/or furniture sold particularly well in the Boston, Philadelphia, Richmond, and San Francisco Districts. Demand for electronics was quite strong in the Cleveland and Minneapolis Districts, but San Francisco reported that electronics sales were weaker than in recent years. Kansas City and Dallas reported lagging sales for higher-priced big ticket items.\nNew York, Philadelphia, and Kansas City reported that automobile sales declined a bit in December; dealer contacts in the New York and Kansas City Districts reported higher inventory levels. Contacts in the Richmond, Atlanta, and San Francisco Districts said that automobile sales remain strong. Auto sales were mixed across areas within the Dallas District. Chicago and Minneapolis reported that light-vehicle sales increased; Cleveland observed that consumers continue to shift from smaller, more fuel-efficient cars to SUVs, crossovers, and light trucks. The 2014 outlook for vehicle sales is strong in the Philadelphia, Richmond, Cleveland, Kansas City, Dallas, and San Francisco Districts.\nReports on leisure and tourism spending were mixed across and within Districts. The Richmond District reported flat to slower bookings in recent weeks, except for resorts specializing in winter activities. San Francisco indicated that travel and tourism were down in Hawaii and remained somewhat weak in Las Vegas. Minneapolis reported that winter tourism activity was off to a solid start on account of snowy weather. The Kansas City District indicated that tourism activity increased slightly since the last survey and increased modestly year-over-year. Hospitality contacts in the Atlanta District reported strong advance bookings and increases in occupancy rates, room rates, and revenue per room during the 2013 holiday season compared with year-earlier levels.\nNonfinancial Services\nDistricts mentioning consumer and business services reported that demand for nonfinancial services increased moderately since the previous Beige Book report. The Philadelphia, Minneapolis, and San Francisco Districts cited increased growth in information technology services; in the San Francisco District, this growth reflected strong demand for cloud services. The Boston District generally reported strengthened activity in the consulting and advertising industries with the exception of a firm that provides consulting services mostly to government agencies. Healthcare, internet technology, restaurant, telecommunications, and distribution firms expanded in the St. Louis District. Other reports of growth included legal and real estate services in the Dallas District and professional and business services in the Minneapolis District. By contrast, contacts in the Richmond District generally reported flat nonretail service growth, citing soft demand in the trucking and healthcare sectors. Demand for staffing services increased in the New York, Cleveland, Richmond, Chicago, and Dallas Districts, notably to serve the internet technology and engineering sectors.\nReports on transportation services were generally positive. Port activity remained strong in the Richmond District. Logistics contacts in the Atlanta District reported expansion in the movement of industrial and healthcare-related goods. Rail contacts noted year-over-year increases in intermodal traffic in the Atlanta District and heightened cargo volumes in the Dallas District. Similarly, freight transportation executives in the Cleveland District reported that shipping volume was in line with or exceeded expectations. One contact in the Philadelphia District observed \"booming\" growth for most modes of transportation. In contrast, transportation companies in the Kansas City District reported a slight decrease in business activity in recent weeks, while both intermodal cargo volumes and air cargo volumes fell in the Dallas District. Airline demand in the Dallas District was largely unchanged.\nThe outlook for 2014 is positive, with most Districts reporting that contacts expected activity in nonfinancial services sectors to continue to increase at a moderate to strong pace.\nManufacturing\nReports from the 12 Districts generally painted a picture of steady growth in manufacturing. All but one District reported both growing sales and an optimistic outlook; only Kansas City reported a decline in manufacturing production and shipments in December, although activity remained above year-earlier levels. A manufacturer in the Dallas District said that for the first time since before the recession, his firm had too many jobs to bid on. Employment was generally described as \"steady\" with few instances of rapid growth but very few reports of staff cuts or plant closings. Contacts in several Districts reported concerns about health care cost inflation. Capital spending was generally up and contacts anticipated further growth.\nThree specific areas of strength in manufacturing were mentioned by multiple Districts: commercial aviation, autos, and construction materials. The Boston, Chicago, and San Francisco Districts reported exceptional strength in commercial aviation driven by record backlogs at major aircraft producers. The Richmond, Chicago, and San Francisco Districts said that the recovering housing market had led to increased demand for construction materials going all the way from raw materials like lumber to finished products like kitchen cabinets. Similarly, the Boston, Cleveland, Atlanta, and Chicago Districts reported above-average strength in the auto industry. Contacts in the Cleveland District said that most auto suppliers were at or near capacity; one respondent there estimated that 85 percent of auto suppliers should be adding capacity right now but indicated that many are reluctant to do so.\nNews about semiconductors was mixed, with contacts in the Boston District citing strong demand for semiconductor manufacturing equipment and contacts in the San Francisco District reporting gradually increasing sales of chips. Contacts in the Dallas District said that demand for memory chips was rising but demand for logic devices remained soft. The one area of weakness was manufacturers of defense-related products; contacts in the Cleveland District expressed hope that the recently enacted federal budget agreement would provide a boost to defense contractors this year and next.\nReal Estate and Construction\nMost Districts reported increases in home sales in the closing months of 2013 compared with last year, but the Atlanta, Cleveland, and Kansas City Districts indicated that year-over-year residential sales growth had slowed relative to earlier quarters in 2013. The Boston, Philadelphia, Minneapolis, and Dallas reports noted that at least some areas within those Districts saw home sales below year-earlier levels. Home selling prices continued their upward trend in the Boston, Atlanta, Chicago, Minneapolis, Kansas City, and San Francisco Districts, while remaining stable in the Cleveland and Richmond Districts; New York noted mixed changes in sale prices across the District. Residential construction saw slight to moderate increases in most Districts; by contrast, Dallas cited a slight decline, New York reported no change, and Cleveland cited strong growth. Notwithstanding its decrease in overall residential construction, the Dallas District noted elevated construction levels for multi-family units; the Atlanta, Cleveland, and Chicago Districts also cited strong multifamily construction. Reporting Districts indicated that residential real estate contacts remained optimistic looking forward, while voicing concerns about declining inventory and potential changes in the mortgage market. The Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Districts reported that contacts expected residential construction to pick up in the near term.\nDistrict reports on commercial real estate contained much good news, although performance within some Districts was uneven across locations and property types. Commercial leasing activity increased in the Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco Districts, as well as in New York City and Long Island, and held roughly steady in the Boston, Philadelphia, Richmond, Kansas City, and Dallas Districts. Industrial leasing activity weakened in the New York District in the fourth quarter but improved in both the Richmond and St. Louis Districts. Office and other commercial vacancy rates were mixed across and within metropolitan areas and across property types. Commercial rents increased at least modestly on average in the Boston, Chicago, Kansas City, and Dallas Districts and held steady in the New York and Richmond Districts. Commercial real estate investment continued to strengthen across numerous Districts, with brisk sales activity in the Boston, Chicago, and Minneapolis Districts and rising prices in those same Districts as well as in the Richmond and Kansas City Districts. Excepting the New York and Dallas Districts, which gave no information on recent construction, all other Districts reported increases in commercial construction activity in recent weeks. In the Boston and Richmond Districts, construction activity increased in the education and healthcare sectors. A significant number of commercial high-rise structures are being built (or planned) in the San Francisco District. Information concerning the commercial real estate outlook was largely positive where it was reported. Contacts in the Boston, Atlanta, and Kansas City Districts were optimistic that commercial real estate fundamentals would continue to improve at least slowly in 2014. The outlook for commercial construction activity was positive in the Philadelphia, Cleveland, Minneapolis, and Dallas Districts.\nBanking and Financial Services\nAmong Districts reporting on banking, none noted substantial changes in loan volume. Philadelphia, Richmond, Atlanta, Chicago, Dallas, and San Francisco reported slight to moderate growth. The Cleveland, St. Louis, and Kansas City Districts reported no change, whereas New York cited a moderate decline in loan volume. In addition, while no Districts reported major changes in credit standards, Philadelphia, Chicago, and San Francisco cited instances where financial institutions relaxed their underwriting standards. Some contacts attributed this relaxation to increased competition in lending markets. Among reporting Districts, credit quality held steady or increased, with the New York District citing declines in delinquency rates for all lending categories.\nResidential real estate loans declined in the New York, Cleveland, Atlanta, Chicago, and Kansas City Districts, mostly due to slowdowns in refinancing activity rather than in new purchase loan applications; in fact, the latter have slightly increased in some Districts. The St. Louis District reported no change in residential real estate loan volume.\nCommercial real estate loans increased in the Cleveland District, remained steady in the New York and Kansas City Districts, and fell in the Philadelphia and St. Louis Districts. Business and industrial loan demand increased in the Richmond, Chicago, and San Francisco Districts while remaining stable in Cleveland and Kansas City and declining in the St. Louis District. The Cleveland, Richmond, Chicago, and Dallas Districts reported increases in auto lending. Regarding demand deposits at financial institutions, deposit volumes increased in the Cleveland and Dallas Districts, remained stable in Kansas City, and decreased in the St. Louis District. Contacts in some Districts expressed concern about new banking regulations and their potential negative impact on lending and operating costs.\nAgriculture and Natural Resources\nMost Districts reporting on agriculture indicated that yields and growing conditions were generally strong and improving in late November and December; by exception, the Atlanta District observed mixed results and Minneapolis cited weaker farm conditions. Corn and soybean prices remained very low across the country, and the Chicago and Kansas City Districts reported that some farmers have been holding onto fall crop inventories rather than sell at current prices. Kansas City and Dallas reported that the winter wheat crop is in good shape due to moisture provided by winter storms, although storms slightly delayed the cotton harvest. The Kansas City, Dallas, and San Francisco Districts cited increased profitability in cattle production attributed to flat or rising cattle prices coupled with reduced feed costs and better pasture conditions. Builders in the San Francisco District reported that timber supplies were sufficient to meet rising demand.\nDistrict reports indicated continued strong energy demand and production. The Atlanta, Kansas City and Dallas Districts cited robust oil drilling activity both inland and offshore, despite rising costs to transport crude oil along the Gulf Coast; meanwhile exploration in the Gulf of Mexico has been bolstered by the completion of pipeline infrastructure projects. Coal production was slightly up in the St. Louis and Kansas City Districts but mixed in the Cleveland and Richmond Districts, as Appalachian producers struggled with low coal prices and regulation. Natural gas production was stable at a high level in the Cleveland District, up slightly in the Richmond and San Francisco Districts, and mixed in the Minneapolis District. Most Minneapolis District iron ore mines continued to operate near capacity; however an environmental impact report on a proposed copper-nickel mine has brought the future of the project into question. A judge's ruling brought a proposed $250 million solar power project in Minnesota closer to development.\nWages and Prices\nMost District reports indicated that wage and price pressures were contained and did not present major problems for local contacts. Prices were said to be generally stable in the Cleveland, Richmond, Atlanta, Minneapolis, and Kansas City Districts; they reportedly increased slightly in the Boston, Philadelphia, Chicago, and San Francisco Districts. New York and Dallas cited modest price increases; both mentioned that some service-sector firms plan to raise their selling prices in the near term. Most District reports indicated that cost pressures remained stable or increased only slightly. Manufacturers in a number of Districts reported that raw material prices were generally steady, with small increases in the prices of some metals. Kansas City cited an increase in the prices of some raw materials but not in the prices of finished products. Cleveland indicated that both input and finished products prices remained mostly unchanged.\nThe Cleveland and Atlanta Districts reported steady wages, with Atlanta noting that merit increases remained in the 1 to 3 percent range. The Boston, Philadelphia, Richmond, Chicago, Kansas City, and San Francisco Districts reported slight to modest increases in wages; among these, Richmond noted that average wages declined in the service sector but increased in manufacturing, while Chicago and Kansas City observed that wage pressures were lower compared with the previous reporting period. By contrast, Dallas noted a pickup in reports of pay increases and wage pressures, while Minneapolis indicated that labor markets were showing signs of tightening, and wage increases were moderate.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nDecember 4, 2013\nAggregate 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). Reports from most sectors changed little. However, existing home sales resumed a moderate pace of growth (albeit from low levels), and manufacturing activity slowed to just a slight pace of growth. Sectors that continued to expand at a modest pace included residential construction, general retail sales, tourism, staffing services, and commercial real estate leasing. Commercial real estate construction continued to expand only slightly. The broad general services sector continued to grow at a moderate rate, and auto dealers continued to report strong sales activity. Loan volumes at Third District banks grew at a modest pace across most categories, and credit quality continued to improve. Contacts reported little change to the slight overall increases in wages, home prices, and general price levels--similar to the last Beige Book period.\nDespite a slower pace of growth in some sectors, contacts overall maintained an outlook for moderate growth--similar to the last Beige Book. Contacts in most sectors continued to express confidence in the underlying economy. In particular, manufacturers and service-sector firms expressed strong confidence in the U.S. economy and in global conditions. In regard to hiring and capital expenditure plans, firms continued to expand cautiously, as they face ongoing uncertainty from federal fiscal debates and implementation of the Affordable Care Act.\nManufacturing\nThird District manufacturers have reported continued increases in orders and shipments at a slight pace of growth overall since the last Beige Book. One-third of all firms reported increases--about the same as before. However, one-fourth of the firms reported decreases--somewhat higher than before. The makers of food products, paper products, fabricated metals, and instruments have reported gains since the last Beige Book. Reports of decreases came from the makers of lumber and wood products, chemicals, primary metals, and industrial machinery as well as the makers of stone, clay, and glass products. Some reports reflect seasonal trends. Firms across several sectors noted a reduction in activity due to the government shutdown. One contact reported: \"We definitely noticed a quieter period during the first two weeks of October.\" Another said that \"the debt ceiling debate is having a chilling effect on demand.\" Despite disruptions from the shutdown, one large industrial supplier reported that conditions have been improving steadily since a trough in July.\nSignificantly more firms (over half) reported increases in their total workforce compared with the firms that reported increases one year ago (one-third). Also, the average rate of capacity utilization reported by firms was slightly higher this year. Optimism that business conditions will improve over the next six months remained high although not quite as high as during the prior Beige Book period. While over half of the firms continued to anticipate increases in activity, some firms expected decreases in activity, where there had been none before. One contact reported that \"clear fiscal policy can help spur more growth, while fiscal dysfunction will most likely derail economic activity. I do not know what to expect for early 2014.\" Though still positive overall, contacts have reported somewhat lower expectations of hiring and capital spending plans since the last Beige Book.\nRetail\nThird District retailers have continued to report modest growth overall since the last Beige Book. Contacts cited some negative impacts from the government shutdown and cautioned that year-over-year comparisons might be overly strong due to last year's impacts from Hurricane Sandy. Retailers reported hopeful, but very uncertain, expectations for their all-important 2013 holiday season. Shifting from the longest shopping season last year to the shortest shopping season this year has prompted considerable jockeying by traditional and online retailers over the timing and scope of their promotional offerings. More stores plan to open on Thanksgiving Day than ever before; some Black Friday deals are being offered earlier. Retailers may gain more clarity after Black Friday and Cyber Monday results are tallied, but a complete picture may require sales results for November, December, and January.\nAuto dealers have reported continued strong sales since the last Beige Book period. Pennsylvania dealers reported some softness during the government shutdown. New Jersey dealers reported stronger sales activity but cautioned that year-over-year comparisons for October through year-end will be affected by last year's storm impacts--first as sales lagged during the storm and its immediate aftermath, then soared as replacement vehicles were purchased. Dealers reported that they remain bullish on sales for \"at least the next twelve months.\"\nFinance\nOverall, Third District financial firms continued to report modest increases in total loan volume. Most loan categories appeared to grow somewhat; however, contacts reported essentially no change in commercial real estate loan volumes. Demand remained strong for financing of multifamily housing projects. Several contacts noted that consumers are increasing their use of home equity lines rather than refinancing to do home improvements. Contacts reported that the low interest rate environment has been helpful for businesses generally and that borrowers' financial statements are looking better. However, small businesses remained \"reluctant to borrow.\" Banking contacts continued to express concerns about aggressive competition on rates and terms, suggesting that credit standards have continued to ease slightly. Overall, most bankers remained optimistic, albeit for continued slow, steady growth.\nReal Estate and Construction\nThird District homebuilders have reported little change in their modest pace of activity since the last Beige Book. One builder reported greater interest in the last few weeks after weaker activity at the outset; his competitors had struggled early as well. With recent small drops in gas prices and interest rates and the rise in stocks, he wondered where the buyers were. Another builder reported that the government shutdown and general malaise seemed to be contributing to the soft demand. Another builder reported that contractors remain reluctant to invest in new capacity and to hire workers requiring training. Instead, contractors are \"stealing\" skilled labor from each other. According to residential real estate brokers, sales of existing homes resumed double-digit growth rates (year over year) in most of the Third District's major metropolitan areas. Reported increases ranged from 17 percent in October for the Lehigh Valley to 27 percent in the Harrisburg area. Contacts for the Philadelphia metropolitan statistical area and southern New Jersey also reported growth in excess of 20 percent. The inventory of homes for sale continued to fall in all markets.\nNonresidential real estate contacts indicated little change in the slight growth rate of construction and the modest pace of overall leasing activity. Demand remains strongest for new construction of industrial buildings, hospitals, schools, and other institutions. Multifamily buildings for apartments and condos also remain in greater demand. Leasing agents, management companies, and commercial market analysts remained optimistic for steady progress in various sectors and locations within the Third District.\nServices\nThird District service-sector firms continued to report a moderate pace of growth overall; staffing firms and tourism maintained a more modest pace. Tourism along the Delaware and New Jersey shores is seasonably slow. Storm-impacted areas of the Jersey shore continued to experience somewhat lighter traffic than normal but most parts of the Jersey shore as well as Delaware beaches experienced normal activity. Tourism is expected to be back to normal next year, except for those few areas that lost the greatest number of homes during the storm.\nOther service firms reported modest to moderate growth rates. Contacts described growth during the recent Beige Book period as \"steady\" and \"nothing exciting,\" with no significant impact from the government shutdown. The steady recovery in the residential housing sector was cited by contacts from a variety of service sectors as underpinning their own steady gains. Staffing firms also reported steady growth in demand for temp placements, especially in manufacturing, distribution, and health care. Overall, service-sector firms remain confident that current trends will continue with a possibility for a slightly faster pace of growth.\nPrices and Wages\nOverall, Third District contacts reported no change to the steady, slight pace of price level increases, similar to the previous Beige Book. Manufacturing firms reported that prices paid and prices received moved higher again. Auto dealers and general retailers reported little change in pricing, and most builders reported holding prices steady. One builder offered price incentives in October that drove additional sales. Many contacts reported coping with extremely tight margins. Generally, real estate contacts continued to report rising prices for lower-priced homes, while higher-priced homes are aligned to local market conditions. Very few contacts are seeing wage pressures, other than for a few highly skilled occupations.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nDecember 4, 2013\nBusiness 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. Housing market activity dipped slightly, while nonresidential builders saw an overall pick up in business. Reports on retail purchases during October were mixed. New-motor-vehicle sales posted moderate gains on a year-over-year basis. Wet-gas production in the Marcellus and Utica shales rose sharply between the second and third quarters of 2013. The rate of decline in coal production is slowing. Freight volume remains above year-ago levels. Applications for business and consumer credit rose slightly.\nHiring was sluggish across most industry sectors, though we did see a pickup in construction. Staffing-firm representatives reported that the number of job openings and placements increased slightly, with vacancies found primarily in healthcare and manufacturing. Wage pressures remain contained. Input and finished goods prices saw little change, apart from increases in residential construction materials and steel.\nManufacturing\nReports from District factories showed that demand was steady to growing at a robust pace during the past six weeks. Companies seeing the strongest activity were suppliers to the aerospace, housing, motor-vehicle, and oil and gas industries. A few contacts noted that they are starting to see improvements in European markets. Defense contractors are still coping with uncertainty, due primarily to government fiscal issues. Compared to a year ago, manufacturing production levels are mainly higher. Looking forward, most of our respondents expect little change in demand other than normal seasonal variation, though several manufacturers cited the regulatory environment and the dampening effect it could have on confidence. Steel producers and service centers reported that shipping volume is below expectations due in part to customers keeping their inventories at low levels. Most of our respondents remain concerned about the quantity of steel imports, though a few noted that they are beginning to see a decline in the amount being imported. Steel producers do not expect market conditions to change appreciably in the next few months apart from seasonal variation. District auto production was strong during October, with production numbers showing sizeable increases on a month-over-month and year-over-year basis.\nCapacity utilization rates have risen during the past few months for some of our contacts, but almost all reported sufficient capacity to absorb additional demand spikes. Only one contact reported that he is considering expanding capacity. Capital expenditures are in line with budgeted amounts for the fiscal year. Outlays are being allocated primarily for productivity enhancements and information-technology upgrades. Several manufacturers indicated that they are taking a more conservative stance toward upcoming capital budgets until there is a higher degree of certainty about the economy. Growth in raw material and finished goods prices was generally flat. We heard a few reports about rising steel prices, which manufacturers successfully passed through to their customers. Factories expanded payrolls at a sluggish pace.\nReal Estate\nSales of new single-family homes declined slightly during the past six weeks, which builders attributed to seasonal factors and a lowering of consumer confidence. Multifamily construction remains strong. New-home contracts were found mainly in the move-up price-point categories. The first-time home-buyer category remains very weak. Selling prices of new homes continued on a steady upward trend due to rising costs (labor and materials) and low inventory in desirable areas. One builder noted that he has seen three price increases in the past year. Builders are confident that demand for new homes will persist, and sales should pick up after the first of the year.\nNonresidential builders reported an overall pick up in business. Smaller projects are filling the pipeline at this time, while very large projects are few in number. With respect to the latter, uncertainty about the strength of the economy and fiscal issues are keeping investors from moving forward. Most of our contacts indicated that they are comfortable with the number of inquiries they receive and their backlogs. However, several builders emphasized that clients are only closing on projects that are viewed as crucial to their businesses. The strongest activity was in manufacturing, distribution, shale gas, commercial development, and multifamily/affordable housing. Our contacts are cautiously optimistic about near-term prospects but are expecting slow growth at best.\nPrices for residential construction materials--lumber and drywall--have increased substantially in the past year, but the rate of increase is slowing. General contractors reported moderate hiring in their apartment management divisions, while the hiring of field and back-office personnel was more limited. Many of our contacts noted increases in health-insurance premiums. Builders cited a scarcity of high-skilled trade workers. As a result, there is upward pressure on wages, and subcontractors are demanding and getting higher rates.\nConsumer Spending\nReports on retail purchases during October were mixed. Retailers who saw flat or lower sales relative to September attributed it in part to a weakening in consumer confidence. A full-service food retailer noted a proliferation of dollar stores, which are attracting a rising share of his lower-income customers. Stores seeing increased sales credited a larger product selection and wider use of promotions. Most of our contacts said that year-over-year sales were higher. Products in greater demand included core goods and cold-weather apparel. One of our contacts expects that electronics purchases will pick up once the holiday shopping season gets under way. Projections for the fourth quarter call for flat to moderately higher sales relative to the same time period last year. Inventories were described as being in good shape. Vendor and shelf prices held steady. Some retailers expect to increase capital spending in 2014, mainly for improving e-commerce and distribution systems. Temporary hiring for the holiday shopping season is expected to be flat compared to 2012, though one chain reported that it plans to hire about 10 percent more holiday workers this year. Another retailer reported that it is very difficult to hire the number of temporary workers needed for a regional distribution center.\nYear-to-date sales through October of new motor vehicles showed a moderate increase when compared to the same time period in 2012. On a month-over-month basis, purchases of new vehicles were slightly lower during October versus September. Although buyers continue to prefer smaller, fuel-efficient vehicles, there was a pickup in sales of crossovers and SUVs. New-vehicle inventories were characterized as very good to a little high. Aggregate unit volume projections for 2013 were mixed. In some regions of the District, our contacts believe that volume will be 10 percent to 12 percent higher year-over-year. In other regions, such as those that are dependent on the coal industry for income, dealers are projecting little change from a year ago. Used-vehicle purchases showed a large increase from September to October. Employment levels rose slightly across dealerships.\nBanking\nDemand for business credit grew slightly during the past six weeks. No loan category or industry is performing significantly better than others, although many bankers noted that commercial-real-estate lending has picked up. Downward pressure on commercial-loan pricing was described as moderate to strong. Consumer credit was little changed. Home-equity products and auto lending drew the highest demand. A large regional banker observed that credit-card usage is falling below expectations. Most contacts reported a slowdown in residential mortgage activity, which they attributed to seasonal factors and a rise in interest rates. The shift from refinancings to new-purchase applications continued. For the most part, delinquency rates were stable or declining. No changes to loan-application standards were reported. Core deposits by businesses and consumers grew. On balance, banking payrolls were flat.\nEnergy\nAggregate coal output across the District remains below year-ago levels. A large production decline in eastern Kentucky is being partially offset by modest increases in Ohio, Pennsylvania, and northern West Virginia. Going forward, little change in output is projected. Spot prices for steam and metallurgical coal have declined since our last report. There has been little change in the number of drilling rigs across the District since the beginning of August. However, production from the wet-gas regions of the Marcellus and Utica shales has grown significantly in the third quarter of 2013, when compared to the second quarter. Higher production was attributed to the completion of pipeline connections and the startup of gas- processing plants. We heard one report about plans to construct six additional wet-gas processing plants in the state of West Virginia. Well-head prices for natural gas remain at low levels, with some volatility seen in oil prices. Coal operators and oil and gas producers reported that capital outlays were at targeted levels. Some oil and gas companies plan to increase spending in the first quarter of 2014 for land acquisition and drilling. Production-equipment and material costs were stable. Payrolls and wages held steady.\nFreight Transportation\nFreight executives reported that the slowing in the rate of revenue growth that began early in the third quarter has continued. However, year-to-date shipping volume is higher when compared to the same period in 2012. The industry outlook is favorable, with volume expected to grow at a slow, but steady pace. Operating costs were stable. A few contacts noted that they have successfully negotiated rate increases, although increases fell below desired levels. Capital outlays for new tractors were somewhat higher than planned for the current fiscal year due to capacity expansion or OEM price incentives. The industry has been actively hiring for replacement and to a lesser degree, adding capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nDecember 4, 2013\nThe rate of growth in economic activity in the Seventh District continued to be modest but slowed a bit in October and early November. Growth in consumer and business spending remained modest, while manufacturing production and construction activity continued to rise at a moderate pace. Contacts remained hopeful for improvement in 2014, although they were slightly less optimistic than they were during the previous reporting period. Credit conditions changed little on balance. Cost and wage pressures remained mild. A longer growing season contributed to higher than expected corn and soybean yields.\nConsumer spending\nConsumer spending growth remained modest in October and early November. Auto sales in the District slowed during the government shutdown, but subsequently picked up in late October and November. Contacts noted that lower gas prices were causing sales to shift away from fuel-efficient vehicles. Non-auto retailers reported typical sales levels during the lull between the back-to-school and holiday seasons. Sales of electronics were up, while grocery sales were flat, and apparel sales declined. District retailers are anticipating moderate growth in sales during the holiday season, but with gains somewhat below those expected at the national level.\nBusiness spending\nBusiness spending grew at a modest pace in October and early November. Inventories were at comfortable levels for most retailers and manufacturers. A number of auto dealers reported that inventories were slightly higher than normal, but that this was an intentional buildup in anticipation of increased demand from buyers looking to lock in low interest rates. In contrast, steel service center inventories remained low. Growth in capital spending was up only slightly; but spending plans for the next six to twelve months increased, particularly in the manufacturing and finance sectors. Contacts reported investing in structures, equipment, information technology, and vehicles. In general, the pace of hiring edged down again and expectations for future hiring dropped. One staffing firm, however, reported an increase in billable hours, particularly in manufacturing. Many contacts noted continuing strong demand for skilled and experienced workers. Part-time seasonal hiring for the holidays was slightly lower than normal, with retailers choosing to increase hours instead of hiring new workers.\nConstruction/real estate\nConstruction and real estate activity increased moderately over the reporting period. Overall demand for residential construction grew slightly, although remodeling activity slowed considerably. Multifamily construction experienced moderate growth with strength concentrated in the apartment sector. In residential real estate markets, home sales, prices, and rents continued to rise, though at a slower rate than earlier in the year. Inventories of homes for sale stayed near record lows, but contacts expected them to rise as increasing house prices induce more people to list their homes. Nonresidential construction grew modestly, with contacts noting an improvement in the outlook for industrial building and hotels. Commercial real estate activity continued to expand as retail leasing picked up, though a large fraction of deals contained relatively short-term contracts.\nManufacturing\nGrowth in manufacturing production remained moderate. The auto and aerospace industries were again a source of strength for the District. A large number of new vehicle launches pushed auto production and capacity utilization higher. Steel production fell slightly even though imports were down and net demand from service centers picked up. Specialty metal manufacturers reported slight declines in new orders and backlogs, and were worried that demand would be weak toward the end of the year. Demand for heavy equipment remained soft as sales of farm and mining equipment declined. Rental companies, however, continued to make large investments, as many users prefer to rent rather than purchase equipment given the uncertain business environment. Demand for heavy- and medium- duty trucks was up in response to the improving housing market and the pull-forward of sales in anticipation of new EPA standards in 2014 that will raise the cost of trucks. Manufacturers of construction materials saw a slight increase in demand and expected moderate growth in the coming year. In general, manufacturing contacts remained somewhat optimistic for 2014. Nonetheless, they still expected heightened uncertainty--exacerbated by worries about rising healthcare costs and fiscal policy gridlock in Washington D.C.--to continue to dampen demand.\nBanking/finance\nCredit conditions changed little on balance over the reporting period. Volatility decreased significantly across several asset classes and equity markets saw significant improvements. With rising benchmark rates, contacts noted slight declines in spreads for corporate borrowers, especially in the high-yield debt market. Banking contacts noted a leveling off in the gradual uptrend in asset quality. Demand for commercial and industrial loans remained relatively unchanged. Competition among lenders increased for the limited number of opportunities, putting modest pressure on prices and structures. Contacts also noted an increase in commercial real estate development activity. Residential mortgage activity declined as the increase in borrowing rates resulted in fewer homeowners refinancing mortgages. In contrast, contacts noted increased consumer borrowing, particularly for purchasing and refinancing autos.\nPrices/costs\nCost pressures changed little since the last report. Overall, commodity prices were up slightly. Steel, scrap, lumber, and gypsum prices rose, iron ore prices were flat, and coal and gasoline prices were lower. Retailers noted that heavy promotional activity is being planned for this holiday season. Wage pressures were up slightly. Non-wage labor costs were steady, though a number of contacts reported higher health insurance premiums because of regulatory changes in the Affordable Care Act.\nAgriculture\nHarvesting took longer this fall than a year ago given the larger size of the crop and delays from precipitation. Crop yields remained higher than expected across the District, even in areas that experienced yield losses from drought. In general, farmers tended to sell soybeans and store corn. Pastures and winter wheat fields were in better shape than they were last year. Crop prices fell over the reporting period, though higher exports of corn, soybeans, and wheat cushioned the decline. Lower fertilizer prices relieved some concerns about 2014 crop production costs. Milk and cattle prices were a bit higher; hog prices fell, although they remained above the level of a year ago. The prospects for livestock producers improved due to reduced feed costs.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nDecember 4, 2013\nBusiness activity in the Eighth District has expanded at a moderate pace since the previous report. Recent reports of planned activity in manufacturing and services have been positive. Reports of retail and auto sales have also been positive. Overall residential real estate market conditions in the District have continued to improve; commercial and industrial real estate markets have also improved in some areas of the District. Lending activity at sample of District banks was little changed during the third quarter of 2013. Prices, wages, and employment levels have stayed the same or increased according to most contacts in the District.\nConsumer Spending\nContacts reported that retail sales in September and October were up, on average, compared with the same period last year. About two thirds of contacts noted increases in sales, while one third noted decreases. Some contacts noted fewer sales from low-income shoppers, and some contacts noted increases in lower-end product sales. Contacts also noted that new store openings and renovations outnumbered store closings over the past three months. Most contacts expect holiday sales to increase compared with last year, and many have hired more seasonal employees than last year in anticipation of increased sales.\nReports from auto dealers were generally positive. The majority of contacts reported increased sales in September and October compared with the same period last year. Sixty percent of contacts reported that inventories were at desired levels, while one third reported that inventories were too low. One third of contacts reported increases in used car sales relative to new car sales, while 25 percent reported the opposite. Forty-two percent of contacts reported increases in high-end vehicle sales, while 17 percent reported increases in low-end vehicle sales. A number of contacts cited increased sales of small sport utility vehicles, crossover utility vehicles, and medium duty trucks. Most contacts expect increased sales in November and December relative to last year.\nManufacturing and Other Business Activity\nReports of plans for manufacturing have been positive since our previous report. Several manufacturing firms reported plans to add workers, expand operations, or open new facilities in the District, while a smaller number of manufacturers reported plans to reduce employment. Firms that manufacture food, automobiles, wind turbines, toys, steel flanges, pet food, machinery, and nitric acid plan to hire new employees and expand operations in the near future. In contrast, firms that manufacture auto parts, lead, bottle tops, paper and packaging products, and construction materials reported plans to lay off workers. Manufacturing contacts noted more inquiries and new orders in the most recent quarter, compared with the same period last year.\nReports of planned activity in the District's service sector have also been positive since the previous report. Firms in courier and express delivery services, health care benefit management, distribution, logistics, retail trade, business, telecommunication, information technology, and recreation services reported new hiring (including seasonal hiring) and expansion plans in the District. In contrast, firms in health care, transportation, and financial services announced plans to reduce employment.\nReal Estate and Construction\nHome sales have continued to increase throughout most of the District on a year-over-year basis. Compared with the same period in 2012, October 2013 year-to-date home sales were up 17 percent in Louisville, 20 percent in Little Rock, 9 percent in Memphis, and 7 percent in St. Louis. Residential construction also improved in many areas of the District. Contacts reported residential developments in downtown Little Rock and active housing starts in the Memphis-area suburbs. In contrast, a contact in Louisville reported that new residential construction is not recovering as fast as housing demand.\nCommercial and industrial real estate market conditions have continued to improve in some areas of the District. A contact in Memphis reported that commercial and industrial real estate market conditions have improved, a contact in St. Louis reported that sales activity in the industrial market increased, and a contact in Louisville reported that the industrial real estate market in southern Indiana has improved. In contrast, a contact in Little Rock reported that the industrial market has been a \"sleepy sector,\" while a contact in Louisville noted that there was no office leasing activity in the third quarter but expected it to pick up in the fourth quarter.\nBanking and Finance\nA survey of District banks found little change in overall lending activity during the third quarter of 2013. During this period, credit standards and creditworthiness of applicants for commercial and industrial loans remained mostly unchanged, while demand for these loans was slightly weaker and delinquencies decreased moderately. Credit standards and credit worthiness of applicants for prime residential mortgage loans remained mostly unchanged; demand was moderately weaker overall, with some respondents reporting substantial weakness; and delinquencies saw a slight decrease. Credit standards and creditworthiness of applicants for auto loans and credit cards remained mostly unchanged, while demand decreased moderately and delinquencies edged down slightly. Credit standards, creditworthiness of applicants, and demand for other consumer loans remained mostly unchanged, while delinquencies edged down slightly.\nAgriculture and Natural Resources\nAs of mid-November, over 90 percent of the District corn, sorghum, and rice crops had been harvested, while harvest progress of the District cotton and soybean crops was 81 and 89 percent complete, respectively. Winter wheat planting was 87 percent complete, on average, across the District. Year-to-date coal production in the District for October was 3.7 percent higher compared with the same period in 2012. Coal production for October 2013 was 11.1 percent greater than in October 2012.\nPrices, Wages, and Employment\nSixty-one percent of contacts indicated that prices charged to consumers over the past three months have stayed the same, while 25 percent indicated that prices have increased relative to the same period last year. In turn, 44 percent of contacts noted that wages over the past three months have stayed the same, while 52 percent noted that wages have increased. Meanwhile, 61 percent of contacts reported that employment levels have remained the same over the past three months compared with the same period last year, while 28 percent reported that employment levels have increased.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nDecember 4, 2013\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of early October through late November. Price pressures were limited for most final goods and services, and upward wage pressures remained quite modest overall. Retail sales were a bit soft, while demand for business and consumer services was mixed. District manufacturing activity picked up. Sales and production activity in agricultural and resource-related industries expanded. Demand for residential real estate expanded on net, and commercial real estate activity improved. Reports from financial institutions indicated that loan demand edged up.\nPrices and Wages\nPrice pressures were limited for most final goods and services. Among food products, contacts noted relatively large price gains for pork and shrimp but sustained price decreases for beef. In line with the rapid expansion of the cloud computing segment of the technology industry, contacts perceived strong downward pressure on prices for cloud-related services. Legal fees were mostly flat. Prices of some construction inputs, including insulation, wood, and roofing materials, continued to increase rapidly but remained at relatively low levels. Most contacts indicated that they expect prices at their firms to be the same or higher in 2014 compared with 2013.\nUpward wage pressures remained modest overall. However, contacts from various industries noted above-average wage growth for certain highly skilled workers. Overall wage growth in the technology sector was strong, particularly for software developers. Contacts in California's restaurant industry projected higher labor costs as the state's minimum wage increases take hold over the next few years.\nRetail Trade and Services\nRetail sales were a bit soft. Most contacts indicated that they expect this year's holiday sales to be about the same or a bit higher relative to last year. Contacts pointed to slow sales of certain electronic items including televisions, personal computers, servers, and digital cameras. Demand for information technology (IT) security and cloud computing software was notably strong. Retail grocers noted the possibility of aggressive and earlier-than-usual promotions during the holiday season. Department store contacts observed a trend of robust online sales and soft in-store sales. Auto sales remained at a high level, although contacts noted that the market for high-mileage used vehicles slowed.\nDemand for business and consumer services was mixed. Reports from the technology industry indicated robust demand for IT services. Restaurant industry contacts again experienced weaker same-store sales in the quick-service and casual dining segments of the industry, and they do not expect sales to pick up in the near term. Travel and tourism activity in Hawaii maintained its solid pace of growth. Activity remained relatively weak in the Las Vegas tourism industry, and contacts pointed to a moderate year-over-year decline in automobile traffic in the region.\nManufacturing\nDistrict manufacturing activity picked up somewhat during the reporting period of early October through late November. Driven by demand for mobile technology products, business conditions in the semiconductor industry improved. The aerospace industry in the Pacific Northwest remains poised for growth, with a large backlog of orders for commercial aircraft. Providers of pharmaceuticals described innovative product launches as the force underlying ongoing modest growth in the industry. A wood products manufacturer indicated that their capital spending was up in response to stronger demand for final goods. Steel producers reported that overall capacity utilization was mostly stable, noting stronger conditions for manufacturing of automobile and aircraft-related inputs than for nonresidential construction inputs.\nAgriculture and Resource-related Industries\nOutput in agricultural and resource-related industries expanded on balance. Demand remained strong for most crop and livestock products, although weaker commodity prices caused some contacts to pare back their expectations for production activity in 2014. Water resources were sufficient in most areas. Overall demand for oil products edged down compared with the previous reporting period, and refinery utilization rates--although remaining at historically high levels--declined slightly as well. Year-over-year total refinery inputs and gasoline production activity both increased. Contacts noted increased development of wind and solar energy production facilities. Reports indicated that sales of electricity and gas to businesses increased, and contacts expect growth in industrial activity to persist in the near term.\nReal Estate and Construction\nDemand for residential real estate expanded on net, and commercial real estate activity improved. Home prices moved up further across the District. However, contacts reported the pace of home sales slowed somewhat in parts of California and dropped off substantially in Idaho. California contacts noted robust sales activity in the market for extremely high-end homes. Residential permit issuance expanded in several regions, an encouraging sign for sustained growth next year. Construction activity appeared to increase on net, but was held back by labor shortages in some areas. Several new large construction projects broke ground in parts of Hawaii, California, Washington, Oregon, and Idaho. Technology firms continued to drive demand for commercial real estate in the San Francisco Bay Area and Seattle. High prices for commercial real estate in downtown San Francisco spurred some firms to migrate to more affordable areas of the region.\nFinancial Institutions\nReports from financial institutions suggest that overall loan demand edged up. A few contacts mentioned that asset quality improved and some banks have eased their credit requirements. Contacts indicated that financing for construction projects made up a significant share of overall loan growth in parts of the District. Some slower growing regions experienced tepid growth of business investment that held back the pace of lending. In addition, some contacts noted that an uncertain fiscal policy environment has eroded business confidence and has led to softer demand for credit. Reports continued to highlight ample bank liquidity and substantial competition for high-quality commercial borrowers. In the District's Internet and digital media sectors, mergers and acquisitions activity grew at a steady pace. The pace of initial public offerings normalized after a surge of activity between mid-August and mid-September. Venture capital activity in the third quarter grew in terms of both deal value and volume relative to the second quarter. Private equity financing activity waned.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nDecember 4, 2013\nThe Eleventh District economy expanded at a moderate pace over the past six weeks. Manufacturing activity increased overall, with demand weakening in only a few industries. Retail sales picked up over the period, but automobiles sales were slightly down. Nonfinancial services firms reported steady to somewhat improved demand. The housing sector softened due to seasonal factors and rising home prices, and apartment, office and industrial leasing activity remained strong. Loan demand softened at financial institutions. Energy activity remained strong, and drought conditions in the agricultural sector continued to ease. Prices were unchanged or increased mildly at most responding firms, and employment held steady or rose modestly. There were scattered reports of pay increases and wage pressures. Industry outlooks were generally more positive during the reporting period.\nPrices\nResponding firms said prices were stable to up slightly over the reporting period. Some manufacturers noted price increases in primary and fabricated metal and food products. Price reports from retailers were mixed. One retail contact increased prices very modestly. Another firm reduced selling prices somewhat in an effort to bring holiday demand forward due to the short season this year. Automobile prices were stable. Home prices remained elevated and contacts in the apartment industry said rents continued to rise at a strong pace. Airline contacts noted moderately lower fuel prices, but said fees continued to increase. One airline respondent said ticket prices were trending up. Agricultural contacts reported that cattle prices hit record highs.\nChanges in energy prices were mixed; the price of West Texas Intermediate crude oil declined somewhat, while natural gas prices moved up slightly from the last reporting period. Gasoline and diesel prices fell modestly. The price of natural gas liquids, a feedstock for many chemicals, increased over the past six weeks.\nLabor Market\nEmployment levels were steady to up slightly at responding firms. Retailers said employment was up since the previous report. One retail firm was hiring in line with expanding operations, and another said payrolls were rising due to holiday hiring, which was stronger than last year's hiring. Fabricated metals producers added employees, and contacts noted some pressure on wages. Food producers were hiring, partly due to turnover. Refining and petrochemical contacts reported extreme difficulty finding engineers and construction laborers for current and proposed facility expansions, and noted a continued rise in wages. Homebuilders also noted a shortage of construction workers and said labor costs were rising.\nThere were additional scattered reports of wage pressures. High-tech producers noted wage pressures for workers with certain high-demand skills such as electrical engineering. Accounting firms were actively seeking high-skilled workers, with some higher wages being offered.\nManufacturing\nProducers of construction-related products said demand was mostly stable to up slightly. A lumber producer said that while demand increased in October, it had weakened in the past two weeks. Firms noted this year did not meet expectations but were positive in their outlooks for 2014. Fabricated metals producers said demand continued to rise at a strong pace and the outlook for sales was highly positive. Most primary metals contacts said demand was steady, ignoring seasonal effects, and outlooks for 2014 were somewhat more optimistic. Demand increased for food producers, while paper industry responses were mixed, with some contacts noting better than expected sales and some not meeting demand expectations.\nHigh-tech manufacturers said demand was flat to modestly weaker over the past six weeks. Industrial sector orders for semiconductors weakened, although overall the sector remained one of the largest drivers of growth. Demand for memory chips continued to improve while orders for logic devices continued to soften. Respondents expect a gradual increase in demand over the next three to six months.\nChemical production in the Gulf Coast grew in aggregate over the past six weeks, but at a slower pace than earlier in the year. Refinery utilization rates softened seasonally with the onset of the fall maintenance season. The change to winter fuel standards is pulling down prices, but refiner's margins remain healthy.\nRetail Sales\nRetail sales were up during the reporting period, and year-over-year demand growth remained in the low-to mid-single digits. One national retailer reported that Texas continued to outperform the nation. Strength was noted in luxury goods, and inventories were at desired levels. Outlooks for the rest of the year were positive.\nAutomobile sales were down slightly this reporting period, which contacts attributed to lack of consumer confidence and continued uncertainty. Inventory reports varied by manufacturer, with a few contacts noting inventories were higher than desired. Contacts' outlooks for the remainder of the year were optimistic, and they expect 2014 to be better than 2013.\nNonfinancial Services\nStaffing firms said demand was generally flat. One firm noted better retail demand than usual this time of year and another noted shortages in nursing and aerospace engineers. Demand was down more than expected for call center hires and for workers at warehousing and distribution companies. Most contacts noted improved 2014 outlooks. Accounting firms said demand remained strong with seasonal increases over the past six weeks. Business relocations to Texas fueled demand, and outlooks remained positive. Legal firms noted a slight improvement in demand during the reporting period, in part due to seasonal factors. Intellectual property litigation continued to increase and real estate transactions were slightly higher. Outlooks were somewhat more optimistic.\nTransportation service firms said cargo demand was mixed. Intermodal transportation firms and small parcel shipping firms noted flat cargo volume over the past six weeks, although retail trade and e-commerce remained drivers of growth. Railroad contacts said U.S. cargo volumes grew strongly during the reporting period and noted chemicals shipments were robust. Air cargo volumes decreased somewhat and were down from a year ago.\nAirline reports were mixed. One contact noted that demand increased slightly in the past six weeks, somewhat due to seasonal factors but also to the end of the partial government shutdown. Another respondent said demand was softer since the shutdown. With the exception of concerns about the impact of a pending second round of sequestration in early 2014, outlooks were positive.\nConstruction and Real Estate\nThe Eleventh District housing sector softened during the reporting period. Contacts said the slowdown was partly due to seasonal factors. However, last year at this time there was no seasonal slowdown, thus contacts were somewhat cautious. Some of the weakening in sales and traffic was attributed to recent large increases in new and existing home prices. One homebuilding contact said the lull will give builders a chance to catch their breath. There is still very little inventory of new homes and most are already sold, and the forecast for single-family construction activity is positive. Despite the slowdown, contacts were optimistic in their outlooks.\nApartment demand was mostly unchanged from the last report. Most major Texas markets were seeing sizable demand that is outpacing completions, yielding occupancy and rent growth well above the long-term norm.\nCommercial real estate respondents said tenant demand remained at a steady pace for industrial and office space. A Dallas contact said construction of office, industrial and retail space was picking up. A contact noted Houston may be close to having too much office development in the works. Overall, the outlook remained generally positive.\nFinancial Services\nLoan demand softened across most lines of business in the past six weeks, according to financial contacts. Mortgages and auto lending remained relatively level, and refinancing continued to decline. Loan quality continued to modestly improve, and loan pricing remained very aggressive amid increasing loan supply. Deposit volumes increased moderately with no change in deposit rates. Most contacts were hopeful that loan demand will improve, but no changes are expected for the remainder of the year.\nEnergy\nDemand for oil-field services was steady despite the slight decline in the rig count as the number of wells drilled per rig continued to improve. Activity in Texas was particularly strong, both inland and offshore, according to respondents. Oil and gas extraction firms expect further growth in 2014.\nAgriculture\nDrought conditions continued to ease, although the Texas panhandle area remained particularly dry. Corn and sorghum production was higher, while cotton production was down. The livestock sector continued to benefit from improved pasture conditions, lower feed costs, and high selling prices for cattle.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nDecember 4, 2013\nEconomic activity continues to expand in the First District. Most respondents in manufacturing, retail and tourism, software and IT services, and the staffing industry report year-over-year increases in revenue, while both residential and commercial real estate contacts indicate that market conditions continue to improve. Most firms are holding headcounts level; wages are steady or increasing modestly. Upward price pressures remain minimal. Many firms are cautiously optimistic about the outlook, a more upbeat tally than in the October round of calls.\nRetail and Tourism\nThis round's retail contacts report year-over-year comp store sales increases between 7 percent and 25 percent, with one firm down 3 percent. Demand continues to be strong for apparel, home furnishings, and furniture. Inventories are well managed and prices remain steady. Compared to earlier rounds this year, sentiment is a bit more optimistic, or as one source opines, conditions \"will not get any worse.\" Another respondent notes that the first two weeks of November showed some real underlying strength, but also states that sales performance during the 2013 holiday season will be a better test of what seems to be an improving trend. About one-third of contacts have raised their expectations for overall 2013 sales in light of their third quarter results.\nOctober was particularly good for Boston hotel and restaurant activity, exceeding the usual expectations for this traditionally busiest month, on account of the additional business brought in by the World Series appearance of the Red Sox. Hotel revenues were up 7.5 percent year-over-year, supported by an increase in occupancy rates. Transportation services also benefitted from higher-than-usual demand. Some New England tourist attractions suffered from the government shutdown, notably those run by the National Park Service or the Navy (U.S.S. Constitution) and the private firms depending on their visitors. Museums and other attractions continue to experience declining attendance; their revenues are down 6 percent year-over-year.\nManufacturing and Related Services\nOnly one of the ten firms contacted this cycle reports falling sales. A plastics firm indicates that its core bulk chemical business is slowing--\"coming in for a landing\"--and its retail garden hose business is \"the worst in memory.\" Two contacts report that sales growth is flat. The first is a computer software firm that largely serves the defense industry; the second is a manufacturer of electrical distribution equipment for whom strong residential demand is being offset by very weak non-residential. A firm that makes tools for home improvement reports that sales are up, but less than they had expected. Defense firms continue to say that sequestration has not yet affected them significantly.\nAll manufacturing respondents report it is difficult or impossible to raise their product prices. A contact in the bulk chemical business said input prices are falling, which he sees as evidence that \"no one in the industry is buying.\" A commercial aircraft parts manufacturer says that major firms in the industry are trying to drive costs down and, among other things, forcing more and more subcontracting.\nNone of our contacts reports staff cuts, but only four indicate they are increasing staff. The home improvement equipment firm reports they are bringing 250 jobs back to the United States from China and Mexico. A semiconductor equipment firm plans to hire only contract workers. One contact says the Affordable Care Act is significantly increasing health care costs for his firm.\nMost First District respondents continue trying to keep inventories low. Firms that increased inventory mostly say they are doing so in anticipation of higher sales. By exception, the hose manufacturer cites massive inventory accumulation due to low demand. Two contacts report lower capital spending while the rest cite either no change or an increase since the last conversation. One firm reducing investment did so because a major project was completed. A manufacturer of electrical distribution devices says the only thing holding back investment is a shortage of \"talent\" to execute new projects.\nFirst District manufacturers are mostly optimistic, but guardedly so. The bulk chemical business contact says the slowdown in his industry is serious but not long-term. Firms with substantial exposure to defense are unwilling to make any forecasts due to uncertainty about the budget process.\nSoftware and Information Technology Services\nNew England software and information technology services contacts generally report stronger-than-expected business activity through November, with modest improvements in both revenues and earnings since August 2013. Contacts attribute this growth to factors ranging from increased consumer demand to improved execution at the firm level. Most contacts expect to report positive year-over-year earnings growth at the end of 2013. By contrast, a healthcare contact reports negative growth due to the expiration of federal stimulus funding for health records software; however, this decline is much smaller than expected. While one firm shed some jobs, most firms either maintained headcounts or slightly increased their hiring pace. Wages have been steady, with plans for merit increases at the end of this quarter in the 3 percent to 5 percent range. Both selling prices and capital and technology spending have gone largely unchanged in recent months. Looking forward, New England software and IT contacts are more optimistic than they were in August, expecting continued growth through the first quarter of 2014.\nStaffing Services\nNew England staffing contacts generally report strengthened business conditions through November, with low-double-digit quarter-over-quarter revenue growth, and year-over-year revenue growth in the 3 percent to 10 percent range. This uptick reportedly reflects both an improved macroeconomic climate and changes in firms' business development strategies. Only one staffing contact reports softer results, with revenues in New England down 10 percent year-over-year. Labor demand is largely unchanged since August 2013; one contact reports increased demand in the software and mobile application development sector. Labor supply has thinned in recent months across all industries, and is particularly tight in the software/IT and engineering sectors. Firm strategies to attract more job candidates include improved marketing tactics, and an exchange program that temporarily brings in IT professionals from abroad. The temporary-to-permanent rate continues to be strong, with one contact reporting a 50 percent increase this year. Bill rates and pay rates have either remained flat or have modestly increased since August. Looking forward, staffing contacts are generally more optimistic than they were three months ago, expecting steady growth through the end of the year.\nCommercial Real Estate\nContacts across the First District report that leasing fundamentals maintained a very slow pace of improvement in recent weeks, consistent with minimal-to-slow employment growth. However, in some parts of Boston--the Seaport District and Back Bay--absorption has accelerated in recent months and, for the first time since before the Great Recession, speculative office construction is starting to occur. In Rhode Island, tenants are showing an increased willingness to commit to longer-term lease renewals (5-10 years), following an extended period during which shorter-term renewals were favored. At the same time, projected state budget deficits for Rhode Island, and political uncertainty over how such budget gaps will be closed, are seen as a crimp on business expansion in the state. A Connecticut contact echoes the theme of political uncertainty as a drag on growth, as that state is also facing large budget shortfalls in coming fiscal years. A regional lender to commercial real estate cites the U.S. government shutdown as the cause of a sharp decline in loan inquiries, but borrowing activity at the bank has since resumed at a healthy pace. The lending environment remains highly favorable to borrowers, with historically low borrowing rates and increasingly loose lending standards--even too loose in relation to fundamentals, according to some contacts. Abundant investment capital continues to flow into commercial properties across the region, sourced from private equity firms, pension funds, foreign investors, REITs, and high net-worth individuals. Leverage ratios are reportedly on the rise among some investors, but one contact points out that they remain low in absolute terms.\nIn Boston and surrounding suburbs, construction activity (both current and planned) is reportedly on the rise in both the hotel and retail sectors. The growth rate of multifamily construction--recently quite high in metro Boston--is expected to slow considerably within 12 to 18 months, while construction in the health care sector across the region is seen as restrained by uncertainty over the implications of national health care reform.\nContacts are cautiously optimistic across the region. Forecasts call for more slow improvement in fundamentals moving forward, pending steady (if slow) employment growth. However, fiscal policy uncertainty at both the state (noted above) and national levels is mentioned by a few contacts as a downside risk to employment growth and hence to improvements in leasing and construction activity.\nResidential Real Estate\nBased on numbers for September and contacts' \"sense\" of October results, it appears that sales of single-family homes and condos continue to improve throughout New England, while prices continue to approach, and in some states exceed, pre-recession levels. Sentiment across the region is that the recovery is well underway, but sales activity will likely begin to moderate in the months ahead as winter approaches. Pending sales are expected to decline in a few states, and contacts in the field attribute the decline at least partially to a drop in consumer confidence resulting from the recent government shutdown. While some contacts cite consumers upgrading homes, respondents in other states say sales growth is driven primarily by first-time home buyers. Contacts in Maine and Connecticut also cite an uptick in foreclosures and short sales coming onto the market. The other New England states, however, claim unconventional sales generate a relatively small percentage of total sales. New federal flood insurance legislation and new flood maps drawn by FEMA continue to generate concern across the region as insurance rates are expected to rise and make houses located in potential flood areas more expensive to own. Those worries notwithstanding, the overall message is that this has been a turnaround year in First District residential markets, although economic factors could still change the trajectory of the recovery.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nDecember 4, 2013\nPrepared at the Federal Reserve Bank of Cleveland and based on information collected on or before November 22, 2013. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports 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. Activity in the New York, Cleveland, Richmond, Atlanta, St. Louis, Minneapolis, and Dallas Districts grew at a moderate pace, while Philadelphia, Chicago, Kansas City, and San Francisco cited modest growth. Boston reported that economic activity continued to expand.\nManufacturing activity continued to expand in most Districts, with gains noted in the motor-vehicle and high-technology industries. Manufacturers in many Districts expressed optimism about near-term growth prospects. Demand for professional business services experienced stable to moderate growth, especially in computer technologies. Freight volume showed signs of strengthening. Reports on retail spending were positive. Looking forward to the holiday shopping season, retailers reported being hopeful, but cautious. Sales of new motor vehicles were reported as moderate to strong across much of the United States. Tourism increased in most reporting Districts, although the federal government shutdown had a negative impact in some areas. Residential real estate activity improved across many Districts, with multifamily construction experiencing moderate to strong growth. Some slowing in single-family home sales was attributed to seasonal factors. Activity in nonresidential real estate was stable or improved slightly across many Districts. Agricultural conditions were generally favorable. Mining activity was mixed, while natural gas production increased. Banking conditions were largely stable, with some improvement seen in loan demand. Several Districts reported an easing of lending standards.\nHiring showed a modest increase or was unchanged across Districts. Difficulty with finding qualified workers, especially for high-skilled positions, was frequently reported. Upward pressure on wages and overall price inflation were contained. Contacts in many Districts voiced concern about future cost increases attributable to the Affordable Care Act and other types of federal regulation.\nManufacturing\nManufacturing activity expanded at a modest to moderate pace in most Districts during the reporting period. Firms in Philadelphia and Cleveland are beginning to take a more conservative stance toward capital spending, while capital outlays remain solid in Boston and Kansas City. Companies across a number of sectors in Philadelphia noted a reduction in activity due to the federal government shutdown, while defense contractors in Boston reported that sequestration has not yet affected them significantly. Chicago highlighted the motor-vehicle industry as a main source of strength due to a large number of new vehicle launches and increasing demand for medium- and heavy-duty trucks. Cleveland and St. Louis also reported increased motor-vehicle production. Steel producers in Dallas and San Francisco indicated that demand was steady, while producers in Cleveland and Chicago experienced a slight drop-off in production, even though they are beginning to see a reduction in the quantity of steel imports. San Francisco noted an increase in demand for semiconductors driven by demand for mobile-technology products, while the aerospace industry in the Pacific Northwest reported a large backlog of orders for commercial aircraft. High-tech manufacturing firms in the Dallas District said that demand was flat to modestly weaker; however, respondents expect a gradual increase in demand over the next three to six months. In Kansas City, sales among high-tech firms moderated but were positive overall; several firms cited a reduction in government contracts due to sequestration as the main cause for the slowing. Wood-product manufacturers in Minneapolis and San Francisco saw an improvement in business activity. Contacts in the Boston, New York, Philadelphia, Chicago, Minneapolis, and Kansas City Districts expressed varying degrees of optimism about near-term business activity. Nonetheless, some contacts in Cleveland and Chicago observed that heightened levels of uncertainty, driven in part by fiscal issues, could dampen demand.\nNonfinancial Services\nDemand for nonfinancial services was stable or grew at a moderate pace across most reporting Districts. Boston and San Francisco noted that demand for software and information technology (IT) services was strong. IT contacts in Boston have grown more optimistic and are expecting continued growth into 2014. The Richmond District noted growth in server farms. Dallas reported that multiple service sectors, including accounting, legal, and intellectual property, were experiencing stable to improving demand. Most of the Districts that commented on the partial shutdown of the federal government said that its impact on service providers was modest or temporary. The Dallas District reported that airline activity is mixed but has increased since the cessation of the shutdown; however, seasonal factors were also noted. Concerns linger in Dallas about the upcoming second round of sequestration cuts.\nTransportation and freight services, especially those related to railroads, ports, and trucking, strengthened across Districts. Port activity in Richmond was robust, with exports of containerized grain and imports of housing-related products continuing to grow. Imports and exports of autos and auto parts remained strong. Year-to-date shipping volumes were higher in Cleveland when compared to the same time period in 2012. Freight haulers were hiring for both replacement and capacity expansion. Retail and e-commerce activity in Dallas continued to drive growth in the transportation sector. Logistics contacts in Atlanta were forecasting record volumes during the holiday season due to online sales.\nConsumer Spending and Tourism\nConsumer spending increased in almost all Districts at a modest to moderate pace. A Boston retailer noted that sales performance during the 2013 holiday season will be a better test of what seems to be an improving trend. Philadelphia retailers reported hopeful, but very uncertain expectations for the holiday season, while retailer expectations in the Atlanta District for the holiday season are only mildly optimistic. Stores in Minneapolis and Kansas City are cautiously optimistic about the buying mood of holiday shoppers. Demand for home furnishings was strongest in Boston, Richmond, Chicago, and Kansas City. Apparel sales were strong in the Boston, Cleveland, and Kansas City Districts. Retailers in Boston, New York, Cleveland, and Dallas indicated that their store inventories are at desired levels.\nSales of new motor vehicles continued at a moderate to strong pace across most Districts, although Dallas reported a slight decline, which was attributed to a lack of consumer confidence and continued uncertainty. Motor-vehicle purchases in Kansas City were flat. Dealers in Cleveland and St. Louis saw a pick up in purchases of SUVs and cross-over vehicles. Chicago indicated that lower gasoline prices were motivating buyers to shift away from more fuel-efficient vehicles. Used-car sales were mixed, with Cleveland and St. Louis reporting an increase, while purchases in the New York District were soft.\nReports on tourism varied. Due to the federal government shutdown, tourist destinations in the Boston, Richmond, and Minneapolis Districts experienced lower traffic. In Philadelphia, some super-storm Sandy-affected areas of the New Jersey shore continued to experience lighter traffic than normal. Boston reported that tourism activity at hotels and restaurants exceeded usual expectations due to additional business brought in by the World Series. New York reported strong tourism activity attributed in part to Broadway performance openings. Cold-weather expectations have boosted ski bookings in Richmond. Contacts there noted that the strength in bookings has allowed them to raise rates for the first time in several years. Atlanta and Minneapolis reported that tourism expanded. In the San Francisco District, Hawaii maintained its solid pace of growth. In contrast, Las Vegas tourism remained relatively weak, and contacts pointed to a moderate year-over-year decline in automobile traffic in the region.\nReal Estate and Construction\nResidential real estate activity improved in Boston, Philadelphia, Chicago, St. Louis, Minneapolis, and San Francisco, while remaining steady or softening in other Districts. Some slowing in single-family home sales was attributed to seasonal factors. Nonetheless, sales remain largely above year-ago levels. Increasing demand, low to declining levels of inventory, and slowly rising new-home construction were cited by almost all Districts as reasons for a continued rise in home prices, but at a slower pace than was observed earlier in 2013. Historically low inventories of unsold homes were reported in Philadelphia, Richmond, Chicago, Kansas City, and Dallas. Chicago noted that the inventory of homes for sale is at a record low. In the Philadelphia, Cleveland, Kansas City, and San Francisco Districts, builders continued to face a scarcity of high-skilled trade workers. Boston, New York, Philadelphia, Cleveland, Richmond, and Chicago indicated that multifamily construction continued to experience moderate to strong growth, with strength concentrated in the apartment segment. Vacancy rates declined across most Districts.\nCommercial real estate activity remained stable or improved slightly across many Districts. Philadelphia, Cleveland, Richmond, Chicago, St. Louis, and Minneapolis all saw gains in industrial construction, while Boston, Chicago, and St. Louis cited a rise in hotel construction. The technology sector drove demand for commercial real estate in the San Francisco District, and Cleveland saw gains in affordable housing and shale-gas-related activity. The outlook of market participants is for continued improvement in the Philadelphia, Atlanta, Kansas City, and Dallas Districts, while contacts were cautiously optimistic in Boston and Cleveland.\nBanking and Finance\nOn balance, banking conditions remained stable in a majority of reporting Districts. Loan volume showed a modest increase in Philadelphia, Chicago, and San Francisco, while Boston and Atlanta reported a moderate rise. Dallas noted that loan demand softened across most lines of business during the reporting period. An increase in business-credit activity was seen in a number of Districts. Commercial real estate lending increased in New York, Cleveland, Atlanta, Chicago, Kansas City, and San Francisco. Demand for commercial and industrial (C&I) loans rose in the New York, Atlanta, and Kansas City Districts, but weakened in St. Louis. C&I lending was unchanged in Chicago. In the Philadelphia, Richmond, Atlanta, Chicago, and San Francisco Districts, some bankers eased lending standards in response to aggressive competition for quality loans. Lending standards remained unchanged across loan categories in New York, Cleveland, St Louis, and Kansas City. Consumer borrowing weakened in a few Districts, including New York, Richmond, and St. Louis. In Cleveland, Kansas City, and Dallas, demand for consumer loans was little changed, while it increased in Chicago. Lower residential mortgage activity was reported in many Districts. Bankers in Cleveland, Richmond, and Atlanta attributed the decline in part to higher interest rates than earlier in the year. New York, Atlanta, Chicago, and Dallas reported declines in refinancing activity as well. Several Districts reported increased credit quality, as delinquencies have continued to decline and fewer problem loans have been reported.\nAgriculture and Natural Resources\nStrong crop yields were reported, while in general, agricultural commodity prices fell and drought conditions stabilized or improved. Richmond, Chicago, and Kansas City reported strong crop yields for fall harvests. Contacts in the Kansas City District noted decreases in farm incomes and increases in the demand for farm operating loans, as prices softened in response to rising yields. The Chicago, Kansas City, Dallas, and San Francisco Districts indicated strong demand and increased profitability in livestock due to lower feed costs. Atlanta contacts reported making investments in various types of agricultural equipment as a means to further improve production and contain costs. Prices paid to farmers for wheat, corn, and soybeans fell in Atlanta, Chicago, and Minneapolis. However, in Chicago, higher exports cushioned the decline. The Kansas City District indicated rising farmland values, although the rate of increase slowed.\nReports indicated a continued expansion in energy demand and production. Coal mining activity was mixed across the Cleveland and Richmond Districts and higher in St. Louis. In Cleveland and Richmond, the completion of pipeline connections and gas-processing plants contributed to an increase in natural gas drilling and extraction, while gas production rose in the Minneapolis, Dallas, and San Francisco Districts. San Francisco noted an increase in wind and solar energy production facilities. In Minneapolis, regulatory approval has been obtained for a large wind farm in North Dakota. The Minneapolis District also reported solid mining activity in precious metals and an increase in iron ore production, while oil and gas exploration was flat or fell slightly.\nEmployment, Wages, and Prices\nHiring showed a modest increase in the Philadelphia, Richmond, St. Louis, Minneapolis, and Dallas Districts, while hiring in the remaining Districts was largely unchanged. Industries that reported moderate employment growth included construction, software and IT services, manufacturing, and healthcare. Temporary holiday hiring is in progress. Cleveland reported that year-over-year growth in retail holiday hiring is expected to be flat; however, some employers noted that they are having difficulty finding seasonal workers. In Chicago, part-time seasonal hiring is slightly lower than normal as a result of retailers' choosing to increase current employees' hours instead of hiring new workers. Some employers in the Philadelphia, Cleveland, Richmond, Atlanta, Kansas City, and Dallas Districts reported having difficulty finding qualified workers for certain permanent, high-skilled positions. In Philadelphia, a builder reported that contractors are reluctant to hire workers who require training. Instead, contractors are aggressively hiring skilled labor from each other. On net, staffing services across Districts remain more optimistic than they were three months ago, expecting steady growth through the end of the year and into 2014.\nOverall wage pressures remain contained across most Districts, with a modest increase reported in Boston, New York, and Dallas. Contacts in the Cleveland, Atlanta, Kansas City, Dallas, and San Francisco Districts noted some upward pressure on wages for skilled jobs, such as craft labor, engineering, IT, and accounting. Contacts in California's restaurant industry projected higher labor costs, as the state's minimum wage increases take hold over the next few years. Builders in the Philadelphia and Cleveland Districts cited a scarcity of high-skilled trade workers. As a result, there is upward pressure on wages, and subcontractors are demanding and getting higher rates.\nPrice inflation is contained, with phrases such as \"minimal,\" \"no change,\" and \"stable\" being common across most Districts. However, in New York, service-sector firms reported that price pressure was moderate and that a sizable number of firms were planning at least some price increases in the coming months. The Cleveland, Kansas City, and San Francisco Districts also commented that prices for residential construction materials, such as lumber and drywall, continued to rise, but the Cleveland District noted that the rate of increase has recently slowed. Contacts across many Districts continue to voice concerns about future cost increases attributable to the Affordable Care Act and other types of federal regulation.\n.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nDecember 4, 2013\nEconomic growth in the Second District has continued at a moderate pace since the last report. Contacts report that cost pressures have abated slightly, while selling prices are steady to up moderately. Service sector firms generally indicate a pickup in activity, while contacts in the manufacturing sector report that it has leveled off. Overall, there were no reports of any major disruptive effects from the federal government shutdown. Labor market conditions have continued to improve modestly since the last report, and there has been some upward pressure on wages. General merchandise retailers indicate that sales picked up a bit in October and were somewhat ahead of plan, with favorable trends continuing into November. New auto sales have continued to be robust, whereas used car sales remain soft. Tourism activity has remained fairly strong in recent weeks. Both residential and commercial real estate markets have been mixed since the last report. Finally, banks report some weakening in loan demand from the household sector, but increased demand for commercial mortgages and loans, little change in credit standards, and steady to declining delinquency rates.\nConsumer Spending\nRetailers report that sales have improved since the last report and have generally been ahead of plan. One major retail chain reports that sales were on plan in October and looking stronger in early November, while another chain indicates that they have been above plan throughout. New York City stores have continued to out-perform slightly those in the rest of the region. Contacts at major malls in upstate New York note that sales picked up somewhat in October and early November and are running roughly on par with 2012 levels. Inventories are said to be at desired levels. Retail contacts widely describe the pricing environment as more promotional than in 2012.\nNew auto sales are characterized as quite strong: auto dealers in both the Buffalo and Rochester areas report that new vehicle sales were up 20 percent or more from a year earlier in October, with strength projected to continue into November. Sales of used automobiles, in contrast, have remained soft. Wholesale and retail credit conditions for auto purchases are again reported to be in good shape.\nTourism activity has remained strong since the last report. Manhattan hotels report that occupancy rates remained high in October, with room rates up moderately from 2012 levels. Hotels in the upper Hudson Valley also report that business has been strong. Attendance and revenues at Broadway theaters have continued to trend up in October and into early November, as more shows have opened. While year-earlier comparisons are distorted due to Sandy disruptions last November, recent levels look robust for this time of the season.\nConsumer confidence in the region weakened in October. The Conference Board's survey of residents of the Middle Atlantic states (NY, NJ, Pa) shows confidence retreating from a nearly six year high, while Siena College's survey of New York State residents indicates a more pronounced drop, to a nearly two-year low.\nConstruction and Real Estate\nResidential real estate markets in the District have been mixed since the last report. Contacts in western New York State continue to describe market conditions as robust in October and into early November: sales volume has been exceptionally strong, prices continue to rise, and there are ongoing reports of multiple offers and price wars. Sales activity in New York City's co-op and condo market, on the other hand, has retreated in the 4th quarter, following an exceptionally strong third quarter, and prices have leveled off. While there is a reasonable amount of new development at the high end of the market, inventories across the rest of the market remain lean. Manhattan's rental market has also softened slightly, with rents running modestly lower than a year earlier. A contact in New Jersey's housing industry reports some seasonal slowing in activity in October, suggesting some leveling off in market conditions. Single-family construction in the state remains weak, though there is a fair amount of multi-family development, as well as renovation and alteration work. A large overhang of properties in foreclosure is said to be holding back prices and dissuading some owners from selling.\nCommercial real estate markets have also been mixed thus far in the fourth quarter. In Manhattan, the outer boroughs, and Long Island, office vacancy rates continue to drift down, while asking rents continue to rise--though only modestly for Class A properties. Northern New Jersey's office vacancy rate is little changed at a high level, while asking rents are flat. However, in the Westchester/Fairfield markets and across upstate New York, vacancy rates climbed to multi-year highs. Industrial markets have also been mixed, with conditions strengthening noticeably in downstate New York and northern New Jersey, but slackening across upstate New York.\nOther Business Activity\nOn balance, the labor market has been steady to slightly stronger since the last report. Overall, businesses indicate that they are increasingly likely to add workers in the months ahead--particularly manufacturers. One major employment agency reports that the government shutdown in October took some momentum out of hiring, but that business has been steady in recent weeks. Another agency indicates little change in the market, with somewhat less of a seasonal slowdown than expected thus far--possibly due to mild weather. Salary offers have reportedly increased slightly. One employment agency contact observes that companies are increasingly inclined to hire long-term, full-time workers, as opposed to temps.\nManufacturing firms in the District report that activity has leveled off in recent weeks. But businesses in other sectors report increasingly widespread increases in activity. Both groups continue to express fairly widespread optimism about the near-term outlook. Businesses generally report some easing in input price pressures; manufacturers report that their selling prices remain steady, though service-sector firms overall report moderate price hikes, and a sizable number plan at least some price hike in the months ahead.\nFinancial Developments\nSmall to medium sized banks across the Second District report decreased demand for consumer loans and residential mortgages but increased demand for commercial mortgages and commercial & industrial loans. Bankers also report a decrease in demand for refinancing. Respondents indicate that credit standards were unchanged across all loan categories but note a decrease in spreads of loan rates over costs of funds for all loan categories--particularly commercial mortgages. Respondents report no change in the average deposit rate. Finally, bankers report continued declines in delinquency rates for all loan categories except for residential mortgages, where rates have leveled off.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nDecember 4, 2013\nThe Ninth District economy grew at a moderate pace since the last report. Increased activity was noted in consumer spending, tourism, residential and commercial real estate and construction, professional services, manufacturing and energy. Mining was steady at high levels, and agricultural conditions weakened slightly. Labor markets continued to tighten slightly since the last report, and wage increases were moderate. Prices generally remained stable. Overall, the partial federal government shutdown had a muted impact on the District economy.\nConsumer Spending and Tourism\nConsumer spending increased modestly. Two Minnesota-based retailers reported slight gains in same-store sales compared with a year earlier. Recent sales were down slightly from a year ago at a Montana mall after strong growth in 2012; store managers were cautiously optimistic for the holiday season. A Minnesota-based restaurant chain recently reported that same-store sales decreased slightly. However, respondents to a survey of holiday shoppers in the Minneapolis-St. Paul area by the University of St. Thomas indicated that spending per household will increase by about 8 percent over last year. An auto dealer in Minnesota reported strong vehicle sales during early November.\nTourism activity was up from a year ago. A representative of a Minnesota-based travel agency noted that recent bookings for leisure travel during the next few months were up more than 10 percent. October airline boardings at North Dakota's eight largest airports increased 13 percent compared with a year earlier. However, October visits to Glacier National Park were down about 50 percent compared with last year due to the government shutdown.\nConstruction and Real Estate\nCommercial construction activity continued to grow since the last report. A recent survey of Minnesota building professionals conducted by a trade association noted an improvement in market conditions. More than half of construction respondents to a late-October Minneapolis Fed ad hoc survey reported that they expected to increase capital expenditures in 2014 compared with 2013; the remainder expected level spending. However, in Sioux Falls, S.D., and Billings, Mont., the value of October commercial permits decreased from a year ago. Residential construction activity increased. In the Minneapolis-St. Paul area, the value of October residential permits grew by 20 percent from October 2012 to $195 million. However, the value of October residential building permits in Sioux Falls and Billings fell from 2012.\nActivity in commercial real estate markets increased since the last report. The University of St. Thomas semiannual survey (November) of 50 Minneapolis-St. Paul commercial real estate leaders noted higher rent, occupancy, land prices and building material costs. A large real estate consulting firm reported that demand continues to outpace new building of industrial space, while vacancy rates are expected to continue to decline. Residential real estate markets experienced slight growth since the last report. In the Sioux Falls area, October home sales were up 9 percent, inventory was down 4 percent and the median sale price increased 4 percent relative to a year earlier. Meanwhile, October home sales were down 2 percent from the same period a year ago in Minnesota; the inventory of homes for sale increased by 7 percent, and the median sale price rose 12 percent. In La Crosse, Wis., October home sales and the median price declined from October 2012.\nServices\nRecent activity at professional business services firms increased since the last report. In the aforementioned survey of building professionals, 53 percent of engineers and architects reported improving conditions compared with 11 percent who saw declines. A Minnesota business consulting firm said that demand has picked up recently, particularly since the end of the government shutdown. A web technology firm noted that demand was strong and that profit margins were good. An environmental engineering firm expected its business to continue to grow. Recent corporate travel was up from last year, according to a Minnesota-based travel agency.\nManufacturing\nThe manufacturing sector saw continued moderate growth since the last report. An October survey of purchasing managers by Creighton University (Omaha, Neb.) indicated that manufacturing activity increased in Minnesota and the Dakotas. Preliminary results from the Minneapolis Fed's 2013 survey of manufacturers indicated that respondents on average expect orders, production, employment, investment and profits at their operations to increase in the coming year. A furniture maker began a major expansion at a Wisconsin plant. A producer of agricultural material handling equipment announced an expansion of a South Dakota facility. However, several producers of agricultural equipment noted a reduction in new orders.\nEnergy and Mining\nActivity in the energy sector increased moderately, while mining was steady at a high level. Late-October oil and gas exploration activity was flat in North Dakota and fell slightly in Montana from a month earlier. Production remained at record levels. Construction of a refinery began on an Indian reservation in North Dakota. Regulators approved construction of a large wind farm in North Dakota. October production at District iron ore facilities was up slightly from a year earlier. Activity at Montana precious metals mines was solid; a new gold mining operation was planned at one site, while another operation sought to extend its permit.\nAgriculture\nThe agriculture sector saw slight contraction. In the Minneapolis Fed's third quarter (October) survey of agricultural credit conditions, 28 percent of lenders reported that farm incomes decreased from the second quarter, while 15 percent reported increases; nearly half expect incomes to decrease in the final three months of 2013. October prices received by farmers decreased from a year earlier for wheat, corn, soybeans, milk, eggs, turkeys and cattle; prices increased for chickens, calves, hogs and dry beans. An early-October blizzard in western South Dakota killed an estimated 15,000 cattle there. Drought conditions abated in most of the District in late fall.\nEmployment, Wages and Prices\nLabor markets continued to tighten slightly since the last report. According to respondents to a Minnesota construction industry survey, 38 percent expect to expand staffing levels in 2014, while 12 percent expect layoffs; last year, 31 percent expected to hire more workers, while 18 percent expected layoffs. In Minnesota, a countertop manufacturer plans to hire more than 100 employees over the next six months and a food manufacturer had more than 30 positions open. A South Dakota manufacturer recently announced plans to add up to 20 more workers. However, a Minnesota-based retailer recently laid off about 150 corporate employees as part of a restructuring plan, while a paint company in Minnesota laid off 25 employees.\nOverall wage increases were moderate. According to preliminary results of the aforementioned survey of manufacturers, respondents expect to increase wages by 2.2 percent in 2014. However, an eastern Montana contact reported that salaries there have increased at a faster pace for mechanics, truckers and information technology workers.\nPrices generally remained stable with some exceptions noted. Mid-November Minnesota gasoline prices were down more than 20 cents per gallon compared with early October. Several metals prices decreased over the past month. Home heating costs for natural gas are expected to increase almost 15 percent compared with last winter.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nDecember 4, 2013\nThe District economy expanded moderately in recent weeks. The manufacturing sector strengthened, with a notable increase in shipments and new orders. Retail sales also picked up since our last report, driven by big-ticket sales. Auto sales remained solid. At non-retail services firms, reports were mixed. Tourism varied, with reduced or cancelled government bookings dragging down an otherwise positive report. Consumer lending activity weakened, while commercial lending improved. Residential real estate markets slowed, with little change in new construction. Commercial real estate markets were stable with most of the new construction centered in multi-family housing. Commercial leasing demand was relatively unchanged since our last report. Farming yields varied, with a record high corn harvest. Natural gas production continued to increase, while coal declined. In District labor markets, both permanent and temporary employment improved slightly. Average wages rose more quickly. In manufacturing, price increases moderated for both inputs and outputs. Retail and non-retail services prices also increased at a slower pace.\nManufacturing\nManufacturing strengthened since our last report. Shipments and new orders had a sizable increase according to our survey respondents. A lumber contact located in North Carolina stated that inventories of raw materials and finished goods are being managed at correct levels and that 2013 appears to be headed for a good profit year. He further expects continued improvement in new home building. A manufacturer of airflow measurement devices stated that his sales volume was up two to three percent year to date, despite short-term volatility. A fabric manufacturing company in North Carolina also reported a recent upturn in business, but noted that costs had increased. According to the latest manufacturing survey, prices of raw materials and finished goods rose more slowly compared to last month.\nPorts\nPort activity continued to be robust. Larger ports saw strong container traffic; an official at a major District port noted that exports of containerized grain have been growing every quarter and that housing-related imports such as flooring were up year over year. Coal exports rose during the last month at one port, but were nearly flat for the year so far, while declining elsewhere. Food and beverage imports were strong, and both imports and exports of products such as apparel, toys, and electronics grew \"at a good clip.\" In the last several weeks, import and export traffic of autos and auto parts remained strong overall. According to our contact at a mid-sized port, container traffic was steady.\nRetail\nRetail sales were moderately stronger at most establishments in recent weeks, particularly for big-ticket items such as furniture and appliances. However, executives at a few department stores reported little change in sales or foot traffic. A department store executive in West Virginia remarked that he was \"being squeezed\" by internet competitors. Compared to a year ago, retailers generally expected little growth in holiday sales and sales of gift cards. In contrast, a manager at a chain discounter commented that current sales were lackluster, but lay-away at the store was very busy. Most retail contacts said their holiday inventory levels were about the same as a year ago. Merchants were split on whether they would have more promotions and discounting than last year. Auto sales remained solid, although a few dealers noted some slowing. Average retail prices rose more slowly since our last report.\nServices\nReports from non-retail services firms were mixed. Telecommunications firms reported growth, with a North Carolina source commenting in particular on growth in server farms. A financial services executive commented that his clients were cautiously moving forward with investments, but that they remained hesitant. An executive at a national trucking firm reported that business was consistent with no changes in pricing or capital expenditures. However, construction-related businesses, such as HVAC, reported flat revenues in recent weeks and several restaurant executives indicated that sales were down. Prices in the service sector rose at a slower pace.\nTourism reports also varied, with some hoteliers reporting cancellation of large government bookings. An executive at a resort and conference hotel in central Virginia remarked that he can no longer count on group clients booking multi-year contracts for regular conferences because of the firms' budget uncertainty over healthcare costs. In contrast, a resort executive in western Virginia reported that colder weather expectations have raised ski bookings compared to recent years, and weather conditions have allowed snow-making at Thanksgiving. The strength in bookings has allowed the resort to raise some rates for the first time in several years. A contact on the outer banks of North Carolina also reported strong house rentals and hotel bookings for Thanksgiving; several hotels there offered Black Friday specials.\nFinance\nConsumer borrowing weakened slightly throughout the district since our last report. Several sources indicated that residential mortgage lending has declined in response to higher rates and tighter restrictions from the Qualified Mortgage rule. Further, a banker stated that consumers are reluctant to apply due to their perception that loans are becoming more difficult to obtain. Competition among bankers has risen, with lenders offering incentives such as including closing costs. Also, the consensus felt that the credit quality of applicants has slipped mildly as \"stronger applicants are drying up.\" On a positive note, one central Virginia lender reported seeing an uptick in new construction loans. In addition, all sources reported that delinquency rates have improved. Commercial lending competition increased, leading to some easing in credit quality standards. Rates have remained flat, and lenders reported that businesses are increasingly interested in buying the buildings they are leasing.\nReal Estate\nResidential real estate markets slowed slightly in the past month. Realtors reported a slight increase in sale prices. A Realtor from South Carolina reported an upward trend in sales of entry level homes, and a slow-down in sales of mid- to upper-level homes in the past few weeks. On the other hand, a Northern Virginia Realtor reported a slight decrease in sale prices and thinks there could be another small decrease in the next few weeks. Average days on the market were generally unchanged from last month, although both South Carolina and North Carolina contacts reported a slight increase due to reduced buyer traffic. In contrast, a real estate broker located in Charlotte said relocation referrals were up in the last four to six weeks, and an agent in Greensboro stated that buyers in his region are feeling more confident and that there is a shift towards a more balanced market. Home inventory throughout the District is tight, although a central North Carolina real estate agent told us the supply of town homes and condos is adequate in his region. New construction changed little from a month ago.\nCommercial real estate markets have remained stable throughout the District, with continued strength in multi-family construction. A broker in Richmond reported that commercial development in multi-family housing continues to be strong both in new construction and rehab of older buildings. Construction activity generally flattened in the Carolinas and West Virginia. Another Richmond agent reported new construction in retail, anchored around large stores and food retailers, with some pickup in residential development. A Virginia Beach Realtor reported steady construction activity in office and retail. A broker in that area stated that demand is primarily in the small to medium size range except for a couple of big box retailers. Realtors report a slight decline in Class A office space, but availability varied greatly by submarket. A Roanoke, Virginia Realtor reported a shift to Class A space in suburban markets due to the expansion of professional services, and a Realtor from Columbia, South Carolina has seen high demand for Class A space in the central business district. Realtors throughout the district reported that office tenants were downsizing and focusing on space efficiency. A commercial Realtor in Charlotte, North Carolina reported new construction plans in the health industry and suburban office buildings. Commercial leasing remained largely unchanged since the last report, with the exception of a mild pickup in the industrial market. Brokers in central Virginia and Charlotte reported that there was an unusual level of demand for large blocks of industrial space. In addition, a Realtor from Raleigh reported an increase in industrial flex space. Overall, vacancies, sales prices, and rental rates flattened since our last report.\nAgriculture and Natural Resources\nCrop yields varied since our last report. Corn yields are above the 2012 record and on track for a strong finish this year. Cotton and peanut yields are steady in North Carolina, though below the 2012 record. South Carolina cotton declined moderately from the 2012 record, while peanut yields there were on par with year ago levels. In animal farming, a contact noted that poultry production was declining on the Eastern Shore of Virginia and Maryland due to regulatory changes and water pollution issues.\nNatural gas production increased in the last four to six weeks, with a seasonal uptick in gas prices. According to a West Virginia contact, natural gas exploration continued to be active with new pipeline being added when needed. He also reported a proposal for a petrochemical complex in the near future. Coal production has decreased slightly. An industry contact stated that current production levels are expected to remain constant. There were reports of possible coal mine closures.\nLabor Markets\nEmployment conditions around the district improved slightly over the last several weeks. According to the manufacturing survey, employment and wages rose somewhat more quickly. Survey results from the retail and service sectors indicated that employment picked up across the board. Wages in the service sector increased marginally while faster growth was reported in average retail wages. A respondent in North Carolina said that hotel operators in the western part of the state were raising wages by 6 to 7 percent for low-skilled workers.\nA staffing agency executive remarked that it was difficult to find suitable candidates because the \"skill level demanded is too high,\" and that more workers are taking temp-to-permanent positions. Additionally a recruiter in South Carolina stated that while temporary employment orders rose, full time job openings remained depressed. Contacts reported difficulty filling permanent positions in the fields of medical, maritime, construction-related, and information technology. A temp agency in Maryland reported that labor demand is currently targeted towards distribution, heavy manufacturing, and the information technology sector. Seasonal retail hiring has been generally at last year's level, and few contacts expected to retain seasonal hires as permanent employees after the holidays.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nDecember 4, 2013\nThe Tenth District economy continued to grow modestly in November. Consumer spending increased slightly, with retail stores moderately optimistic about future sales, and energy activity remained solid. District manufacturing activity grew further, and transportation firms reported a slight uptick in shipments. Commercial real estate activity strengthened slightly, and bankers noted steady loan demand, better loan quality, and stable deposits. Residential sales and construction slowed somewhat but remained slightly above year-ago levels, while high-tech firms reported some moderation in sales growth. District farm incomes fell due to a considerable drop in crop prices, which also increased operating loan demand. Prices were up slightly in most industries, while wage pressures were contained outside of a few skilled positions.\nConsumer Spending\nConsumer spending increased modestly from the previous period, and contacts were cautiously optimistic heading into the holiday season. Retail sales edged higher from the previous survey and were up considerably from a year ago. Several retailers noted strong sales of sportswear and appliances. Expectations for future sales rose, and store inventories increased moderately. Auto sales were flat in November, and future sales were expected to remain unchanged. Contacts said sales were strongest for small SUVs and pickup trucks, while sales of large, full-size vehicles remained weak. Auto inventories increased, although many dealers expected levels to stabilize somewhat in the next three months. Restaurant sales edged down, but activity remained similar to last year. Many contacts noted an increase in food costs and uncertainty about the future expense of employee health care. Tourist activity remained sluggish, although occupancy rates improved at a few hotels. Tourism contacts were slightly less optimistic about future activity.\nManufacturing and Other Business Activity\nDistrict manufacturing activity continued to grow at a moderate pace in November. Production at durable goods-producing plants grew more slowly than in the previous survey, but production of nondurable goods products picked up, particularly for chemicals and plastics. Employment conditions improved, with several respondents indicating plans to hire more skilled workers. Manufacturers' capital spending plans remained solid, and overall expectations for future activity increased from the previous survey period. Transportation activity edged higher, and several firms reported strong shipments of perishable food products. Expectations for future transportation activity improved slightly from the previous survey, while capital spending plans were mostly unchanged. Sales growth among high-tech firms moderated somewhat but was positive overall, with several firms citing a reduction in government contracts due to sequestration and the government shutdown. However, expectations for future high-tech activity increased, and capital spending plans were generally favorable.\nReal Estate and Construction\nResidential real estate activity slowed somewhat but remained stronger than last year, while commercial real estate conditions strengthened slightly. Housing starts were flat since the previous survey, although activity was still higher than a year ago. Expectations for future homebuilding remained upbeat, but a few builders noted difficulties finding qualified workers. Sales at construction supply firms rose and many firms were optimistic about future activity. Home sales slowed in November, though activity remained slightly better than last year and inventory levels decreased. Some contacts attributed the slowdown to inventory shortages and the upcoming implementation of new qualified mortgage standards. Residential realtors noted positive sales of low to mid-range properties, but said higher priced homes over $400,000 sold poorly. Expectations for future home sales eased slightly, but prices were generally rising and expected to increase further. Mortgage lending activity remained weak, as both home purchase and refinancing loans slowed further. Commercial real estate activity grew modestly, and contacts were increasingly optimistic heading forward. Vacancy rates edged down, and absorption rates rose in some cities. Office prices and rents increased at a slower rate than the previous survey, although further increases were anticipated in coming months.\nBanking\nBankers reported steady overall loan demand, improved loan quality, and stable deposit levels in November. Respondents reported increased demand for commercial and industrial loans and commercial real estate loans, and steady demand for consumer installment loans. Demand for residential real estate loans declined during the survey period. Bankers reported improved loan quality compared to a year ago, and nearly all bankers expected the outlook for loan quality to either improve or remain the same over the next six months. Credit standards remained unchanged in all major loan categories, and respondents reported stable deposits.\nEnergy\nEnergy activity remained solid in November. Oil rigs increased slightly in the District, particularly in Wyoming, while natural gas rigs held steady. Natural gas prices remained low, although several contacts expected higher prices in coming months due to the expected colder winter. Crude oil prices moderated slightly from the previous survey, but remained generally strong. Several contacts noted increasing U.S. supply, lower global demand, and easing sanctions in Iran could constrain oil prices heading forward, although most producers expected prices to remain high enough to spur further drilling in the months ahead.\nAgriculture\nA steep drop in crop prices, which partly reflected better-than-expected corn and soybean yields, lowered District farm income and boosted demand for farm operating loans since the last survey period. Some livestock operators in Western Nebraska also faced significant herd losses due to a severe October snowstorm. Farm income was expected to remain weaker than last year despite some support from crop insurance and a gradual improvement in livestock sector profitability resulting from lower feed costs. With reduced incomes, agricultural bankers reported the number of requests for loan renewals and extensions edged up and demand for new farm operating loans also increased. Farmland values rose further, but the pace of gains moderated and most contacts expected values would hold steady through the end of the year.\nWages and Prices\nPrices rose modestly in most industries, and wage pressures were largely contained outside of a few skilled positions. Retail prices remained flat and were anticipated to be generally steady heading forward. Prices of manufacturing materials grew slower than in the previous period, and fewer firms planned on raising selling prices. Transportation firms reported slightly higher input prices, and restaurants noted rising food costs and menu prices. Construction materials prices moved higher, particularly for concrete and drywall, and selling prices increased at most supply firms. Many contacts noted concerns about future costs from new health care and other types of regulations. Wage pressures increased slightly but were still generally contained in most industries. Some firms reported continued difficulties in obtaining skilled labor, such as truck drivers, construction workers, and machinists.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"