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Atlanta

/beige-book-reports/2013/2013-12-at

"Beige Book Report: Atlanta\nDecember 4, 2013\nBusinesses across the Sixth District described economic activity as moderately increasing from October to mid-November. Most contacts expect the economy to expand at a slow, steady pace for the remainder of the year but remain positive as they anticipate improving conditions for next year.\nWhile auto sales remained stable, reports on other components of consumer spending were mixed. The travel and tourism industry was a bright spot for the District as overall activity continued to expand. Residential real estate brokers indicated that growth of existing home sales had slowed, while homebuilders saw sales growth increase over a year ago. Commercial contractors noted that activity increased, albeit at a modest pace. Manufacturers reported mild gains in new orders and production. On balance, bankers noted better loan demand. Wages and input prices continued to increase at a slow and steady pace.\nConsumer Spending and Tourism\nRetailers cited mixed results from October to mid-November. District retail contacts indicated that economic uncertainty was having an impact on consumer confidence and behavior. Although merchants reported plans to offer robust discounting, beginning even earlier than the traditional Black Friday, retailers' expectations for the upcoming holiday season are only mildly optimistic. Sales of light vehicles were steady.\nHospitality firms continued to cite expanding levels of activity in both leisure and business travel. Industry contacts expect a robust holiday season and continue to anticipate strong performance for the first half of 2014. Overall, the industry is forecasting continued growth in business and leisure travel and a healthy influx of international visitors based on reports of advanced bookings.\nReal Estate and Construction\nDistrict brokers indicated that growth of existing home sales have slowed notably in recent months. The majority of brokers said sales were flat to slightly up compared with a year earlier but were below their plan for the period. Most brokers indicated that the government shutdown had an impact on their business, including confusion about the availability of government insured mortgages, delays in processing loans, and reduced consumer confidence. By most accounts, inventory levels continued to decline on a year-over-year basis. Home prices remained ahead of the year earlier level but price gains seemed to be slowing. The outlook among brokers has waned since our last report. Most anticipate that sales will be flat to slightly up on a year-over-year basis over the next several months.\nDistrict builders indicated that recent activity was in line with their plan for the period. The majority of builders noted that new home sales and construction were ahead of the year earlier level. However, similar to broker reports, homebuilders noted that the government shutdown impacted their business, as well. Reports on unsold inventory were mixed while modest home price appreciation continued to be noted. The outlook for new home sales and construction remained slightly positive.\nDistrict commercial brokers noted that demand for space continued to improve modestly. Construction activity slightly increased as well, from earlier in the year. Most contractors said that activity in the third-quarter was ahead of the year-ago level. New build-to-suit projects continued to break ground across the region while landlords also updated space to make it attractive for tenants to rent. Once again, brokers indicated that most markets still favored tenants; however, rental rate increases continued to be noted in select submarkets. The outlook among District commercial real estate contacts remained positive with further improvements expected early next year.\nManufacturing and Transportation\nDistrict manufacturers reported gains in new orders, production, and employment in October compared with the previous month. An increasing number of contacts cited higher than desired finished inventory levels and that commodity prices continued to rise, albeit at a modest rate. Manufacturers also noted a mild decrease in supplier delivery times. Although overall production increased, expectations for production have fallen with approximately one-quarter of manufacturing contacts expecting production to increase over the next three-to-six months, compared with one-third from our previous report.\nRailroad contacts continued to cite significant increases in shipments of petroleum products and nonferrous scrap metals, as well as metallurgical coal; however, rail traffic year-to-date is up only slightly. District port contacts reported record levels of container shipments, bulk cargos, and truck and intermodal freight. Trucking tonnage continued to increase year-over-year from heavier freight loads of energy products, housing construction materials, and autos. Contacts cited significant investment in the production of Liquefied Natural Gas (LNG) for use in the transportation sector. A majority of regional transportation contacts indicated that their customers' do not expect to meet their holiday season volume expectations, although some logistics firms have forecast record volumes due to online sales.\nBanking and Finance\nBanking contacts reported better overall lending activity, relative to our previous report, although loan demand in rural areas remained low. Commercial real estate lending increased as property values rose; commercial and industrial and auto lending was strong. Mortgage lending and refinancing activity slowed as mortgage interest rates increased. Deposit levels were high at most institutions and banks continued to competitively seek out quality-loan customers. Some banks loosened underwriting standards and reduced margins to attract new loan business.\nEmployment and Prices\nOn balance, contacts across the private sector reported that the government shutdown had little-to-no direct impact on employment, but has negatively affected business confidence, which could translate into delayed hiring decisions in the present or near term. Contacts continued to cite that companies looking to hire expressed concern that their inability to find qualified labor is inhibiting business expansion. Overall, firms experiencing any growth in demand for their products expressed no plans to hire in the near term.\nContacts continued to report stable pricing with no major concerns about inflation. Isolated reports of cost increases, for example in fast food, grocery stores, and construction, were generally passed through successfully to customers. Year-ahead unit cost expectations were unchanged at 1.9 percent, according to the Atlanta Fed's survey on business inflation expectations. Overall, profit margins were tight across most industries. Aside from scattered reports of upward pressure on wages for high-skilled workers, increases remained stable (mostly in the 2-3 percent range) across most industries.\nNatural Resources and Agriculture\nEnergy contacts continued to cite infrastructure expansion and high-capacity utilization. Rail investment has provided much needed relief to the liquids transportation bottleneck issues that arose with the increasing production from shale resources. Overall, contacts remain largely optimistic about future demand, productivity, and pricing for the industry.\nDrought conditions in Mississippi and Louisiana eased while other areas in the District continued to experience abnormally dry conditions. Since the previous cycle, monthly prices paid to farmers for cotton, rice, and oranges increased while prices for corn, soybeans, beef, hogs, and poultry decreased. The most recent crop production projections for corn and soybeans were up from last year while cotton, rice, and orange projections were down. Contacts reported making investments in irrigation equipment, storage augmentation, and replacing smaller equipment with larger, more modern units as ways to improve production and/or contain costs.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

/beige-book-reports/2013/2013-10-da

"Beige Book Report: Dallas\nOctober 16, 2013\nThe Eleventh District economy expanded at a moderate pace over the past six weeks. Manufacturing activity increased overall and retail sales edged up. Services firms reported mixed demand. The housing sector remained strong, with rising construction and sales. Office and industrial leasing activity picked up. Financial institutions said loan demand was flat to up modestly. Energy activity remained at high levels, and the severity of drought conditions eased somewhat. Prices held steady or rose at most responding firms. Employment levels were flat or slightly increased, and wage pressures picked up.\nPrices\nContacts said prices were stable or up over the reporting period. Manufacturers reported flat prices with the exception of increases in cement, brick, and paper. Contacts noted no change in retail or automobile prices since the last report. Accounting and legal firms noted modest increases in billing rates, and shipping rates increased in light of higher fuel costs. Airlines reported mostly flat ticket prices but higher fees. Home prices rose notably, and several real estate contacts noted strong growth in office and apartment rents. There were some reports of increased input costs, particularly for steel, rubber, beef, and dairy products.\nChanges in energy prices were mixed; natural gas prices held steady while the price of West Texas Intermediate crude oil fell slightly over the reporting period. Gasoline and diesel prices declined modestly from six weeks ago.\nLabor Market\nEmployment levels held steady or increased slightly at most responding firms. Scattered reports of hiring came from staffing services, high-tech firms, fabricated metals and food manufacturers. Retail hiring was generally limited to new stores, and headcounts rose at law firms as fall associates came on board. Reports of labor shortages eased somewhat from earlier in the year, although construction firms cited difficulty finding subcontractors, and some respondents noted a competitive job market for accountants and financial analysts.\nReports of pay increases were more widespread than in prior periods. Accounting firms noted strong increases in wages and bonuses. A retail contact reported upward wage pressure for IT workers, and wages rose in fabricated metals and construction-related manufacturing. Legal and finance firms said raises will be modest but above what was given last year.\nManufacturing\nMost responding firms noted an increase in manufacturing activity over the reporting period. Construction-related manufacturers said demand was flat or up, and a brick contact noted a sharp rise in residential projects. Fabricated metals demand continued to rise, supported by the energy sector and road construction, while demand for primary metals softened slightly but remained at or above year-ago levels. Demand increased for paper and food producers.\nHigh-tech manufacturers said orders were flat to slightly up, and one semiconductor firm noted demand increased for three consecutive quarters for the first time since 2010. Respondents expect mild growth to continue over the next three to six months.\nSome transportation manufacturing contacts reported sizable increases in demand. An automobile manufacturer said a pickup in construction prompted a rise in demand for light trucks, and that orders exceeded production capacity. Contacts expect 2013 to be on par with 2012 or slightly stronger.\nPetrochemical producers noted decreased production in August, although year-to-date production was slightly above what it was during the same period last year. Increased oil prices provided further support to the cost advantage of domestic petrochemical firms, but softening global demand and unplanned outages suppressed exports.\nRetail Sales\nRespondents reported that retail sales were up slightly over the reporting period, and year-over-year demand was up in the low to middle single digits. Two national firms reported that retail activity in Texas continued to marginally outperform activity in the nation. Contacts\u2019 outlooks for the next six to twelve months are cautiously positive.\nAutomobile sales held fairly steady overall. Demand was up year over year but not as much as expected, possibly due to a lack of confidence among buyers. Inventories were in line with respondents\u2019 expectations. Contacts have positive outlooks for the fourth quarter and into 2014.\nNonfinancial Services\nNonfinancial services contacts reported mixed demand. Staffing services firms noted flat demand overall since the last report but saw an unexpected decline in direct hires. One contact saw a few signed contracts designed to circumvent the Affordable Care Act (ACA) by utilizing a temporary employee full time, then hiring that person on a permanent but part-time basis when the ACA goes into effect. Accounting firms noted demand was up seasonally due to upcoming tax deadlines, and also up modestly year over year. Contacts expect the strong demand to continue, with a further pickup in transactions work. Legal firms reported a modest decrease in demand. Litigation and corporate transactions work remained slow, and demand fell for healthcare and land use legal services. Intellectual property litigation increased and real estate work remained elevated, although it abated recently. The outlook for legal services is guarded and lawyers are less bullish than in prior periods.\nTransportation service firms said container and cargo volumes increased over the reporting period, except for air cargo, which held steady. Loaded container volume was up in August and up year to date compared with the same period in 2012. Strength was reported in retail imports in advance of the holiday season, and the growth was stronger than last year. Small parcel cargo volume grew at an accelerating pace in August, with growth driven by e-commerce. Air cargo volume was largely unchanged over the reporting period, both domestically and internationally, and was down slightly on a year-to-date basis when compared with last year. Contacts noted a continued trend toward cargo being carried less by passenger aircraft and more by cargo airlines.\nAirline contacts noted a seasonal decline in passenger demand over the past six weeks, although demand was slightly stronger than year-ago levels. Travel to Latin America and Europe was robust while travel to Asia was weak. Firms expect the fourth quarter to compare favorably to the fourth quarter of last year, and one contact is optimistic that 2014 will be stronger than 2013.\nConstruction and Real Estate\nThe District housing sector remained strong over the reporting period. Respondents said most major Texas markets continued to record robust sales, while demand slowed in some parts of the U.S. Home prices continued to rise, due in part to low inventories of existing homes and finished lots. Contacts expect the pace of price increases to moderate slightly when new home construction catches up to demand. The summer\u2019s rise in mortgage rates had little effect on demand and reduced affordability only slightly, according to respondents. Contacts expect steady demand through the rest of the year and anticipate construction levels in 2014 will pick up further. Healthy apartment demand pushed occupancy rates higher despite high levels of multifamily construction activity. Increases in rents were strong in several major metros, and contacts are optimistic in their outlooks for 2014.\nOffice and industrial leasing activity strengthened, especially in Dallas and Houston, and contacts noted strong growth in rents for class A office space. Several respondents noted a pickup in investment sales for office and industrial buildings. Outlooks for Texas commercial real estate remained optimistic.\nFinancial Services\nLoan demand remained soft and was flat to up modestly from six weeks ago. Demand for mortgages was robust, although increased mortgage rates lowered demand from exceptionally high levels and led to less mortgage refinancing. Loan quality was good and continued to improve modestly. Financial institutions were able to sell real estate owned properties for gains. Loan pricing remained extremely competitive, with big banks undercutting community banks, especially in Austin. Deposit volumes and rates did not change, but there was some competition in rates for certificates of deposit. Outlooks are cautiously optimistic, with mortgage lending expected to remain strong and small business lending expected to increase.\nEnergy\nRespondents said that energy activity was little changed at high levels over the reporting period. Activity was better than a year ago, but margins for oil and gas services firms have tightened. Global demand held steady. Oil and gas extraction firms continued to expect modest improvement through the end of 2013 and into 2014.\nAgriculture\nThe District remained largely in drought, although the severity lessened in late September in Texas due to good rainfall and the excessive heat tapering off. The harvest progressed normally for row crops, and conditions were mostly fair to good. Improved moisture conditions increased optimism for the winter wheat crop. Beef exports increased over the reporting period.\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 16, 2013\nPrepared at the Federal Reserve Bank of Chicago and based on information collected on or before October 7, 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 suggest that national economic activity continued to expand at a modest to moderate pace during the reporting period of September through early October. Eight Districts reported similar growth rates in economic activity as during the previous reporting period, while growth slowed some in the Philadelphia, Richmond, Chicago, and Kansas City Districts. Contacts across Districts generally remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate.\nConsumer spending continued to increase and activity in the travel and tourism sector expanded in most Districts. Business spending and payrolls grew in many Districts. Demand for nonfinancial services rose, and manufacturing activity also expanded modestly. Residential construction continued to increase at a moderate pace. By comparison, nonresidential construction again expanded at a slower rate. Residential and commercial real estate activity varied across Districts, but largely continued to improve. Financial conditions were little changed on balance, with lending activity remaining modest in most Districts. There were mixed reports on agriculture, with excess precipitation and drought both impacting the sector. Energy and mining activity expanded or maintained high levels, with the exception of the coal industry in the eastern half of the nation. Price and wage pressures were again limited.\nConsumer Spending and Tourism\nConsumer spending grew modestly in most Districts. Auto sales continued to be strong, particularly in the New York District where they were said to be increasingly robust. In contrast, Chicago, Kansas City, and Dallas indicated slower growth in auto sales in September. Growth in retail sales was steady in most of the Districts, but picked up some in Cleveland and Richmond and slowed in Chicago, Kansas City, and Dallas. Contacts in Chicago and Atlanta noted that back-to-school spending was lower than a year ago. However, retailers generally remained optimistic about the holiday shopping season, with contacts in Philadelphia and Chicago expecting this year's holiday sales to be about equal to last year's despite the traditional holiday period being six days shorter this year. In addition, Dallas noted strength in retail imports in advance of the holiday season, with growth stronger than a year ago.\nActivity in the travel and tourism sector also expanded in most areas, with the reports from the Atlanta, Boston, and New York Districts being particularly upbeat. Dallas indicated that airline passenger demand slowed seasonally, but was slightly stronger than year-ago levels. Tourism contacts in the Boston District were concerned about the potential impact of a protracted federal government shutdown; and Richmond noted that the shutdown had led to the closing of some tourist attractions, although hotel contacts indicated that these closures did not result in guest cancellations. In addition, Kansas City noted lower tourism activity due in part to the severe effects of recent flooding in Colorado.\nBusiness Spending and Hiring\nBusiness spending grew modestly in most Districts. Overall, inventory investment proceeded at a moderate rate. Retail inventories were said to be in-line with sales in the Boston, Cleveland, Chicago, and Dallas Districts. Philadelphia and Cleveland reported that inventories were on the low side at auto dealers, and Chicago noted the same was true at steel service centers. Philadelphia reported an increase in manufacturers' demand for equipment, while manufacturers in Cleveland and Chicago indicated that current capital outlays were primarily for productivity enhancing investments. Cleveland noted that low natural gas prices and regulatory uncertainty were slowing the build-out of shale-gas transport and processing infrastructure. In contrast, additional infrastructure projects to support natural resource extraction were mentioned in the Richmond, Minneapolis, and Kansas City Districts. Philadelphia and Chicago reported an increase in spending on information technology. Looking ahead, several Districts noted an improvement in capital spending plans. Manufacturers in Philadelphia and St. Louis, high-tech service firms in Kansas City, and retailers in the Cleveland and St. Louis Districts expected to increase capital spending in the months ahead. Technology contacts in San Francisco relayed expectations for a near-term pick-up in spending on both hardware and software products. In addition, Philadelphia and Minneapolis reported slight increases in activity at architecture firms.\nEmployment growth remained modest in September. Several Districts reported that contacts were cautious to expand payrolls, citing uncertainty surrounding the implementation of the Affordable Care Act and fiscal policy more generally. Cleveland and Dallas noted that retail hiring was primarily limited to staffing of new stores in their Districts, while contacts in Philadelphia, Cleveland, and Chicago reported that hiring for the holiday season would be about the same as last year. In manufacturing, Boston indicated that hiring primarily was for replacement or to fill key needs, New York noted slower job growth, and Chicago reported that manufacturers were cutting back on overtime. Dallas cited scattered reports of hiring in high-tech, fabricated metals, and food manufacturing. Furthermore, demand for skilled labor remained high in many Districts. Examples included technology, healthcare, and engineering occupations in Richmond, economic and health consulting in Boston, legal and compliance positions in the financial services industry in New York, and accountants and financial analysts in the Dallas District.\nNonfinancial Services\nDemand for nonfinancial services increased modestly from the prior reporting period. Boston reported robust growth in consulting, but noted that activity at a government consulting firm remained weaker due to the effects of sequestration. The Minneapolis District reported increased activity in professional business services, whereas demand was more mixed in the Dallas District with strength in accounting services and a modest decrease in legal services. Demand for staffing services increased in the New York, Philadelphia, Cleveland, and Minneapolis Districts, with New York citing strong demand for information technology occupations and Cleveland highlighting healthcare and manufacturing. In contrast, staffing service activity was down slightly in the Chicago and Dallas Districts. Demand for technology services increased in the Kansas City and San Francisco Districts, but San Francisco indicated that overall demand for nonfinancial services was mixed with healthcare services somewhat weak. Demand for transportation services increased on balance. Port activity remained robust in the Richmond and Atlanta Districts, reflecting exports of grain, auto parts, and forest products and imports of energy products and steel. Atlanta, Kansas City and Dallas cited a modest rise in demand for transportation services. Cleveland reported that the rate of growth in shipping freight volume had slowed recently, and demand for trucking services softened slightly in the Richmond District.\nManufacturing\nOverall, manufacturing activity expanded modestly in September, but with some notable exceptions among the Districts. Cleveland, St. Louis, and Minneapolis experienced faster growth, while New York, Richmond, and Chicago saw growth weaken. The automotive and aerospace industries continued to be a source of strength in a number of Districts. Demand for fabricated metals was mixed in the Chicago and Richmond Districts, but stronger in the Dallas District. Cleveland, Chicago, St. Louis, and San Francisco reported steady increases in the demand for steel; Cleveland, Chicago, and Atlanta indicated that much of the higher demand was being met by imports. Demand for construction materials remained strong for Philadelphia, increased for Cleveland and San Francisco, was flat for Dallas, and was slightly lower for the Chicago District. Cleveland and Dallas reported strong demand for manufactured inputs to energy production, and demand for heavy equipment improved slightly in the Richmond and Chicago Districts. High-tech manufacturing activity edged up in a number of Districts, with Boston and Dallas reporting slightly higher demand for semiconductors, and biotech manufacturing increasing in San Francisco. While there was little immediate disruption from the federal government shutdown, contacts were worried about the potential impact if the closing became prolonged.\nConstruction and Real Estate\nConstruction and real estate activity continued to improve in September. Residential construction increased moderately on balance, growing at a stronger pace in the Minneapolis and Dallas Districts but only slightly in Richmond and Philadelphia. Multifamily construction remained stronger than single-family construction in a number of Districts. Residential real estate activity continued to improve at a moderate pace in most Districts, as home sales and prices continued to rise and inventories remained low. Home sales in the New York and Dallas Districts were strong, with the exception of the Jersey Shore, which is still recovering from Hurricane Sandy. The Philadelphia, Atlanta, and Chicago Districts experienced a more modest improvement in home sales. A number of Districts reported concerns from homebuilders and realtors over rising mortgage rates. However, contacts in the Dallas District indicated that rising interest rates were not hurting affordability and contacts in the Boston District suggested some boost to activity by homebuyers entering the market in anticipation of future increases in rates. Nonresidential construction activity remained modest, but varied by market and District. Growth was strong in the Minneapolis District, but up only slightly in Richmond, Atlanta, and Philadelphia. The Cleveland, Chicago, and St. Louis Districts reported increased activity for industrial building, Cleveland noted strong demand from the healthcare sector, and redevelopment of vacant retail space picked up in Boston. Leasing activity continued to improve modestly in most Districts, but was particularly strong in the Dallas District. A number of Districts reported that vacancy rates continued to fall, rents rose, and the outlook for commercial real estate was generally positive.\nBanking and Finance\nFinancial conditions were little changed on balance from the prior reporting period. Overall loan growth remained modest in most Districts. Consumer loan demand weakened slightly. Reports on mortgage lending were mixed. Several Districts noted a decrease in mortgage lending, citing higher mortgage rates and reduced refinancing activity. However, mortgage originations continued to rise in Philadelphia, Richmond, and Dallas, and rising home prices led to an increase in home equity lending in Philadelphia, Chicago, and San Francisco. Chicago, Cleveland, and Atlanta noted an increase in auto lending, while credit card volumes decreased slightly in Philadelphia. Business loan demand edged higher, with several Districts noting a pick-up in both commercial and industrial and commercial real estate lending. The Philadelphia, Cleveland, Richmond, Chicago, and Dallas Districts reported intense competition on pricing and terms for commercial and industrial loans. In addition, contacts in Philadelphia and Chicago expressed concern about an easing of credit standards on these loans. Overall, however, lending standards were largely unchanged and credit quality continued to improve moderately.\nAgriculture and Natural Resources\nHeavy rains hurt agriculture in the Richmond, Atlanta, and Kansas City Districts, even resulting in declarations of some natural disaster areas. At the other extreme, some portions of the Chicago, Minneapolis, and Dallas Districts experienced drought conditions, although they eased in some areas over the reporting period. Harvests were reported as behind their normal pace. Nonetheless, crop yields were higher than expected in the Chicago District and about average in the Kansas City District. Strong fruit output was noted in the Richmond, Chicago, and Minneapolis Districts. Cotton output was mixed across the South. Prices fell for corn, soybeans, wheat, hay, cotton, hogs, broilers, turkeys, and eggs, but rose for rice, citrus, grapes, milk, cattle, and dry beans. Livestock producers benefited from lower feed costs, as well as higher beef exports according to the Dallas District. San Francisco reported demand remained strong for most crop and livestock products.\nNatural resource extraction increased in September. Oil and natural gas activity remained at high levels in the Cleveland and Dallas Districts, was solid in the Kansas City District, and expanded in the Richmond and Minneapolis Districts. Drilling rig counts were stable in the Richmond and Kansas City Districts, although the latter reported a shift in rigs from oil drilling toward natural gas. This shift was driven in part by expectations of higher natural gas prices and lower oil prices in the future. Atlanta and Dallas noted steady demand for energy. San Francisco indicated that demand for oil products edged up, resulting in increased refinery activity. Refinery expansions continued in the Atlanta District, although the cost of transporting inputs to Gulf Coast refineries rose. Mining activity picked up in the Minneapolis District. Coal production in the Cleveland and Richmond Districts slowed, but output was higher in St. Louis and Kansas City.\nPrices and Wages\nPrice pressures remained limited in September. Most Districts reported only slight increases in commodity prices and limited ability to pass through these increases to their customers. Metal prices fell slightly in the Chicago District, but held steady in Minneapolis and were up slightly in Dallas. The Chicago, Kansas City, Dallas, and San Francisco Districts reported upward pressure on prices for building materials such as asphalt, brick, lumber, and concrete, with Kansas City indicating that concrete was in short supply in the Colorado areas affected by flooding. Energy prices in most Districts were steady to slightly lower than during the prior reporting period. In general, prices for final goods were little changed, except for a faster increase in retail prices in the Richmond District and higher food prices in the Kansas City and Dallas Districts. Wage pressures remained modest overall, though the Minneapolis and Richmond Districts reported moderate wage increases. Most Districts reported continued upward wage pressure for skilled workers, particularly those in consulting, accounting, information technology, engineering, and skilled manufacturing and construction trades.\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/2013/2013-10-sf

"Beige Book Report: San Francisco\nOctober 16, 2013\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of late August through early October. Price pressures were limited for most final goods and services, and upward wage pressures remained modest overall. Retail sales were a bit soft, while demand for business and consumer services was mixed. District manufacturing activity inched up. Agricultural production and sales expanded. Demand for housing advanced, and commercial real estate activity gained. Reports from financial institutions indicated that loan demand rose.\nPrices and Wages\nPrice pressures were tame for most final goods and services. While wheat prices have increased, contacts in the agricultural and restaurant industries mentioned softening prices of some other commodities, particularly beef. Some retail grocers were reluctant to raise shelf prices, citing consumers\u2019 price sensitivity. Technology industry contacts recognized stronger downward pressure on prices resulting from more aggressive competition lately. Reports indicated upward pressure on prices of various construction inputs, including wood and cement.\nUpward wage pressures remained modest overall. Slack in the labor market restrained wage gains in most sectors, occupations, and regions. Firms in various industries continued to compete vigorously for a limited pool of qualified workers, including construction supervisors and software developers, spurring significant wage growth. In particular, reports noted that the pace of wage gains for software developers might have even picked up in recent months. Contacts indicated that some small businesses have boosted compensation packages to minimize voluntary staff turnover.\nRetail Trade and Services\nAside from spending on big-ticket items and certain technology products, retail sales were a bit soft. Contacts pointed to evidence of pent-up demand and attractive financing opportunities spurring households to purchase big-ticket items, particularly autos and housing-related goods. Contacts in the technology industry expect a near-term pickup in spending on various hardware and software products, including storage, cloud computing-related infrastructure, and enterprise security software. Retail grocers and department store contacts noted flat and sluggish sales, respectively. A beverage retailer also noted that consumer demand was stagnant. On net, luxury items and premium brands sold relatively well, but growth slowed for other categories of full-priced items as consumers continued to search for the lowest prices.\nDemand for business and consumer services was mixed. Technology contacts noted that, although demand for various technology services ticked up in the U.S. and near-term expectations remain positive, demand in Europe appeared to slip. Reports indicated that demand for discretionary health-care services was somewhat weak. Restaurant industry contacts noted ongoing softness in same-store sales in the quick-service restaurant and casual dining segments of the industry. Travel and tourism activity in Hawaii maintained its solid pace of growth, although contacts noted weaker visitor arrivals from the western United States recently. Contacts noted year-over-year declines in Las Vegas gaming revenues, as the tourism industry there continued to face challenges.\nManufacturing\nDistrict manufacturing activity appeared to inch up during the reporting period of late August through early October. Contacts noted that activity along the supply chain for electronic components improved, and capacity utilization remained near its historical average. Uncertainty about fiscal policy triggered reductions of new orders and revenue in the defense industry. Providers of pharmaceuticals noted increased activity in the biotech drug industry. A wood products manufacturer indicated that demand eased over the summer, and a metal manufacturer noted that production activity slowed a bit. However, demand for steel products used primarily in nonresidential construction edged up further, and steel producers reported that overall capacity utilization was mostly stable. In particular, reports indicated an ongoing trend of stronger capacity utilization for steel manufacturing of automobile and aircraft-related inputs than for nonresidential construction inputs.\nAgriculture and Resource-related Industries\nAgricultural and resource-related sales and production activity expanded in the District. Demand remained strong for most crop and livestock products. Contacts noted that competition for grapes in the California wine industry contributed to higher prices for grapes, which passed through to raisin prices, reducing sales and increasing inventories of raisins. Water availability was adequate on net but limited in some areas. Overall demand for oil products ticked up. Refinery utilization rates, total refinery inputs, and gasoline production activity increased since the previous reporting period. The stock of stored natural gas was up as well compared with the previous reporting period, but notably down year-over-year. Utility providers reported that consumer energy usage patterns were consistent with ongoing modest growth in consumer spending.\nReal Estate and Construction\nHousing demand advanced overall, and commercial real estate activity improved. Home prices and sales climbed further in many District cities. Reports indicated that residential permit issuance increased in parts of California but decreased in some areas of the Pacific Northwest. Construction activity ramped up on net, although in some areas, new building activity was held back by factors such as poor lot availability and shortages of skilled construction workers. Contacts indicated that multifamily residential construction projects increased. Rental rates for commercial real estate were stable by some reports and up according to others. Technology and medical services firms in particular drove the growth in demand for commercial real estate in the San Francisco Bay Area and Seattle.\nFinancial Institutions\nFinancial institutions indicated that loan demand rose. Most contacts reported increased lending. Some small businesses in areas with strengthening local economic conditions sought increased financing for equipment or real estate purchases. Some banks reported slower mortgage origination and especially refinancing activity in response to higher interest rates, although rising home price appraisals have sparked increased activity in home equity lending. Reports highlighted ample bank liquidity and substantial competition for high-quality commercial borrowers. Regional and community banks aggressively sought out well-qualified small business borrowers. Demand for asset management and investment advisory services was strong. In the District\u2019s Internet and digital media sectors, mergers and acquisitions and venture capital activity grew in terms of both deal value and volume, and the pace of initial public offerings picked up substantially. Private equity financing activity, on the other hand, was mostly flat.\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\nOctober 16, 2013\nThe Fourth District's economy continued to expand at a moderate pace during the past six weeks. On balance, demand for manufactured products grew at a moderate rate. Housing market activity held steady; nonetheless, sales of new and existing homes were above year-ago levels. Nonresidential builders saw an overall pick-up in business. Retailers reported stronger sales during August and September, while new motor-vehicle purchases posted moderate gains on a year-over-year basis. Shale-gas activity is showing signs of moderating due to low natural gas prices; still, production is at historic highs. Output at coal mines trended lower. The rate of growth in freight volume has slowed. Applications for business credit were flat, while consumer credit demand rose slightly.\nHiring was sluggish across industry sectors. 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.\nManufacturing\nReports from District factories showed that demand was steady to growing at a robust pace during the past couple of months. Companies seeing the strongest activity were suppliers to the housing, motor-vehicle, and oil and gas industries. Weakness in euro-zone and Asian economies was often cited as a barrier to stronger growth. Defense contractors are still coping with uncertainty, which was attributed to the sequester. Compared to a year ago, manufacturing production levels are similar or higher. Most of our contacts are cautiously optimistic and expect little change in demand, although many were uneasy about fiscal issues and implications of the Affordable Care Act on their businesses. Steel producers and service centers reported that shipping volume is increasing, but at a very slow rate. Several respondents continue to express concern about the quantity of steel imports, especially from China. Steel producers do not expect market conditions to change appreciably in the upcoming months. District auto production recovered in August on a month-over-month basis as motor-vehicle assembly plants returned to normal production schedules. Compared to a year ago, motor-vehicle production figures revealed a sizeable increase.\nOnly a few manufacturers reported that they are moving forward with capacity expansion plans. Other producers said that they see a need to expand capacity, but they will not proceed because of uncertainty about the economy. One manufacturer commented that he will postpone any expansion until GDP grows at a sustained rate of 3 percent. Capital outlays are being allocated primarily for productivity enhancements. Several manufacturers indicated that they are taking a more conservative stance toward upcoming capital budgets until there is a higher degree of certainty about future demand. Raw material and finished goods prices were generally flat. Factories expanded payrolls at a sluggish pace. Several contacts expect production wages will rise between 2 and 3 percent in the near term. There is anxiety about rising health insurance premiums, which was attributed to the Affordable Care Act.\nReal Estate\nSales of new single-family homes and construction starts were stable but below levels seen during the second quarter. Compared to a year ago, new home-building activity is considerably higher. Builders are uncertain about the effect of rising interest rates on potential buyers. New-home contracts were found mainly in the mid-price-point category. The first-time home-buyer category remains very weak. Builders are confident that demand for new homes will persist in the upcoming months, and they believe that some loosening in credit markets would provide a boost to their industry. Selling prices of new homes are rising across the District. Two builders told us that they were able to push through increases during August to offset rising labor and material costs.\nNonresidential builders reported an overall pick-up in business, but it remains difficult to move projects from the pipeline to a contract signing due to uncertainty on the part of clients. Very large projects are few in number, and renovations are more prevalent than new building in some regions of the District. In general, business is stronger than a year ago. Inquiries and backlogs have strengthened since our last report. The strongest activity was in manufacturing, distribution, healthcare, and multifamily housing. A developer of retail space characterized his industry as strong and much more positive than two years ago. He noted a decline in regional mall footprints due to chain consolidation and on-line shopping. Our contacts were fairly optimistic about near-term growth prospects, but they are concerned about unresolved fiscal policy issues.\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 very limited hiring of field and office workers. Many builders cited a scarcity of high-skilled trade workers, many of whom left the industry during the recession and are not returning. As a result, there is upward pressure on wages, and subcontractors are demanding higher rates. Subcontractors are also having difficulty obtaining operating capital.\nConsumer Spending\nMost retailers we spoke with reported that same-store sales were stronger in August and September than they had been during the previous four months and were above year-ago levels. They cited an improving labor market and new product introductions as reasons for the increase. Products in greater demand included back-to-school items, home furnishings, and cold-weather apparel. A food retailer attributed her chain's margin growth to consumers trading up in their buying habits. Fourth-quarter sales are expected to improve slightly when compared to those in the third quarter. Inventories were described as being in good shape. Retailers were able to clear out their left-over summer merchandise. Vendor and shelf prices held steady, and agricultural prices stabilized. Some of our contacts expect to increase capital spending in 2014, mainly for improving e-commerce and distribution systems. Hiring will be limited to staffing new stores. Temporary hiring for the upcoming holiday shopping season is expected to be modestly higher than a year ago.\nYear-to-date sales through August of new motor vehicles showed a moderate increase when compared to the same time period a year ago. On a month-over-month basis, purchases of new vehicles were only slightly higher during August versus July. Buyers continue to prefer smaller, fuel-efficient vehicles, although trucks are in big demand in regions with considerable shale-gas activity. New-vehicle inventories are lower than desired, which dealers attributed to the model-year changeover. Our contacts are optimistic about sales for the remainder of the year. They project that sales volume for 2013 will be about 10 percent higher than in 2012 due to pent-up demand, the availability of financing, and the option to lease. Used-vehicle purchases increased during the past six weeks. Employment levels at dealerships held steady. Many of our contacts are concerned about the implementation of the Affordable Care Act and the effect it will have on their total labor cost.\nBanking\nBankers reported that the low-interest-rate environment continues to hurt their revenues, though net interest margins are in line with expectations. Little change is anticipated in the near term. Demand for business credit was largely unchanged during the past six weeks. No loan category or industry is performing significantly better than others, although several bankers noted that commercial real estate lending has picked up. Competition for quality loans was described as aggressive. Consumer-credit demand showed a slight improvement, especially for auto loans and credit cards. Most bankers reported a slowdown in residential mortgage activity, mainly on the refinancing side. A slight rise in interest rates had little effect on new- purchase applications. For the most part, delinquency rates declined slightly across categories. On balance, banking payrolls were flat. We heard a couple of reports about layoffs due to branch-office downsizing or closures. Some wage pressure was reported, especially for employees working in regulation.\nEnergy\nDistrict coal production remains below year-ago levels; however, the rate of decline is shrinking. Going forward, producers project little change in production, but they are uneasy about the effects of the regulatory environment. Spot prices for steam coal declined, whereas metallurgical coal prices were flat. Oil and gas drilling held steady during the past six weeks. Output from shale-gas wells in Pennsylvania during the first half of 2013 was at a historic high. Well-head prices for natural gas are flat to down. One contact reported that, due to low natural gas prices and regulatory uncertainty at the federal, state, and local levels, the shale-gas industry will grow very slowly through the end of 2014, and the build-out of the transport and processing infrastructure will take longer to complete than originally estimated. Capital outlays are at targeted levels, and little change was seen in production-equipment and material costs. One coal company reported a workforce reduction; otherwise, payrolls held steady.\nFreight Transportation\nFreight executives reported that the rate of growth in shipping volume has slowed recently. However, year-to-date volume is higher when compared to the same period in 2012. Demand from motor-vehicle, shale-gas, and housing industries was strong. The industry outlook is favorable, with volume growing at a slow, but steady pace. Freight haulers are still uncertain about the impact of newly enacted hours-of-service regulations, especially on labor costs. Other operating costs were fairly stable. A few contacts noted that they have successfully negotiated rate increases. Some respondents plan to reduce capital outlays during the next fiscal year because substantial monies have already been allocated for capacity expansion or because equipment costs are high. The industry has been actively hiring for replacement and adding capacity.\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\nOctober 16, 2013\nDistrict economic conditions improved modestly, on balance, since our last report. Manufacturing shipments and new orders softened, with only a few producers reporting strength. Retail revenues were flat to modestly higher, and auto sales improved year over year, although a few dealers reported recent flattening. Conditions were mixed at non-retail services firms, with some slowing in tourism. Lending activity increased slightly, and competition for quality loans was intense. Residential real estate sales improved, except for higher end homes, and there were some reports of new home construction. Commercial leasing varied by location and new construction was limited, except for multi-family housing. While excessive summer rain may reduce some crops, peanut yields were bountiful. Natural gas production rose and expansion was expected to continue; in contrast, coal mining declined further. Labor markets grew slowly, despite difficulty finding skilled workers. Average wages rose at a faster pace across the board. Prices grew more quickly in the service sector and at manufacturing firms.\nManufacturing\nManufacturing generally weakened since our last report. Shipments dropped for most products, and manufacturers said that both military and civilian orders were down. Although manufacturers of metals, pulp, paper, and chemicals indicated an increase in shipments in recent weeks, their new orders softened. However, a machinery manufacturer expected orders to increase because conditions were improving and distributors had kept inventories lean. A manufacturer of milled wood products reported that he currently has sufficient supply, but many lumber harvesting companies have gone out of business, which could lead to shortages when demand picks up. Auto parts manufacturing remained strong, and an aircraft executive remarked that orders for civilian planes were up. According to our latest manufacturing survey, the pace of price increases picked up for raw materials and finished goods.\nPorts\nPort activity remained strong in recent weeks. Port officials expect that even after the seasonal increase winds down, import levels will remain above last year. Food and beverage imports increased, while exports of automotive parts were particularly strong. Forest product exports also increased, as Chinese import constraints were partially lifted. The volume of containerized grain exports was robust in recent weeks. Heavy equipment imports and exports slowed as some U.S. coal mines closed and Chinese purchases slowed. However a port contact cautioned that comparisons to a year ago appeared weaker than usual because of last year's substantial replenishment of some equipment.\nRetail\nMerchants reported flat to modestly improved sales revenues in recent weeks. An executive with a chain of hardware stores remarked that sales were flat since our last report, although year-over-year same-store sales had increased. Home and garden retailers, as well as suppliers of building materials reported stronger sales, and a manager at a sporting goods store commented that his revenues were up despite rising freight costs. Auto sales were strong at a dealership near the Washington, D.C. beltway, although other dealers in Maryland and Virginia indicated sales were flat. Many smaller retailers have limited weekly hours per employee to control healthcare costs. As a result, some employees are taking second jobs, and a few firms are even partnering to help their employees \"stitch together\" full time hours by working for both businesses. Average retail prices rose more quickly in recent weeks.\nServices\nRevenues at non-retail services firms were mixed since our last report. Demand for trucking services softened slightly in recent weeks, according to a national freight carrier. Another contact reported that loads have become heavier and there is a shift to rail transportation. Healthcare systems executives reported little change in demand, while cost reduction has continued. An executive at a West Virginia bookkeeping firm said his business was steady, while a Maryland firm that provides medical records systems said that revenues picked up. In addition, large construction companies in Maryland and Washington, D.C. reported an increase in revenues. Services price increases quickened.\nTourist bookings slowed from recent strong growth. Although the federal government shutdown closed some tourist attractions, those closures did not result in guest cancellations, according to several hotel contacts. Bookings were flat for a hotel on the Maryland side of the Chesapeake Bay, and a central North Carolina hotel reported unusually slow bookings. A hotel manager in the Tidewater, Virginia area reported that summer finished on a strong note, but the autumn market of government and association bookings was below normal. A tourism contact on the outer banks of North Carolina told us that hotel bookings and rentals were stable, with family stays during Thanksgiving becoming increasingly popular. A resort manager in western Virginia has already received a few early season ski reservations. An hotelier in the North Carolina Piedmont expected a strong October for leaf viewing and a sold-out holiday season.\nFinance\nConsumer lending increased slightly. New residential mortgage lending increased according to a lender in West Virginia, who said that more people were taking long-term fixed rate mortgages rather than one to five year ARM's. He added that he has a decent pipeline for several months ahead and rates were stable. A North Carolina lender reported that loan demand was stable although pricing, especially for jumbo loans, was very competitive. He commented that some lenders were willing to sacrifice a good bit of margin to get those loans and another banker described the environment as \"pretty brutal.\" In contrast, a lender in Virginia noted much slower demand for loans and mortgages. A Northern Virginia banker commented, \"Banks are chasing the good deals,\" and therefore, spreads remained low. Inside the Washington beltway, demand for commercial real estate lending was strong, particularly for hotels and apartment buildings. A central Virginia banker also reported that lending for multi-family housing and commercial refinancing remained solid. A lender in North Carolina said while real estate loans slowed, demand for other commercial loans rose modestly, particularly in metro areas. Competition for commercial and industrial lending was strong. Lenders generally reported no changes in standards and credit quality.\nReal Estate\nResidential real estate markets improved, although new construction was limited. Residential sales increased according to a Realtor in the Washington, D.C. area. He noted that days on the market remained low despite reduced foot traffic, and sales in most price ranges improved, with the exception of homes over $1.5 million. A central North Carolina Realtor reported that sales and prices rose, while inventory on the market declined to slightly over five months. Houses in the more affordable range were moving, while the higher-end market was slow. Another Realtor commented that the mortgage process could take four and a half months for even the best applicants. A Maryland contact noted that new restrictions were making the mortgage process more challenging. He reported fewer days on the market and a marked increase in sales of entry level homes, while inventory remained steady. According to a report from the Tidewater area of Virginia, residential real estate sales were strong. A contact in South Carolina told us sales were up, mostly for price levels below $250,000. He also stated that condo sales rose slightly, but foreclosures and short sales in that area continued to depress prices.\nCommercial development of multi-family housing has remained strong. A central Virginia Realtor reported that there is virtually no new speculative commercial building, and medical construction is either build to suit or with sixty to eighty percent of tenants. In contrast, smaller scale, single family residential development there picked up, and construction and renovation of apartment buildings was strong. He added that leasing activity was \"reasonable\" for smaller tenants; rents firmed and there were fewer incentives. Commercial leasing slowed in the D.C. area, according to a contact who told us people are \"punting a little\" before making decisions on five to ten year leases and construction. A central North Carolina real estate broker reported that retail leasing had improved slightly. Another Realtor in that state said last year's incentives were burning off, and leasing activity was steady. He commented that vacant office space was sufficient except for very large blocks, while industrial warehouse construction was picking up despite rising construction costs. In West Virginia, a Realtor noted that increased calls and site visits did not necessarily translate into a new purchase agreement.\nAgriculture and Natural Resources\nFruit and peanut yields have been excellent, while cucumber production was reduced this autumn as a result of too much rain. Cotton and soybean harvests are also expected to be low this year because of the excessive rain this summer.\nNatural gas production rose since our last report. A contact noted that some wells on the perimeter of production areas in West Virginia have produced more than expected, leading to speculation that the ultimate production area may be larger than originally defined. As always, further expansion will depend on prices, which declined in recent weeks. More pipeline was added, while the rig count remained static. Coal production in the District declined, with the year-to-date percentage drop in Maryland and Virginia both in double digits. West Virginia coal production also fell, although the drop was not as steep.\nLabor Markets\nLabor markets continued their slow expansion in most areas of the District since our last report. Our most recent survey results indicated that employment in manufacturing and in the non-retail service sector grew modestly. Employers across the District reported rising turnover and challenges finding qualified workers in biotech, health care, information technology, engineering, and advanced manufacturing. Demand for low- or semi-skilled workers included truckers, retail associates, warehouse employees, machine operators, and collections agents. Many contacts also commented on reluctance to expand due to uncertainty surrounding the Affordable Care Act; some employers cut hours or employees. Remarks on effects of sequestration were mixed. Average wages in the manufacturing and service sectors increased more quickly in recent weeks.\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 16, 2013\nThe Tenth District economy expanded modestly in September after growing at a slightly faster pace during the previous survey period. Consumer spending slowed somewhat as a decrease in automobile, restaurant and tourism sales was offset in part by an increase in retail activity. Manufacturing activity grew modestly, and expectations for future activity improved substantially. Residential home sales and prices continued to rise, but contacts anticipated a marginal decline in home sales in the months ahead. Commercial real estate conditions continued to improve, and additional gains were anticipated. Bankers reported stronger overall loan demand, improved loan quality, and stable deposit levels. District crop yields were expected to be about average, but falling crop prices led to lower farm income projections. Energy activity in the District remained solid as natural gas drilling rigs increased slightly and the number of oil rigs edged down in September. Wage pressures eased somewhat since the last survey, and prices held steady for most finished goods, while prices continued to rise moderately for raw materials.\nConsumer Spending\nConsumer spending slowed somewhat in September as a decline in automobile, restaurant and tourism sales was offset in part by an increase in retail activity. Retail sales picked up since the last survey, with appliance and lower-priced retail purchases particularly strong. District retailers continued to expect higher sales moving into the holiday shopping season. Automobile sales declined in September, but were in line with expectations and remained above year-ago levels. Small SUVs, cars and trucks sold well, while large SUV sales were weak. Automobile dealers expected stable sales in the coming months. Despite a slight decline in restaurant sales in September, restaurant sales remained significantly higher than year-ago levels, and respondents were more optimistic about the next few months compared to the last survey. Hotel occupancy rates fell and tourism counts declined due in part to seasonal factors. A couple of Colorado contacts also noted a decrease in restaurant sales and tourism activity due to severe effects from the recent flooding. Both occupancy rates and tourism were expected to continue to decline over the next three months.\nManufacturing and Other Business Activity\nManufacturing activity rose modestly in September, while sales at high-tech service firms experienced strong growth and transportation activity edged up. Durable manufacturing production, shipments and new orders increased moderately since the last survey, while non-durable goods manufacturing activity decreased marginally in September. Activity in the manufacturing sector remained well above year-ago levels, and manufacturers\u2019 expectations for future activity improved substantially. Contacts expected strong growth for production, new orders and shipments over the next six months. Capital spending in the manufacturing sector was higher than a year ago and was expected to increase further in the months ahead. Sales at high-tech firms picked up in September after falling slightly during the previous survey period. High-tech services contacts also expected sales and capital spending to increase solidly in the months ahead. Transportation firms reported a modest rise in activity but did not expect additional gains in the coming months.\nReal Estate and Construction\nResidential and commercial real estate activity remained strong in September. District residential real estate sales increased moderately and remained much higher than a year ago. Low to mid-priced homes continued to sell well, while higher priced home sales remained sluggish. The pace of home sales was projected to tick down over the next few months. Inventory levels held steady at low levels and were constraining sales in some areas. Residential home prices continued to rise across the District, and additional price gains were expected over the next few months as supported by lower anticipated inventories. Builders reported a modest gain in home starts, and construction supply firms expected stronger sales in the coming months. Residential mortgage lenders noted that higher interest rates had led to fewer refinances. Furthermore, they reported that increased regulation had added costs and tightened lending conditions. Commercial real estate construction rose, and commercial vacancy rates declined further. Commercial real estate sales were expected to pick up, and rents were expected to rise over the next three months.\nBanking\nIn the recent survey period, bankers reported stronger overall loan demand, improved loan quality, and stable deposit levels. Respondents reported increased demand for commercial and industrial loans and commercial real estate loans, steady demand for consumer installment loans, and decreased demand for residential real estate loans. Many 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.\nAgriculture\nIn the agriculture sector, crop production expectations were little changed from the previous survey period, but falling prices lowered farm income expectations. With most of the corn and soybean crops still in relatively good condition, overall District yields were expected to be about average. As harvest began, however, a greater probability of near-record corn and soybean production nationally led to a drop in prices, cutting farm income expectations. Meanwhile, heavy rainfall in Colorado and flooding along the South Platte River affected some agricultural lowlands. Scattered storms slowed harvest activity and winter wheat planting, but helped soil moisture conditions. Lower feed prices narrowed losses for cattle feedlot operators and improved profitability for hog producers. Weaker farm income prospects were expected to curtail farm household and capital spending, but demand for quality farmland remained strong.\nEnergy\nDistrict energy activity remained solid in September, and expectations for the coming months improved slightly. Natural gas drilling rigs for the District increased modestly in September, particularly in Colorado and Oklahoma, as gas prices remained stable. District oil drilling rigs edged down over the past month, with most of the decrease occurring in Oklahoma. Respondents expected drilling to remain stable through the end of the year as capital spending increases shift to midstream business such as pipelines. Higher oil prices continue to make oil drilling more attractive than natural gas exploration. Looking forward, however, respondents expected oil prices to drop and natural gas prices to rise in the coming months. Wyoming\u2019s coal production continued a moderate expansion from the summer months, but remained below year-ago levels.\nWages and Prices\nWage pressures eased slightly in September, while prices rose moderately for raw materials and held steady for most finished goods. Labor shortages declined over the past month in most sectors, and most contacts reported little wage pressure outside specific skilled positions including technicians, software developers, truck drivers, and engineers. Retailers reported a small decline in prices and expected only modest price gains in the months ahead. Restaurant contacts continued to report rising food costs, but held menu prices flat. Average hotel room rates declined as occupancy rates also fell. After an acceleration in the pace of raw materials price increases in August, manufacturers reported a slight moderation in the pace of price increases in September. Manufacturers raised finished goods prices modestly, and most contacts expected additional price increases in the months ahead. Transportation firms held prices steady despite higher input costs. Builders reported little input cost pressures except for items experiencing a shortage. One example noted was a shortage of concrete and equipment in flooded Colorado areas. Commercial real estate prices and rents were flat over the past month but remained higher than year-ago levels. Residential home prices continued to rise, and additional gains were expected in the months ahead.\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\nOctober 16, 2013\nThe Ninth District economy grew moderately since the last report. Increased activity was noted in consumer spending, tourism, residential and commercial real estate, professional services, manufacturing, energy and mining. Residential and commercial construction continues to grow at a robust rate, while agricultural conditions deteriorated somewhat. Labor markets tightened modestly since the last report, and wage increases were moderate. Price increases were modest. The effects of the partial federal government shutdown on the Ninth District economy were too early to determine.\nConsumer Spending and Tourism\nOverall consumer spending increased since the last report. Sales and traffic at a Minneapolis area mall were level during the past two months, according to the mall manager. Recent sales were about the same as last year\u2019s strong results at a North Dakota mall; apparel sales were soft. A Minnesota-based food producer reported that recent cereal sales increased 4 percent compared with a year earlier. A Minnesota auto dealer reported recent strong traffic and sales for new and used cars and trucks; service business was also strong. New vehicle sales were robust in North Dakota, but activity was slightly slower from exceptionally strong sales a year ago.\nTourism activity was solid. Respondents to a survey of Minnesota hotels, resorts and campgrounds expect fall occupancy to be somewhat better than in 2012. Tourism businesses in Montana noted strong occupancy levels at hotels and motels and solid activity at tourism destinations through the end of the summer season. Convention business and leisure travel was very good during the past two months in the Sioux Falls, S.D., area, according to an official. However, some South Dakota hotels noted that fall reservations by hunters decreased due to a report that the number of pheasants in the state was down. Tourism destinations funded by the federal government were recently closed due to the partial government shutdown.\nConstruction and Real Estate\nCommercial construction activity continued to grow since the last report. The value of September commercial building permits in Billings, Mont., increased significantly from last year. In Sioux Falls, the value of September commercial permits increased from a year ago. Several commercial building projects were announced in the Minneapolis-St. Paul area since the last report. Robust growth was noted in residential construction, especially for multifamily housing. Several multifamily building projects were announced since the last report. A long-time developer of apartment buildings warned that \u201cmassive\u201d amounts of construction could be a sign of overbuilding. In the Minneapolis-St. Paul area, the value of residential permits in September was up by 47 percent from September of 2012. However, the value of September residential building permits in Sioux Falls and Billings fell from 2012.\nActivity in commercial real estate markets increased since the last report. Contacts noted that several commercial real estate transactions occurred since the last report, including sales and leasing activity at higher rents. A real estate analytical firm reported that retail vacancy rates edged downward in the Minneapolis market in the third quarter. A contact from a hotel chain noted increased occupancy and rates for properties in the Ninth District. Residential real estate markets experienced moderate growth since the last report. August home sales were up 7 percent from the same period a year ago in Minnesota; the inventory of homes for sale increased by 4 percent, and median sale prices rose 14 percent. However, in the Sioux Falls area, September home sales were down 4 percent, inventory was down 5 percent and the median sale price increased 3 percent relative to a year earlier. In La Crosse, Wis., September home sales and the median price declined from September 2012.\nServices\nRecent activity at professional business services firms grew since the last report. A web design firm noted strong demand, but growth was limited by the lack of available talent. A package design firm noted a recent uptick in activity. Architect contacts noted a slight increase in bidding activity. Mortgage and real estate title company contacts reported a continued decrease in refinance activity.\nManufacturing\nDistrict manufacturing activity continued to grow moderately. A September survey of purchasing managers by Creighton University (Omaha, Neb.) indicated that manufacturing activity increased in Minnesota and the Dakotas. An aerospace manufacturer announced a $34 million expansion of a plant in Montana. A producer of landscaping equipment announced plans to expand a Minnesota facility.\nEnergy and Mining\nThe energy sector continued to grow. Late-September oil and gas exploration activity increased in North Dakota and was flat in Montana from a month earlier; production remained at record levels. Several highway expansion projects were under way in western North Dakota to accommodate oilfield traffic. Meanwhile, mining activity increased. Production at District iron ore mines picked up from its lull earlier in the year, but remained slightly below year-earlier levels. A stalled copper-nickel mining development in Michigan\u2019s Upper Peninsula resumed construction after it was sold to another owner. Work began on a Montana plant that will reprocess mining waste for construction and industrial use.\nAgriculture\nAgricultural conditions deteriorated somewhat since the last report. Drought conditions returned to the eastern part of the District in late summer, with parts of eastern North Dakota and central Minnesota seeing severe drought conditions in early September. Crop progress remains behind average due to late spring planting, and yields are likely to be affected. While much of the District corn and soybean crops remain in good or excellent condition, overall quality has fallen in recent weeks. However, in Minnesota, apple growers are expecting a strong harvest. Prices received by farmers in September increased from a year earlier for hogs, cattle, milk, dry beans and chickens; prices for corn, wheat, soybeans, hay, eggs and turkeys fell from a year earlier.\nEmployment, Wages, and Prices\nLabor markets tightened modestly since the last report. Minnesota initial claims for unemployment insurance benefits decreased 12 percent in August compared with a year earlier.\nA web-based image publishing company recently broke ground on a facility in Minnesota that will add at least 300 jobs to the area. A Minnesota manufacturing company expansion will add 50 new positions at its headquarters. Contacts from Minnesota staffing agencies noted increased demand for workers and fewer workers applying for jobs. However, a bank recently eliminated about 330 jobs in Minnesota due to slowing demand for home-mortgage financing, and a Minnesota advertising company recently laid off more than 30 workers in the state. A Minnesota-based retailer announced that it is planning to hire fewer temporary workers during the holiday season than last year.\nWage increases were moderate. According to a recent St. Cloud (Minn.) Area Quarterly Business Report, 43 percent of respondents expect to increase compensation over the next six months, while 56 percent expect no change. In last year\u2019s survey, 41 percent expected to increase compensation, while 58 percent expected no change.\nPrice increases were modest. Most metals prices were relatively level since the last report. Minnesota gasoline prices at the end of September were down about 20 cents per gallon from the end of August and almost 40 cents per gallon from a year earlier.\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 16, 2013\nThe rate of growth in economic activity in the Seventh District slowed a bit in September. Contacts remained generally optimistic, but several expressed concern about the potential impact of a protracted federal government shutdown. Growth in consumer and business spending was modest. Manufacturing production and construction continued to grow at a moderate pace. Credit conditions changed little on balance. Cost and wage pressures remained mild. Corn and soybean yields were higher than expected, contributing to lower crop prices.\nConsumer Spending\nConsumer spending grew modestly in September, falling short of retailers\u2019 expectations. Auto sales increased at a slower pace, but dealers noted continued strength in demand for used vehicles and in the fuel-efficient passenger car and light truck segments. Non-auto retailers reported that back-to-school spending was less than last year. However, sales of electronics and home-related items such as furniture, appliances, building materials, and gardening supplies remained stronger. Retailers expected holiday season spending to be similar to last year.\nBusiness Spending\nGrowth in business spending flattened out in September. Inventories remained at comfortable levels according to most retailers and manufacturers. However, a few noted low inventories of used vehicles and at steel service centers. Growth in capital spending slowed slightly, though contacts reported an increase in productivity-enhancing investments to structures, equipment, and information technology as well as workforce training. The pace of hiring edged lower. Manufacturing contacts noted layoffs in several mining-related industries, and reported cutting back on overtime. Retailers indicated that seasonal hiring plans were about the same as last year, and a staffing agency reported a slight reduction in billable hours. In contrast, contacts continued to report plans to increase employment over the remainder of the year. Demand remained strong for skilled and experienced workers, with many such positions still difficult to fill. Several manufacturing contacts also noted difficulty in finding and retaining entry-level workers.\nConstruction and Real Estate\nConstruction and real estate activity continued to increase in September. Demand for residential construction grew moderately, with single-family homebuilding increasing at a steady pace and multifamily construction softening somewhat. Many contacts worried that higher interest rates could lead builders to cut back on new development projects. Sales of new homes continued to increase as inventories remained low, although growth was not as strong as in previous months. Real estate contacts noted that increasing competition for listings among brokers had pushed commission rates lower. Nonresidential construction grew modestly, as contacts noted an improvement in the outlook for industrial building. Commercial real estate activity continued to expand, although vacancy rates, particularly in the retail sector, remained elevated.\nManufacturing\nGrowth in manufacturing production decreased slightly in September. The auto and aerospace industries were again a source of strength for District manufacturing. Steel production and capacity utilization were steady, with an increase in domestic demand for steel primarily met by a rise in imports. Specialty metal manufacturers reported lower shipments, but remained optimistic for the fourth quarter as order books filled. Demand for heavy equipment continued to be soft, although orders picked up some. Contacts also cited an improving outlook for the industry, driven by an expected recovery in export demand and domestic construction. Manufacturers of construction materials and household appliances experienced a slight decline in demand, but remained optimistic about the recovery in the housing market. Manufacturing contacts, in general, remained cautiously optimistic for the remainder of this year and 2014, but several expressed concern about the confidence of their customers amid the federal government shutdown.\nBanking and Finance\nCredit conditions changed little on balance over the reporting period. Financial market participants noted an increase in market volatility with heightened uncertainty surrounding recent monetary and fiscal policy actions. Banking contacts again noted competitive pressures for commercial and industrial loans, with narrowing spreads and easing standards. Some also expressed concern about the potential deterioration of underwriting standards for these loans. In addition, several contacts cited a modest increase in demand for commercial real estate lending. Consumer loan demand was steady, with a decrease in mortgage lending and an increase in auto lending. Purchase and refinance mortgage activity declined with contacts citing higher interest rates, although increasing home prices led to a modest increase in home-equity lending.\nPrices and Costs\nCost pressures changed little in September. Overall, commodity prices were down slightly. Prices for metals such as steel, copper, and aluminum edged lower. In contrast, contacts reported increases in prices for building materials such as asphalt and concrete as well as for some energy prices. Retailers again noted a slight increase in wholesale prices, although few were able to pass them along to their customers. Wage pressures remained mild, while non-wage labor costs increased. A number of contacts voiced concern about the uncertainty surrounding future employer and employee healthcare costs. In addition, several reported changing their health insurance enrollment periods this year in order to match the deadlines of the Affordable Care Act.\nAgriculture\nAlthough this year\u2019s drought affected the harvest, corn and soybean yields in parts of the District were higher than expected in September. In fact, a contact reported that the local harvest would be the best in four years. Soybean yields were more variable than and not as favorable as corn yields. In the areas affected by drought, subsoil moisture and genetic advances in seeds reduced yield losses. Rains in September slowed harvesting, even damaging some crops that were mature. Crops harvested and sold early brought a premium due to low crop stocks prior to harvest. Since then, corn prices have dropped relatively more than soybean prices. With much of the harvest still unsold, farmers will store more of the crop in the hope of better selling opportunities over the winter. Milk and cattle prices increased from the previous reporting period, while hog prices decreased. Livestock producers continued to benefit from lower feed costs. Fruit crops bounced back strongly from last year\u2019s devastating freeze, leading to lower prices.\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 16, 2013\nReports from business contacts indicate the First District economy continues to grow, at a pace that varies depending on sector. Most retailers and manufacturers report moderate increases in revenue, while consulting and advertising contacts cite robust growth. Residential and commercial real estate markets continue to improve. Aside from consulting, most firms are doing little to no hiring, or hiring only for replacement. Prices are largely unchanged. Firms doing business with the government have been affected by the sequester; other firms are also concerned about potential effects of the government shutdown on consumer demand or broader economic effects of hitting the debt ceiling.\nRetail and Tourism\nThe retail contacts reporting for this round cite September year-over-year comp store sales ranging from a 2 percent decrease to increases in the upper single digits. Consumer demand remains strong for apparel, home improvement items, home furnishings, and sporting goods, with online sales accounting for an increasing fraction of total sales. Inventories are said to be in good shape and prices remain steady. Contacts say that while consumer sentiment seems to have improved over the summer months through mid-September--which they attribute in part to more positive trends in the housing market\u00e2\u20ac\u201cthe recent decline in the stock market and federal government shutdown may damp consumer spending. Respondents note uncertainty about the underlying strength of the economic recovery.\nDomestic and international leisure travel and corporate business travel and entertaining are quite strong. Hotel occupancy rates in Boston and Cambridge reached a nine-year high in August, with average room rates the highest in a decade. However, if the federal government shutdown lasts more than ten days, it could curtail some leisure travel, as domestic leisure travelers seem to operate within a 10-day booking window. October is New England's busiest month of the year for travel, so such a curtailment now could be particularly significant for businesses throughout the region that rely on tourism.\nManufacturing and Related Services\nOf 11 manufacturing firms contacted this cycle, only one, a frozen food producer, reports falling sales. Among firms reporting higher sales, those in the medical and technology areas with blockbuster products report double-digit sales growth, more or less independently of the state of the economy. The rest of the firms generally report year-on-year sales growth in low single digits and, for such firms, small changes are very significant. For example, a diversified firm in the building equipment and aerospace industries reports sales growth of only 3 percent when they expected 4 percent; as a result, the firm has imposed serious restrictions on hiring and, in some areas, substantial layoffs, as the firm attempts to meet earnings targets through cost containment.\nOn the global front, China has reportedly stabilized, but several contacts mention that other emerging markets declined, pointing in particular to Brazil and India. Indeed, a contact at a manufacturer of computer storage devices describes the two countries as \"disasters.\" Interestingly, the devaluation of the Indian currency was good for this firm's income statement because, due to outsourcing, their costs in India exceed their revenues; nonetheless, the contact views the turmoil in India as worrisome news. A firm in the semiconductor industry reports that an unusually long down-cycle in sales appears to have come to an end and that sales have returned to their historic peak, achieved in 2010.\nEight of the 11 contacts say they are keeping employment steady and hiring only for replacement or for key needs. Of the remaining three, one plans to consolidate two business lines and cut headquarters staff, including some highly paid executives. The other two, a drug manufacturer and a computer storage firm, are hiring significantly and roughly in line with their sales growth.\nOnly one contact, a firm in the semiconductor equipment business, reports revising investment plans down recently. The rest are holding steady or accelerating their plans. In particular, the firm planning layoffs is at the same time \"investing for the long run,\" albeit mostly in Asia.\nThe outlook ranges from fair to very good. One contact in publishing expects slow growth for at least the next 12 to 18 months. Another contact said he was, \"increasingly nervous that there is another little slowdown here.\" But many other contacts are quite optimistic, including a firm that had disappointing results in 2013, where the contact expects 2014 to be better.\nSelected Business Services\nConsulting and advertising contacts report a strong third quarter, consistent with a sustainably, but not rapidly, growing economy. Healthcare consultants cite the strongest results, as the double-digit revenue growth of the past few years continues. Demand for healthcare consulting services is driven by increased merger and acquisition activity among providers, adoption of new technology, compliance with new regulations, and the need for organizational change due to structural shifts in the healthcare industry. Demand for economic consulting remains strong, and strategy consultants report that \"the economy is slowly picking up steam.\" Marketing contacts estimate industry-wide growth of 6 percent to 7 percent, driven by large corporate orders and a shift in demand towards higher-value items as companies have more to spend on marketing and branding. By contrast, a government consultant reports a slight drop in revenues and a smaller backlog as the sequester continues to reduce agencies' ability to purchase services.\nMost firms' annual salary adjustments range from 2 percent to 4 percent. A majority of contacts report minimal increases in health insurance costs; however, two cite troublingly large increases. Firms' own rate increases are about 3 percent to 5 percent. Economic and healthcare consulting firms have been increasing employment 10 percent to 15 percent on an annual basis, strategy consultants closer to 5 percent, while marketing and government consultants report little to no hiring.\nContacts expect growth to continue at or moderately above its current level as long as the economy is not hit with a shock. Other than the government contractor, contacts are not worried about the sequester or European uncertainty, and several note that European risk has been \"priced in\" or forgotten about. Several are very concerned, however, about the potential for a debt ceiling-induced financial crisis.\nCommercial Real Estate\nReports from First District contacts describe the region's commercial real estate markets as either stable or strengthening. A Boston contact cites improvement in leasing fundamentals in recent weeks across diverse sectors--including office and assisted living facilities--while investment sales demand is up from an already-strong pace. Redevelopment activity picked up in Boston's retail sector, with plans for filling and retooling vacant space in both urban and suburban locations. Another Boston contact says office leasing activity is roughly unchanged since the last report, with strong demand in the Seaport and Kendall Square areas and comparatively weak demand for locations in the Financial District. Build-to-suit office construction continues in prime neighborhoods but otherwise office construction is negligible in metro Boston. A Portland contact notes significant improvements in leasing fundamentals and investment demand in recent months. In Hartford, the sale of two large office building in recent months has resulted in a significant decline in the office vacancy rate for class A space, from upwards of 25 percent to roughly 17 percent, a decline that should lead to some firming of rents after a long period of stagnation. Also in Hartford, investor demand for prime office and multifamily properties stayed strong. A Providence contact is mostly upbeat, citing a modest uptick in leasing activity in recent weeks and some positive absorption of downtown office space. While leasing volume increased across the region, contacts note that most leasing deals consist of renewals-in-place or relocations of existing firms, with little to no net expansion of firms' footprints.\nIn Boston, local conditions lead contacts to expect more slow-to-modest growth in the commercial real estate sector moving forward, but national economic and political conditions lend uncertainty and downside risks to the outlook. In both Rhode Island and Connecticut, contacts are cautiously optimistic that commercial leasing fundamentals will continue to improve, but note that their respective states face persistent challenges to economic growth, leaving their overall prospects weaker than the U.S. average. A Portland contact is mostly optimistic that southern Maine will continue to see modest growth in leasing fundamentals, but expects investment sales to slow with rising interest rates.\nResidential Real Estate\nResidential real estate contacts in the First District say markets continue to strengthen and they are \"cautiously optimistic\" about the outlook. According to a source in New Hampshire, realtors are no longer talking about returning to a \"non-recession\" market, but rather stating that market conditions have returned to normal. August saw sales of single-family homes and condominiums continuing to increase across the region compared to August 2012. Market participants, however, are watching interest rates closely. Where current market activity is largely driven by first time home buyers--such as in Maine and Connecticut--higher interest rates could slow sales. In other states, rising interest rates may be temporarily spurring activity as buyers attempt to lock in lower rates. With the exception of one state which saw condo prices fall, median prices for single-family homes and condominiums rose in August relative to last year. Inventory trends vary across the states, with Massachusetts seeing inventory for single-family homes and condos low compared to historic norms--making it a sellers' market--while inventory in Maine increased in August compared to a year ago and New Hampshire sources indicate there \"appears to be more balance between buyers and sellers.\"\nWhile First District realtors say that this has been a turnaround year, they fear economic shocks could still stall the recovery. In addition, respondents express concern about negative effects on housing markets of the Biggert-Waters Flood Insurance Reform Act of 2012; they say that lack of affordable flood insurance may cause values to fall and buyer delays in newly redrawn flood zones.\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\nOctober 16, 2013\nSixth District business contacts described economic activity as expanding slowly in September. The outlook among firms remains optimistic as most expect near-term growth to be sustained at or slightly above current levels.\nMost retailers cited slightly improved levels of spending and auto dealers continued to experience solid results. Hospitality reports remained largely positive. Residential brokers and builders continued to witness improvements in many parts of the District as sales and prices of new and existing homes increased compared with a year ago. Commercial development picked up slightly, led by multifamily construction. Manufacturers indicated that new orders and production had increased since the last report. Bankers saw increased volumes for both commercial and consumer loans. Payrolls across the region expanded, albeit at a slower pace than the previous report. Firms noted input costs remained stable.\nConsumer Spending and Tourism\nDistrict retailers continued to report modest spending as consumers remained focused on finding deals. Back-to-school retailers and fast-food establishments cited that sales were slightly lower than a year ago; however, District auto dealers reported continued gains in light vehicle sales. On average, merchants indicated that sales and store traffic were slightly up for the year and are expecting this trend to carry on for the remainder of the year.\nThe travel and tourism sector continued to cite healthy demand in leisure travel as hotel bookings, revenue per available room, and attendance at conventions and attractions all increased. Contacts confirmed a slight increase in hiring, as well as a healthy supply of qualified applicants. However, government cut backs and softening demand from Europe and China were sources of concern for many hospitality firms. Overall, the industry is anticipating the same pace of growth for the rest of the year and into the beginning of 2014 based on reports of advanced bookings.\nReal Estate and Construction\nOverall, District brokers indicated that existing home sales remained ahead of last year's level. In particular, home sales growth continued to improve among Florida brokers while brokers outside of Florida noticed that sales growth remained positive but slowed notably on a year-over-year basis. Brokers also noted a larger than usual seasonal slowdown in buyer traffic. By most accounts, inventory levels continued to decline on a year-over-year basis and home prices continued to rise. The outlook for sales remains slightly positive with half of brokers anticipating sales gains over the next several months.\nDistrict homebuilders said that new home sales and construction were ahead of year earlier levels. However, reports indicated new home sales softened in recent months. Most builders saw modest home price appreciation since the last report. The outlook for new home sales and construction was positive, but the outlook for growth moderated from earlier in the year.\nDistrict commercial brokers noted that demand for space improved at a modest pace towards the end of the summer. Construction activity was described as flat to slightly up on a year-over-year basis with apartment development dominating activity. Contractors noted that government related construction slowed while light manufacturing related construction picked up. Brokers indicated that most markets still favored tenants; however, rental rate increases continued to be noted in select submarkets. The outlook among District commercial real estate contacts remained positive with further improvements expected for the rest of the year.\nManufacturing and Transportation\nMost District manufacturers reported that the pace of growth remained flat or rose slightly in September. New orders, production, finished inventories, commodity prices, and hiring all increased since the previous period while supply delivery times experienced a modest decrease. Auto manufacturers in particular continued to describe solid demand for their products. When asked about their outlook, one-third of regional purchasing managers expect higher production over the next three to six months.\nRegional trucking contacts reported recent increases in tonnage, primarily because of shipments related to housing, autos, and energy. However, truckload and less-than-truckload volumes were described as mostly flat for the year. District ports continued to cite increased activity in the movement of energy products and steel imports, along with an uptick in exports of forestry products, such as wood pellets and resins. Containerized freight growth was seen as mostly even for the year. Regional railroad firms reported significant year-to-date declines in the shipment of agricultural products and military equipment; however, substantial increases in the movement of chemicals and nonferrous scrap metals have offset those declines.\nBanking and Finance\nBankers voiced concern over interest rate risk as they noticed that their competitors were more willing to extend credit and in some cases were aggressively seeking qualified borrowers. According to some contacts, banks seemed to be luring loan business mostly away from each other, rather than creating new opportunities.\nDistrict bankers reported increased activity in owner-occupied commercial real estate, commercial and industrial, manufacturing, small business, and healthcare lending. Consumer loan volume, including purchase/construction mortgages, second mortgages, auto loans, and even credit cards, was strong in some regions. However, mortgage lending overall had slowed as interest rates increased and the refinancing boom subsided. Some contacts mentioned residential real estate lending was now about evenly split between refinancing and new mortgages.\nEmployment and Prices\nSince the last report, the District's overall pace of payroll growth slowed somewhat. In July, Georgia and Florida saw payroll gains greater than the District's monthly average for the year, but August's sizeable contractions in payrolls in those states brought the pace closer to the monthly average. Louisiana saw strong gains in leisure and hospitality employment, particularly in accommodation and food services. The District's rate of unemployment remained unchanged and slightly higher than the national average. Employers continued to report hiring hesitancy related to changes in healthcare regulation and fiscal policy uncertainty.\nInput costs remained largely stable, according to business contacts. The few input costs that were cited as rising were doing so very slowly. According to our September Business Inflation Expectations survey, increases in unit costs remained in the range of 1.3 to 1.7 percent over the past year. Looking forward, businesses expect unit costs to rise by 1.9 percent, on average, over the next 12-months. There were few reports of pricing power and margins remained tight. Wages remained in a range that met expectations of most firms, but some noted upward wage pressures for certain high-skilled workers.\nNatural Resources and Agriculture\nEnergy refiners across the region have been in the throes of expansion as new projects and investments continue to be announced. Contacts reported that demand and inventories of oil and natural gas remained steady. Additionally, transportation of these natural resources to the Gulf Coast for refinement and processing was increasingly occurring via barges and trucks rather than pipeline and rail since those networks are under construction. Contacts indicated that this method of transportation was driving up costs.\nAs a result of this year's excessive rain and flooding, which heavily damaged some crops, the USDA declared most counties in Alabama and many in Georgia, Florida, and Tennessee as natural disaster areas. Since the last report, average monthly prices paid to farmers for corn, cotton, soybeans, hogs, and broilers were down but were up for rice, citrus, beef, and milk. Lower corn prices benefited livestock producers that rely on corn for feed. Compared to August, cotton estimates for September indicated reduced production in Florida, Mississippi, and Tennessee; higher production in Alabama and Louisiana; and unchanged production in Georgia.\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\nOctober 16, 2013\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 positive. Reports from contacts in the retail sector have also been generally positive. Residential as well as commercial and industrial real estate market conditions have continued to improve. Total lending at a sample of small and midsized District banks decreased from mid-June to mid-September.\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 Eighth District, while a smaller number of manufacturers reported plans to reduce employment. Firms in automobile parts, consumer products, magazine, package, tubular products, coiled metal springs, machinery, steel, chemical, specialty chemical, and plastic products manufacturing plan to hire new employees and expand operations in the Eighth District. In contrast, firms in pharmaceutical products, shoes, food, and aircraft manufacturing reported plans to lay off workers in the District.\nReports of planned activity in the District\u2019s service sector have also been positive since the previous report. Firms in distribution, logistics, telecommunication, online shopping, wealth management, transportation, and veterinarian services reported new hiring and expansion plans. In contrast, firms in healthcare services plan to lay off employees. Reports from contacts in the retail sector have been mostly positive, as contacts noted a number of major investment projects and expansions among retail stores and restaurants. In Louisville, contacts noted that retail stores appear to be performing well and new restaurants are opening regularly; contacts also indicate higher traffic at fast food restaurants. In St. Louis, contacts noted high foot traffic and sales at two new outlet malls.\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, August 2013 year-to-date home sales were up 17 percent in Louisville, 19 percent in Little Rock, 10 percent in Memphis, and 8 percent in St. Louis. August 2013 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2012. Permits increased 8.2 percent in Louisville, 21 percent in Memphis, and 17 percent in St. Louis, but decreased 5 percent in Little Rock.\nCommercial and industrial real estate market conditions have continued to improve throughout most of the District. Contacts in Little Rock reported decreased office vacancy rates and increased asking rents. A contact in St. Louis noted a rebound in the industrial real estate market, while a contact in Memphis reported a strengthened industrial real estate market. A contact in northwest Kentucky reported that commercial real estate activity is expected to increase by the end of 2013, while the industrial vacancy rate is expected to decline. Commercial and industrial construction activity also continued to improve throughout most of the District. A contact in central Kentucky noted increased commercial construction in Hardin County. A contact in northeast Arkansas reported that commercial development continued to be strong in northeast Jonesboro. Contacts in St. Louis reported plans for expansion of a manufacturing factory in southwest Missouri and industrial development in north St. Louis.\nBanking and Finance\nTotal loans outstanding at a sample of small and midsized District banks decreased 1.1 percent from mid-June to mid-September. Real estate lending, which accounts for 72.9 percent of total loans, decreased 0.9 percent. Commercial and industrial loans, accounting for 15.7 percent of total loans, remained largely unchanged. Loans to individuals, accounting for 5 percent of total loans, increased 4.6 percent. All other loans, accounting for 6.4 percent of total loans, decreased 9.6 percent. During this period, total deposits at these banks remained largely unchanged.\nAgriculture and Natural Resources\nCrop conditions across the District remained relatively unchanged from our previous report. On average, 89 percent of the District states\u2019 corn, cotton, sorghum, and soybean crops were rated in fair or better condition. Similarly, about 80 percent of the District states\u2019 pastureland was rated in fair or better condition. Harvest progress in the District lagged behind the 5-year average for all five major crops. The District corn, cotton, and rice harvests were 19 percent, 14 percent, and 18 percent behind their five-year averages, respectively. The District sorghum and soybean crops fared slightly better at 9 percent and 8 percent behind their five-year averages, respectively. Year-to-date coal production in the District for August was about 3 percent higher compared with the same period in 2012. In contrast, coal production for August 2013 was about 1 percent lower than in August 2012.\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\nOctober 16, 2013\nEconomic growth in the Second District has continued at a moderate pace since the last report. Contacts indicate some increase in cost pressures, though selling prices continue to be steady to up slightly. Labor market conditions have shown further signs of improvement, and there are scattered reports of wage pressures. General merchandise retailers indicate that sales were generally steady in September and close to plan, while new auto sales have been increasingly robust. Tourism activity has shown some signs of picking up since the last report. Commercial and especially residential real estate markets have shown signs of firming. In contrast, contacts in the manufacturing sector report a pause in growth, and the climate in the financial sector is described as downbeat. Bankers report softer loan demand from the household sector, no change in credit standards, little change in loan spreads, and continued widespread declines in delinquency rates. More broadly, some contacts express concern about potential disruptive effects of a prolonged federal government shutdown.\nConsumer Spending\nRetailers report that sales have been generally steady and close to plan since the last report. A major retail chain reports that sales were on plan in both August and September, with New York City stores continuing to out-perform the rest of the region. One major mall in upstate New York notes that sales picked up somewhat in September whereas another upstate mall indicates that sales have been steady and roughly on par with 2012 levels. Inventories are generally characterized as on plan. Prices are generally described as somewhat more promotional than a year ago.\nBuffalo area auto dealers report that new vehicle sales were steady and strong in August, running 13 percent ahead of a year ago, while Rochester-area dealers report that sales accelerated and were up more than 20 percent. While final numbers are not yet tallied, sales are reported to have remained robust in September. Sales of used automobiles have generally been soft. Wholesale and retail credit conditions for auto purchases continue to be characterized as favorable.\nTourism activity has shown increasing strength since the last report. Manhattan hotels report that revenues were up 5-6 percent from a year earlier in September, following gains of 3-4 percent in both July and August. Occupancy rates remain above 90 percent--up nearly 2 percentage points from comparable 2012 levels--while room rates are up roughly 3 percent. Based on bookings, October looks to be strong as well. Attendance at Broadway theaters picked up noticeably in August and especially in September. After running below 2012 levels for most of this year, attendance was up 5-6 percent from a year ago in September, and total revenues were up 10 percent--in part reflecting some new shows opening.\nFinally, consumer confidence in the region has improved since the last report. The Conference Board's survey of residents of the Middle Atlantic states (NY, NJ, Pa) shows confidence surging to a nearly six year high in September, while Siena College's survey of New York State residents points to a more moderate increase.\nConstruction and Real Estate\nResidential real estate markets in the District have been steady to stronger since the last report. Buffalo-area contacts continue to describe market conditions as robust in both August and September, with brisk sales volume, moderately rising prices, and continued reports of bidding wars. Sales activity in New York City's co-op and condo market was exceptionally brisk in the third quarter--the highest since 2007 and the 2nd highest in 24 years. Sales of smaller (one bedroom) apartments were particularly strong. The inventory of available apartments for sale has fallen to new lows, as completed transactions are outnumbering the flow of new listings. Whereas Manhattan prices have risen only modestly, prices for Brooklyn apartments are reported to be up 10-15 percent over the past year. New York City's rental market has been mixed: while Manhattan rents have stopped rising and are down slightly from a year ago, Brooklyn rents have been rising at a more than 10 percent pace.\nA contact in New Jersey's housing industry reports continued gradual improvement in market conditions. Prices continue to rise modestly, held back by a persistent overhang of distressed properties. The Jersey shore sales market remains tepid, with prices still well below their pre-recession peaks--particularly in areas hard hit by Sandy last October.\nOffice markets were steady to stronger in the third quarter. Manhattan's vacancy rate declined to 7.3 percent--its lowest level in more than four years--while asking rents continued to rise, particularly on Class B properties. Long Island's office vacancy rate also edged down below 8 percent, though asking rents were little changed. In the northern New Jersey and Westchester/Fairfield markets, however, vacancy rates were unchanged at much higher levels, while asking rents were little changed. A New Jersey real estate contact maintains that non-residential construction activity is almost strictly limited to renovations and improvements on existing properties.\nOther Business Activity\nOn balance, the labor market has shown further signs of improving. One major employment agency reports broad-based strength in hiring activity and notes increasing difficulty finding qualified job candidates; more job-seekers are reportedly getting multiple offers and there are now scattered reports of salaries being bid up. Another contact, however, reports more modest improvement and characterizes wage offers as stable. Both contacts report particularly strong demand for IT workers. One employment agency notes that the government shutdown has hampered efforts to do background checks on prospective employees, whereas another contact indicates this has not been problematic thus far.\nA contact in the finance sector characterizes the current business climate as gloomy--hiring has reportedly been mixed, with much of the demand focused on people in legal and compliance fields. Manufacturing firms in the District report some slowing in hiring activity, along with a pause in growth more generally; these contacts are also less optimistic about the near-term outlook. However, non-manufacturing firms generally indicate that both business and hiring activity have increased modestly since the last report, though these contacts have also become a bit less optimistic about the near term outlook and also in their net hiring plans. Both manufacturers and other firms report some pickup in input price pressures but little change in their selling prices.\nFinancial Developments\nBankers reported weakening demand for consumer loans and especially in residential mortgages but increased demand for commercial mortgages. Demand for mortgage refinancing also continued to decrease. Respondents reported no change in demand for commercial & industrial loans. Credit standards were unchanged across all loan categories. Respondents indicated a narrowing in spreads of loan rates over costs of funds for commercial loans and mortgages but no change in spreads for consumer loans and residential mortgages. Finally, bankers report further widespread declines in delinquency rates for all loan categories.\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 16, 2013\nAggregate business activity in the Third District slowed to a modest pace of growth during this current Beige Book period (beginning with the last week of August through the first partial week of October). The slowdown was most evident in the housing sectors--existing home sales slowed to a modest pace of growth, while homebuilders saw sales, traffic, and new contracts decline; however, construction continued at a modest pace. Other sectors that continued to expand at a modest rate included general retail sales, tourism, staffing services, and commercial real estate leasing. Commercial real estate construction continued to expand only slightly. Meanwhile, manufacturing activity improved to a modest pace of growth. Two broad sectors grew at a more than modest pace: Auto dealers continued to report a strong rate of sales growth, and moderate rates of growth continued for general services. 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. The housing recovery has softened somewhat for existing home sellers and new homebuilders, and builders are less optimistic. However, contacts in other sectors continued to express confidence in the underlying economy. In particular, manufacturers and service-sector firms expressed greater 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 the federal government shutdown and implementation of the Affordable Care Act.\nManufacturing\nOverall, Third District manufacturers have reported a significant rebound in orders and shipments for a modest pace of growth since the last Beige Book. Over one-third of firms reported growth. Producers in nearly all sectors of durable and nondurable goods reported stronger activity. The chemicals and allied products industry was a notable exception. Overall, firms continued to report strong demand from auto- and residential construction-related businesses. Numerous firms reported growing demand for exports to Europe, China, and/or South America. However, one large industrial supplier reported continued growth through August, then softening in September.\nOptimism that business conditions will improve over the next six months has broadened among Third District manufacturers. Contacts expect foreign and domestic demand to increase. Consequently, expectations of hiring and capital spending plans have largely rebounded since the last Beige Book, including more talk of \"reshoring\" of production that had gone overseas. However, several firms expect to deploy more capital than labor to meet higher production levels. The federal government shutdown has reignited concerns about fiscal drag, which is of most concern to smaller firms. Otherwise, the U.S. economy is still \"poised to grow.\"\nRetail\nThird District retailers have continued to report modest growth overall since the last Beige Book. Sales in August were generally stronger than in July, especially at outlet malls; sales at traditional mall retailers softened somewhat in the second half of August and then ticked up in early September after most schools had resumed. Convenience store retailers reported similar results but noted softness in discretionary purchases and a reliance on promotions and discounting. Hiring plans reported by area retailers for the 2013 holiday season were generally equal to or greater than last year's--reflecting similar expectations for sales. Some retailers plan to add seasonal workers earlier in what appears to be an effort to extend the shopping season, since the traditional holiday period will be six days shorter than in 2012. The optimistic sales expectations generally assume that the federal government shutdown does not extend beyond two weeks.\nAuto dealers reported that August was a \"killer\" month; however, year-over-year comparisons were boosted by stealing an extra Saturday from September compared with last year. September sales were reported as still very strong, although the lost weekend may account for a little dip from August's pace. In addition, sales slowed for some dealers as they grew low on inventory. Dealers continued to report good prospects for future sales.\nFinance\nOverall, Third District financial firms continued to report modest increases in total loan volume. The most notable difference from the last Beige Book period was a slight drop in commercial real estate loan volumes. Contacts noted that demand for mortgages to purchase homes continued to increase modestly, as did demand for home equity lines and C&I loans. Stronger increases were noted for most types of consumer lending, although volumes for credit cards fell off slightly. Some bankers indicated that home equity lines were being used to pay off remaining low mortgage balances. However, with the rise in interest rates, a mortgage servicing company indicated that prepayments were starting to slow. While some contacts reported growth of activity from medium-sized companies, most continued to report that small businesses remain very cautious. Many banking contacts expressed concerns about aggressive competition on rates and terms, suggesting that credit standards may have eased a little. Overall, most bankers remained optimistic, although they expressed uncertainty on behalf of their business customers and for themselves over the implications of both the Affordable Care Act and a prolonged government shutdown.\nReal Estate and Construction\nThird District homebuilders reported mixed results in August \u00e2\u20ac\u201c from weak demand to \"finished strong.\" However, by the end of September, most builders reported that traffic was down and that very few contracts for new construction had closed. Builders assigned only partial blame to rising interest rates, stressing as well that the pool of potential buyers has been culled by weakened consumer confidence. The recent slowdown has caused builders to adjust their outlook lower. General residential construction activity continues to grow slightly from prior sales. Also, other contacts reported strong demand for home renovations. A final tally of existing home sales also indicated a slower year-over-year pace of growth in August than in July, according to many residential brokers. Sales closed and sales pending barely hit double-digit percent increases (year over year) in a few of the Third District's larger metropolitan areas; the metrics were worse in other areas. Homes sold were nearly flat in the Harrisburg area and fell in the Lehigh Valley. Sales pending grew a mere 2 percent in the Greater Philadelphia area.\nAlthough little change was indicated by nonresidential real estate contacts in the modest pace of overall leasing activity and slight growth of construction, their outlook improved overall. Architecture and engineering firms continued to see stronger interest and workflow. The resurgence of Philadelphia-area refineries continued to reignite strong construction and maintenance operations. Leasing agents, management companies, and commercial market analysts are increasingly upbeat over the 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. Parts of the Jersey shore experienced lighter traffic this season. Hotel activity was on par with previous seasons; however, longer-term rentals were down, suggesting that tourists kept their visits short. A Delaware shore realtor reported slow but steady sales in August and September; however, the realtor did not see the pickup in rentals he was expecting during the summer season.\nOther service firms continued a moderate pace of growth overall. A large IT firm reported a very strong increase in sales as \"the floodgates opened over the last year.\" Another large service firm reported continued moderate improvement in its base business and an increase in new business from last year. A third large firm reported \"not much has changed--a point or two on the softer side,\" but still growing and doing great. Overall, service-sector firms remained optimistic about future growth.\nPrices and Wages\nOverall, price levels continued to increase slightly, similar to the previous Beige Book. Manufacturing firms reported that prices paid and prices received moved higher again; the increases were more widespread this period than last. However, auto dealers and general retailers reported little change in pricing, and builders reported holding prices steady. Most contacts report 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. Some contacts reported high-cost increases for employees' health insurance coverage. However, 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"

National Summary

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"Beige Book: National Summary\nSeptember 4, 2013\nPrepared at the Federal Reserve Bank of San Francisco and based on information collected on or before August 26, 2013. 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 suggest that national economic activity continued to expand at a modest to moderate pace during the reporting period of early July through late August. Eight Districts characterized growth as moderate; of the remaining four, Boston, Atlanta, and San Francisco reported modest growth, and Chicago indicated activity had improved. Consumer spending rose in most Districts, reflecting, in part, strong demand for automobiles and housing-related goods. Activity in the travel and tourism sector expanded in most areas. Demand for nonfinancial services, including professional and transportation services, increased slightly on net. Manufacturing activity expanded modestly. Residential real estate activity increased moderately in most Districts, and demand for nonresidential real estate gained overall. Lending activity was mixed. Lending standards were largely unchanged, while credit quality improved. Demand for agricultural products was strong during the reporting period, but growing conditions and production in some areas were somewhat weak as a consequence of extreme weather. Demand for natural resource products was stable or up slightly, and extraction increased in anticipation of further demand growth.\nFor most occupations and industries, hiring held steady or increased modestly relative to the prior reporting period. Upward price pressures remained subdued, and prices increased slightly during the reporting period. Wage pressures continued to be modest overall.\nConsumer Spending and Tourism\nReports indicated that consumer spending rose in most Districts. A few Districts mentioned that back-to-school sales contributed to overall consumer spending growth. Districts reported retail sales generally grew moderately in Boston, Kansas City, and Dallas; sales were mixed in New York; and sales grew more modestly in Philadelphia, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco. Cleveland noted that sales came in below many retailers' expectations, and Richmond indicated that sales revenues weakened. Boston noted that consumer confidence improved, while New York reported that it retreated a bit. According to reports from Boston, some retailers experienced robust demand gains, with \"year-over-year comparable store sales increases between 4 and 5 percent.\" Many Districts noted strong demand for home furnishing and home improvement items. However, reports from several Districts indicated that consumers remained cautious in their purchases and highly price-sensitive. For example, Philadelphia observed that consumers engaged in \"price-shopping,\" as \"sales of children's apparel were stronger at outlets than at traditional malls.\"\nAttractive financing conditions and pent-up demand supported a robust pace of automobile sales in most Districts. New York noted that sales of high-end brands were especially robust. Richmond reported that one dealership had its best sales month ever, and sales at another dealership doubled relative to twelve months earlier. Used vehicle sales were strong in Chicago, Kansas City, and San Francisco but a bit soft in New York. New car inventories rose or remained high in Cleveland and San Francisco, but dealers were generally satisfied with their inventory positions; by contrast, Minneapolis reported sales were constrained at some dealerships due to a lack of inventory. Reports from dealerships across the nation were optimistic about demand growth for new and used automobiles for the remainder of the year.\nMany Districts pointed to solid gains or high levels of travel and tourist activity, with pickups evident in both the business and leisure segments. Travel and tourism activity expanded overall in the Boston, Philadelphia, Richmond, Atlanta, Minneapolis, and San Francisco Districts. Relative to the same period a year earlier, Richmond and Minneapolis reported that the number of camping permits and visitors at state and national parks in their Districts increased substantially. New York reported that business at Broadway theaters picked up since the previous reporting period, but Boston highlighted low attendance at some museums. New York and Kansas City both reported that some hotels experienced slightly lower occupancy rates, which may be a result of cutbacks in government travel. A few Districts indicated that business travel activity had also expanded.\nNonfinancial Services\nDemand for nonfinancial services improved modestly overall since the previous Beige Book. Adjusting for seasonal fluctuations, providers of various professional and business services such as accounting, consulting, information, transportation, and legal services generally expanded their activities according to reports from Philadelphia, Richmond, St. Louis, Minneapolis, and Dallas. Providers of staffing services in the Boston and New York Districts reported improved business conditions. Several Districts noted increased demand at restaurants, although San Francisco was an exception, with reports from parts of the District indicating that demand had eased. Health-care organizations in the Richmond, St. Louis, and San Francisco Districts reported soft demand for various health-care services. Boston noted that sales of technology services to businesses and consumers were a bit weaker than expected, and reports from St. Louis indicated that some information technology firms may downsize their workforces. Cleveland indicated that ground cargo volumes were strong; Dallas reported an increase in railroad volumes but a decline in small parcel volumes; and Atlanta observed a decrease in overall trucking volumes. Both Cleveland and Atlanta noted a short supply of truck drivers as a consequence of new hours-of-service regulations. Air freight tonnage ran slightly above year-ago levels for the Atlanta District but was unchanged over the past six weeks for Dallas.\nManufacturing\nManufacturing activity expanded modestly during the reporting period. Kansas City noted a slight contraction in the previous reporting period but indicated that manufacturing activity had expanded moderately in recent weeks. Cleveland and Minneapolis also reported a moderate expansion, although Minneapolis specified that the pace of growth was uneven across District states. Atlanta noted a decrease in the pace of growth as indicated by modest decreases in new orders and production. Several Districts, including Philadelphia, Richmond, Atlanta, Chicago, Kansas City, and San Francisco, expressed that demand for inputs related to autos, housing, and infrastructure were strong. Chicago highlighted the auto industry as a main source of strength for that District's overall manufacturing sector, and contacts there expect demand for heavy and medium trucks to ratchet up further and to support growth in overall manufacturing for the remainder of the year. By contrast, Cleveland was the only District to report that auto production activity declined, although reports specified that it was a normal seasonal pattern and sales were up relative to twelve months earlier. In the Richmond District, a lumber company purchased new equipment to expand its production; and in Chicago, demand for construction equipment and materials continued to strengthen. Philadelphia reported some increased demand related to ongoing repairs of infrastructure damaged during Superstorm Sandy last year. Reports from San Francisco indicated that shipments of steel products used in nonresidential construction continued to increase, and reports from Chicago indicated that steel output grew at a moderate pace. Boston and San Francisco noted increased demand for semiconductors. High-tech manufacturing firms in the Dallas District noted that demand was stable, and, while Kansas City District firms reported that sales dipped, contacts there expect sales to bounce back in the next three months. In general, contacts in most Districts expressed optimism about a near-term pickup in overall manufacturing activity. Production in the defense industry was mixed across Districts. Contacts in the Boston District reported minimal direct effects of the federal sequestration, although they were concerned about the prospect of larger effects in the fourth quarter. On the other hand, defense firms in the Kansas City and San Francisco Districts reported that the effects of the sequestration have already been passed through to actual reductions in production.\nReal Estate and Construction\nActivity in residential real estate markets increased moderately. The pace of sales of existing single-family homes continued to increase moderately in most Districts. Sales activity in New York City's co-op and condominium market was described as unusually strong in July and August, and the Cleveland District reported that year-to-date sales of existing single-family homes were up substantially relative to the same period last year. Reports from several Districts suggested that rising home prices and mortgage interest rates may have spurred a pickup in recent market activity, as many \"fence sitters\" were prompted to commit to purchases. Sales of new single-family homes stabilized during the past few months in the Cleveland District after accelerating earlier in the year. New home sales declined slightly in parts of the Philadelphia and Richmond Districts in July. Philadelphia conveyed that some borrowers apparently preferred to lock in a mortgage rate for an existing home rather than wait for a new home to be completed and chance higher mortgage rates. Home prices climbed in most Districts. Richmond and Boston reported that houses in some areas were staying on the market fewer days and increasingly receiving multiple offers. New York noted that bidding wars were common in the Buffalo area. Many Districts reported that limited inventories of desirable properties contributed to upward price pressures. Single-family home construction was strong in the Minneapolis and Dallas Districts, and Chicago reported that a number of builders are planning new developments to begin later this year. However, several Districts noted constraints on the construction of single-family homes. San Francisco pointed to shortages of construction workers. In the Kansas City District, some building materials, such as drywall and roofing shingles, were in short supply.\nDemand for nonresidential real estate increased. Office vacancy rates and other indicators in markets for office space improved modestly in the major metropolitan markets in the New York, Richmond, and St. Louis and Districts. Rents for Class B office space in Manhattan have risen more than 10 percent over the past twelve months. Demand for commercial real estate showed strong growth in the Dallas District and moderate growth in the Minneapolis District. Both Districts reported new plans for construction of industrial space. Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Kansas City, and San Francisco reported modest growth in demand for commercial real estate. Philadelphia highlighted a shift in recent leasing activity toward larger commercial spaces. The Boston, Philadelphia, Cleveland, Atlanta, Dallas, and San Francisco Districts all reported increases in construction of multifamily residential properties.\nBanking and Finance\nLending activity weakened a bit, and several Districts reported less-favorable conditions than in the preceding reporting period. Most Districts indicated no better than modest growth. Loan growth in the Atlanta, Chicago, St. Louis, and San Francisco Districts was slower than in the previous reporting period. Kansas City reported a decline in lending, reversing slight growth earlier in the summer. Several Districts characterized business lending as largely flat. Chicago reported that recent interest rate increases likely were depressing commercial investment. However, Kansas City noted that expectations for better economic conditions and stronger profit growth had offset any effects of rate increases on business loan demand. Demand for mortgage refinance loans declined in the New York, Philadelphia, Cleveland, and Richmond Districts. By contrast, purchase mortgage lending continued to grow moderately in most Districts, although San Francisco noted that applications have dropped a bit in some areas of that District. In the Atlanta District, increases in home values generated a surge in second mortgages, and Philadelphia and Cleveland reported modest increases in demand for home equity lines of credit.\nLending standards were largely unchanged, while credit quality improved. Reports indicated little change in standards across all lending categories. However, a few Districts commented that stiff competition for high-quality commercial borrowers was eroding loan volumes at banks that maintained prudent interest rates and terms. New York reported widespread declines in delinquency rates, especially for consumer loans and home mortgages, while Philadelphia, Cleveland, Richmond, and Kansas City all reported general improvement in loan quality.\nAgriculture and Natural Resources\nDemand for agricultural products expanded during the reporting period, although production activity was limited by extreme weather in some areas. Droughts or dry weather in the Chicago, Kansas City, and Dallas Districts constrained farming activity, but some growing areas within the Chicago and Dallas Districts were relieved by much-needed rainfall. By contrast, extremely wet conditions led to delayed planting and reduced yields for some crops in the Richmond and Atlanta Districts. Kansas City noted that wheat production was below average and corn crops were threatened by disease, and Atlanta and Dallas indicated that the cotton crop was smaller than anticipated. Chicago noted that, despite the dry weather, corn and soybean crops were in better condition than they were during the drought last year. Meanwhile, the St. Louis District anticipates robust production activity, with corn crop yields expected to increase substantially over last year. San Francisco noted that demand was generally strong for most crop and livestock products, and Atlanta found that poultry farming and fruit production were robust.\nFor producers of natural resource products, demand was mostly steady, while production and extraction activity rose. San Francisco reported a modest decline in demand for some oil products, and Dallas reported stable drilling activity at a high level. Contacts in San Francisco and Dallas expect near- to medium-term oil-related sales and production activity to pick up; contacts in Dallas and Atlanta expect drilling activity in the Gulf of Mexico to increase as demand continued to grow. Richmond and Kansas City reported that the number of natural gas rigs increased, but coal production in the Cleveland, Richmond, St. Louis, and Kansas City Districts was below year-ago levels. Minneapolis reported upgrades to a nuclear power plant and development of oil sands production facilities, and Cleveland noted that unconventional drilling activity increased. Mining activity was flat in the Minneapolis and Richmond Districts.\nEmployment, Wages, and Prices\nFor most industries and occupations, hiring held steady or increased somewhat in most Districts. Hiring in manufacturing rose modestly. St. Louis reported increases in employment at a variety of manufacturing firms connected to the auto industry or the home construction industry. Boston, Richmond, and Minneapolis reported shortages of some types of skilled manufacturing workers. Hiring increased for selected services occupations. Increases in demand for information technology workers were widespread. Hiring increased for workers in accounting and health services occupations in several Districts. Retail employment gains were limited. Atlanta reported slight employment increases in Georgia and Florida, and Dallas reported gains in oil and gas producing areas. Cleveland noted that retail employment increases were limited to new stores. Boston and Richmond reported that temporary workers are increasingly being offered permanent employment. A health-care staffing firm in the Boston District reported a 30 percent increase in permanent placements this year. Similarly, a staffing firm in the Dallas District reported \"near-record\" levels of direct hiring by health-care and engineering clients.\nWage pressures remained modest overall. The Boston, Philadelphia, Cleveland, Atlanta, Dallas, and San Francisco Districts reported that wage pressures were largely subdued. Cleveland and Dallas highlighted that, overall, wage pressures at homebuilding and other construction-related firms were contained. New York reported that some firms have become increasingly willing to negotiate salaries, although pay rates have not escalated significantly. Reports from a few Districts highlighted significant labor supply constraints and, in some cases, large compensation increases for workers with specialized skills in selected sectors, including the construction and high-technology sectors in Atlanta and Kansas City and the engineering sector in Dallas. Kansas City also reported that some firms in the retail, leisure, and hospitality industries were beginning to raise wages to attract salespeople, housekeepers, maintenance staff, and clerical staff. Increases in the costs of employee health benefits continued to put upward pressure on overall compensation costs, although Minneapolis indicated that growth in the price of health-care has slowed.\nUpward price pressures were subdued, and price increases were limited during the reporting period. Reports from many Districts indicated modest growth, no change, or slight decreases in overall commodity and input prices. In a few Districts, prices of some construction inputs in short supply increased, including lumber, drywall, concrete, and roofing shingles. However, Cleveland noted that the rate of increase for construction input prices slowed, and lumber prices in the Chicago District declined. Dallas reported that law firms had reduced their billing rates slightly. Atlanta and Chicago reported that firms have limited pricing power in general. Similarly, food costs continued to increase in the Kansas City District, but most restaurant owners did not increase menu prices. However, Richmond reported that several construction-related businesses said that they were able to pass along rising input prices.\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 4, 2013\nEconomic conditions in the Fifth District improved moderately since our last report. Manufacturing shipments and orders rose, and capital spending increased. Retail weakened, with the exception of robust auto sales. Revenue growth was strong among non-retail services firms and tourist destinations reported good attendance. In banking, lending activity slowed somewhat under the pressure of higher interest rates. Residential real estate and construction activity varied, while commercial real estate and construction markets were little changed. Heavy rains in the Mid-Atlantic hindered harvests and raised concerns about crop damage. In energy markets, natural gas production increased sharply as more infrastructure came online; in contrast, coal mining declined. Conditions in District labor markets improved modestly. Growth in manufacturing prices for inputs and finished goods slowed; service sector price increases also slowed. Average wages rose in both sectors.\nManufacturing\nManufacturing shipments and orders rose moderately, and reports of greater spending on plant and equipment increased. Producers of auto parts, plastics, and textiles were buying machinery. A lumber company executive said his business had purchased new equipment to increase production in response to higher order volume. Another contact indicated that demand had picked up for mid-range and high-end cabinetry. In contrast, a furniture producer reported that all employees had to take unpaid time off in recent weeks, and a machine parts manufacturer worried that he might have to begin layoffs by early autumn. According to our latest manufacturing survey, growth slowed in prices of both raw materials and finished goods.\nPorts\nDistrict port contacts indicated that bulk and container shipments grew briskly in recent weeks. Agricultural products accounted for much of the increase in exports, while auto-related products were a large share of the growth in imports. Coal exports declined in recent weeks while remaining slightly up for the year. The ports' peak season began in July, as retail imports allowed stores to stock up for the holidays. Port officials were monitoring developments in the Middle East closely because the Suez Canal is a \"vitally important artery\" for shippers.\nRetail\nSales revenues weakened since our last report. Retail and wholesale suppliers of construction inputs gave mixed reports. A West Virginia building materials wholesaler commented that his sales were flat and cautioned, \"Contractors who normally have a six-month backlog of work are down to two months.\" Several grocers, convenience stores, and pharmacies also reported flat sales, while sales at art and hobby shops and an electronics retailer declined. Auto sales were strong; a dealer in West Virginia remarked that his dealership had its best thirty days ever this summer and a dealer in the Washington, D.C. beltway area said his sales doubled compared to this time last year. He noted, however, that purchases were based on need, rather than discretionary spending. Average retail price growth picked up slightly. In particular, a grocery wholesaler noted gradual but steady increases in his cost of meat, poultry, and seafood.\nServices\nNon-retail services firms reported generally robust growth in recent weeks. Among the categories noting stronger revenues were architectural services, IT, business law, advertising, and accounting. A financial services executive reported that clients were becoming more aggressive with respect to the amount of risk they would assume while remaining \"a little nervous under the surface.\" Construction-related businesses such as contracting reported more bidding opportunities and project starts; several also commented that they were able to pass along rising input prices. Healthcare organizations reported softer demand and many were making cost reductions to help offset lower reimbursements, sequestration, and uncompensated care. Smaller hospitals continued to express concern about their viability under the Affordable Care Act, and the solution for some has been to pursue affiliation with a larger healthcare system. Growth in overall services prices slowed.\nTourism representatives reported strong attendance at resort locations. Year-over-year National Park visits in the Washington, D.C. area increased. A contact on the outer banks of North Carolina indicated hotels bookings were up and rentals were good, albeit not quite \"the banner year\" people had expected. She noted that restaurants were generally busy, although budget-conscious tourists were primarily frequenting \"tapas and deck parties\" instead of fine dining establishments. A resort executive in western Virginia reported that occupancy rose and revenues increased by double digits over this time last year. He observed that \"the family vacation seems to be coming back.\"\u00a0In central North Carolina, an hotelier reported that corporate bookings were up, while government stays fell.\nFinance\nThe pace of growth in District lending slowed somewhat as many bankers reported a drag from higher interest rates. On the business side, contacts generally indicated that any adverse impact from the modest increase in interest rates was being offset by expectations for better economic conditions and stronger profit growth. One banker flatly stated that \"CFOs understand that rates remain near historically low levels.\" Small business loan volumes increased modestly. A lender in the D.C. area noted that some small businesses that wanted to grow were looking to do so through acquisitions. Most banks reported no changes in standards and terms for business loans, although competition was reportedly testing lenders' discipline. New residential mortgage lending was said to be holding up, but virtually every banker said that refinancing had slowed. Overall, mortgage loan volumes were reported to be modestly lower. Demand for other types of household loans held fairly steady, and metrics of consumer credit quality displayed fewer signs of duress.\nReal Estate\nReports on residential real estate and construction activity were more varied since the last survey period. Several Realtors said that demand for owner-occupied homes remained firm and a dearth of quality inventory was leading to fewer days on the market, more multiple offers, and higher selling-to-asking price ratios. Some reports suggested that rising home prices and mortgage interest rates may have boosted demand in the near term as many \"fence sitters\" were moved to make a decision. While homes remained affordable, one contact said that \"they aren't the screaming bargain they once were.\" Residential construction activity increased at a slower rate. A homebuilder who develops in the Carolinas reported that sales and traffic through models edged lower since our last report, although he could not determine if this was due to higher interest rates or a typical summer lull. A builder in Northern Virginia noted a similar slowdown, but added that activity had picked up in early August as potential homebuyers adjusted to higher mortgage rates. He expected that strength to be sustained.\nCommercial real estate and construction markets were little changed in recent weeks. Contacts in most areas reported that vacancy rates continued to decline modestly in office and industrial markets, while retail vacancies remained very low. There were a few suggestions that rents were firming and several real estate professionals noted that landlords were offering fewer concessions to potential tenants. Given the rather steady improvement in vacancy rates, and lack of construction in recent years, respondents in many areas expected commercial construction to pick up momentum in late 2013, particularly in the office and industrial markets.\nAgriculture and Natural Resources\nHeavy rains in the Mid-Atlantic delayed the harvest of some grains and hay cutting, particularly in the lowlands of the Carolinas. According to one source, cotton, peanuts, and soybeans might be damaged by the unusually high levels of precipitation. Another contact in South Carolina noted that some late crops could not be planted and root systems of plants in the ground have not developed well because of the rain. He added that cotton and tobacco crops \"do not look good at all.\" A number of contacts noted that corn prices had risen and were expected to remain high for some time. Prices of beef and pork were also up, according to sources. Poultry farming and fruit production were strong in recent weeks. Results of our recent agricultural credit survey indicated that farmland values remained relatively constant since the beginning of this year.\nNatural gas production increased sharply as more infrastructure came online. An industry executive expected production and rig counts to continue to rise. Another contact stated that demand for District coal had declined further since our last report, idling some mines and resulting in large layoffs.\nLabor Markets\nLabor market conditions improved modestly since our last report. Employment increased in most areas. Demand increased for workers in financial services, accounting, IT, health services, and manufacturing. Reports of difficulty finding workers with the \"correct\" skills were widespread, and a West Virginia contact commented that it was difficult to find people \"at any price.\" A Virginia executive noted that workers went from temporary to permanent employment more frequently, while a source in North Carolina indicated that temporary assignments were lasting longer than they did a year ago. Our most recent survey results were generally consistent with other accounts: hiring increased somewhat at manufacturing and non-retail services establishments, while retail employment declined slightly.\u00a0Average wages rose in the manufacturing and service sectors, including retail.\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 4, 2013\nAccording to reports from Sixth District contacts, economic conditions modestly improved from July to mid-August. Most businesses noted a positive outlook for the remainder of the year.\nMerchants indicated a slight pickup in retail sales and automobile sales were strong. The travel and tourism sector remained a bright spot across much of the District. Residential real estate continued to recover at a solid pace as sales and prices stayed ahead of last year's level. However, low housing inventories were still restraining sales growth. Commercial real estate contacts reported slight improvements in demand and construction activity. Manufacturers cited a decrease in new orders and production. Bankers noticed very little pickup in loan activity, overall. District payrolls improved slightly. Input cost increases were described as being relatively subdued by most firms.\nConsumer Spending and Tourism\nDistrict retailers indicated that sales rose slightly from July to late-August. Reports described consumers as remaining cost conscious. Automotive dealers noted that year-end projections are being revised up as truck sales strengthen mostly from contractors purchasing vehicles again.\nHospitality contacts continued to witness strong travel and tourism activity this summer. Overall demand in the sector remained on the rise resulting in a pickup in hiring of both full-time and part-time workers, although the cruise industry reported a decrease in both domestic and international demand as a result of the recession in Europe and a slowing economy in China. With the exception of cutbacks in travel in the government sector, the industry is forecasting steady growth for the remainder of the year.\nReal Estate and Construction\nDistrict brokers continued to report that existing home sales and prices remained ahead of last year's level. When polled about rising mortgage rates, some said business had improved as buyers moved to lock-in rates. However, nearly half of respondents also said that rising rates were having a negative impact on their business by slowing buyer traffic, disqualifying some buyers, and forcing some to shift to lower price points. Inventory shortages persisted and were seen as a major factor restraining sales. Low inventory levels continued to put upward pressure on home prices in many submarkets across the District. Even so, the outlook for sales growth remained slightly positive, with the majority of brokers anticipating sales gains over the next several months.\nDistrict homebuilders cited that new home sales and construction were ahead of year earlier levels. The majority of builders said that rising rates were not having an impact on their business. Most builders reported that the availability of development and construction financing remained below demand, new home inventories were below the year earlier level, and prices rose modestly. The outlook for new home sales and construction was positive, but the outlook for growth continued to moderate from earlier in the year.\nDistrict commercial brokers noted that demand for space improved at a modest pace during the summer. Construction activity was described as flat to slightly up from earlier this year with apartment development dominating activity. Brokers reported that most markets still favored tenants; however, rate increases continued to be noted in select submarkets. The outlook among District commercial real estate contacts remained positive with further improvements expected for the rest of the year.\nManufacturing and Transportation\nWhile the majority of the region's manufacturers cited expanding activity, the pace of growth decreased from July to mid-August. New orders and production experienced modest decreases which contributed to the slowing of activity. However, a number of firms, especially those in the auto sector, continued to report solid demand for their products. When asked about their outlook, one-third of regional purchasing managers expect higher production over the next three to six months.\nRegional railroad companies noted that total year-over-year volumes remained flat; however, growth was seen in shipments of petroleum-related products, forest products, nonferrous scrap metals, and metallurgical coal. District ports cited robust activity in the movement of energy products as well as rubber and steel used in automobile production. Reports were mixed for containerized cargo volumes. Air cargo contacts stated that year-to-date air freight tonnage rose slightly from a year ago with notable increases in imports, while declines in exports were attributed to the recession in Europe and a slowing economy in China. District trucking companies reported a slowdown in year-over-year volumes. The recent implementation of the \"Hours of Service\" regulation, which restricts driving hours, and a short supply of new drivers were mentioned as limiting growth opportunities.\nBanking and Finance\nBanking contacts did not witness any noticeable increase in overall lending as most borrowers had already taken advantage of lower rates. However, the recent uptick in rates did motivate many businesses to move to lock-in rates through refinancing. Some bankers also reported a pickup in loan volume for lending products such as second mortgages, credit cards, auto lending, and commercial lending. A surge in second mortgage requests was caused by increasing home values. Qualifying new business loans remained fairly scarce with many banks competing over the same few loans.\nEmployment and Prices\nSince the last report, the region's pace of payroll growth improved modestly. Gains were seen in Georgia and Florida, as those states saw slight payroll increases in retail, leisure and hospitality, and professional and business services. On balance, firms were hesitant in hiring new staff due to various uncertainties, with healthcare reform mentioned most frequently. Similarly, in recent polls, contacts expressed a clear preference for investing in capital expenditures to improve efficiencies and reduce costs rather than hiring additional labor.\nGrowth in input costs was muted for most businesses as price inflation for crude and intermediate materials remained relatively subdued. According to our August Business Inflation Expectations survey, costs were up 1.7 percent from the previous 12 months and were expected to rise to 2.0 percent in the year ahead. Businesses continued to note tight margins and very little pricing power. Wage pressures were largely subdued, except for industries where workers are in short supply, such as information technology and specialized construction. Wage increases in the 2 to 3 percent range remained standard, with the distribution of increases weighted toward workers whose skills are in highest demand.\nNatural Resources and Agriculture\nEnergy refiners reported a pickup in activity, with more oil flowing into the region from the central U.S. and Canada. Rail transport capacity expanded for crude oil and liquid feedstocks, with large off-loading and increased storage capacity occurring along the coast. Contacts expect deep-water drilling in the Gulf of Mexico to continue to expand.\nSince the last report, most of the District received ample or, in some cases, excessive rain. These rains have resulted in problems with pesticide efficacy, delayed planting, and damage or reduced yield for some crops. On a year-over-year basis, prices paid to farmers were elevated for meat protein (beef, hogs, and broilers), corn for grain and cotton saw price reductions, and soybean prices remained unchanged.\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 4, 2013\nEconomic growth in the Second District has continued at a moderate pace since the last report. Contacts indicate that cost pressures remain moderate, while selling prices continue to be steady to up slightly.\u00a0 Labor market conditions have shown further signs of improvement, while wage increases have remained subdued. Retailers report that sales picked up a bit in July and August and were on or close to plan; new automobile sales have strengthened since the last report. Tourism activity has been mixed since the last report. Commercial and especially residential real estate markets have shown signs of firming. Finally, bankers report steady to somewhat softer loan demand, little change in credit standards, some leveling off in loan spreads, and widespread declines in delinquency rates.\nConsumer Spending\nRetailers report that sales were mixed but on or close to plan in July and early August. A major retail chain reports that sales were on plan in July and in early August, with New York City stores out-performing the rest of the region somewhat. One major mall in upstate New York notes that sales have picked up in recent weeks, following a sluggish June when sales were hurt by inclement weather. However, another upstate mall reports that sales are down slightly from a year ago, in part reflecting fewer Canadian shoppers. Inventories are generally at or near desired levels. Prices are generally described as stable, though a few contacts say there is significant discounting.\nAuto dealers in the Buffalo and Rochester areas report that new vehicle sales strengthened in July, running roughly 15 percent ahead of comparable 2012 levels; early indications are that sales in August have been similarly robust. High end brands are reported to be selling particularly well. Sales of used automobiles have been mixed but generally soft. Wholesale and retail credit conditions for auto purchases continue to be characterized as favorable.\nTourism activity has been mixed since the last report. Hotels across parts of upstate New York have seen some decline in occupancy rates. Business at Broadway theaters has picked up somewhat from mid-July to mid-August; attendance is still down modestly from a year earlier but not by nearly as much as in June and early July. Moreover, revenue was running ahead of comparable 2012 levels in July and the first part of August--the first such gain since March. Finally, consumer confidence in the region has retreated slightly since the last report: both The Conference Board's survey of residents of the Middle Atlantic states (NY, NJ, Pa) and Siena College's survey of New York State residents show confidence declining modestly in July but running roughly on par with a year earlier.\nConstruction and Real Estate\nResidential real estate markets in the District have strengthened since the last report. Buffalo-area contacts describe market conditions as very robust, as demand continues to outstrip supply. Thus far, there has been little new construction, and the lack of inventory has pushed prices up. Bidding wars are common for desirable properties. Similarly, sales activity in New York City's co-op and condo market has been unusually strong in July and August. The inventory of available apartments for sale has declined further and is at new lows, except at the high end of the market. Prices have been rising only modestly in Manhattan, though in Brooklyn, prices are reported to be up by close to 10 percent over the past year. Manhattan's rental market appears to be at a plateau: rents have leveled off and are up only marginally from a year ago. Brooklyn rents, on the other hand are up 5-10 percent over the past year. As in the sales market, the inventory of available rentals remains tight throughout New York City.\nAn authority on New Jersey's housing industry reports that market conditions continue to improve gradually: sales activity has picked up somewhat and prices of existing homes are up roughly 2 percent from a year ago. Multi-family construction activity has been robust but single-family construction remains sluggish; there continues to be little or no spec building. A sizable inventory of distressed properties persists. The New Jersey shore rental market has not yet recovered to 2012 levels; markets in communities hardest hit by Sandy remain particularly depressed.\nCommercial real estate markets across the District have been steady to slightly firmer since the last report. Manhattan's office vacancy rate remains little changed at a low level and is down modestly from a year ago; asking rents for Class A properties have been flat, whereas rents on Class B office space have been trending up and have risen more than 10 percent over the past year. Office vacancy rates in Northern New Jersey, as well as in Westchester and Fairfield counties, have come down since the beginning of this year, though they remain elevated. Long Island's vacancy rate is steady at a low level. Office markets in the Buffalo and Rochester areas have been stable, while Albany's has been somewhat softer.\nOther Business Activity\nThe labor market has shown signs of strengthening. One major employment agency notes that summer business has been unusually strong across the board--in terms of both industries and occupations. Another major agency describes the improvement as more gradual. Both these contacts report that people are finding jobs more quickly and that demand for IT workers has been particularly strong. Companies are also described as increasingly negotiable on salary, though pay has yet to start escalating significantly.\nManufacturing firms in the District report a pickup in employment levels, and a growing proportion of contacts plan to add workers in the months ahead. More broadly, manufacturers report that business activity has continued to improve modestly since the last report, that input price pressures are steady and that selling prices are little changed. Non-manufacturing firms indicate that both business and hiring activity have been steady since the last report, though these contacts have become a bit more optimistic about the near term outlook and also in their hiring plans. Service sector firms report that cost pressures remain somewhat widespread but are more subdued than earlier in the year.\nFinancial Developments\nSmall- to medium-sized banks in the District report a decrease in demand for residential mortgages but little change in demand for other types of loans. Bankers report fairly widespread declines in refinancing demand--more so than at any time in the past three years. Respondents indicate that credit standards are little changed across all loan categories. Spreads of loan rates over costs of funds are reported to have narrowed, on balance, but to a lesser extent than has been the case for most of the past two years. Finally, bankers report widespread decreases in delinquency rates, particularly for consumer loans and residential mortgages.\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 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, manufacturing, energy and agriculture. Growth in residential real estate and construction has slowed somewhat, but is still strong. The mining sector was flat, and professional services were mixed. Hiring announcements were more prevalent than layoff announcements since the last report. Wage increases were moderate. Prices were relatively level since the last report.\nConsumer Spending and Tourism\nConsumer spending increased modestly. A Montana mall manager reported that sales increased about 5 percent in June and July from a year earlier. Recent same-store sales at a Minnesota-based retailer were up slightly compared with last year. In the Minneapolis area, a mall manager noted that summer traffic and sales increased slightly compared with a year ago, while another mall reported modest decreases in traffic and increases in sales. Truck and car sales during the summer were generally higher at a number of dealerships in Montana, according to an auto dealers association; some dealerships noted that sales were constrained due to a lack of inventory.\nTourism increased from a year ago. Summer tourism activity was strong after a slow start in northern Wisconsin, according to a representative of a chamber of commerce. The number of visitors to Glacier National Park in Montana increased more than 5 percent compared with a year ago. Tourism activity was solid in southwestern Montana. Camping permits and revenue at state parks in South Dakota were up from last year.\nConstruction and Real Estate\nCommercial construction activity continued to grow since the last report. A commercial real estate research firm noted an increase in planned construction of industrial and medical office space in the Minneapolis-St. Paul area. The value of July hotel building permits in Billings, Mont., increased significantly from last year. However, in Sioux Falls, S.D., the value of July commercial permits was down from a year ago. Growth has slowed somewhat but is still strong in residential construction. In the Minneapolis-St. Paul area, the value of residential permits in July was up by 25 percent from July of 2012. The value of July single-family residential building permits in Billings was up 24 percent from last year; multifamily building increased by $23 million. However, the value of July residential building permits in Sioux Falls fell from 2012.\nActivity in commercial real estate markets increased since the last report. A commercial real estate professional noted an increase in transactions, including a portfolio of retail centers, a large distribution center, an office building, a mixed-use property and a hotel in the Minneapolis-St. Paul area. Growth has slowed somewhat but is still strong in residential real estate markets. July home sales were up 13 percent from the same period a year ago in Minnesota; the inventory of homes for sale increased by 1 percent, and median sale prices rose 13 percent. In the Sioux Falls area, July home sales were up 25 percent and inventory was down 11 percent, but the median sale price decreased 3 percent relative to a year earlier.\nServices\nRecent activity at professional business services firms was mixed, depending on the service. An information technology consulting contact noted continued strong demand. A health care consulting contact said business was up. Mortgage and real estate title company contacts reported an increase in purchase activity but a decrease in refinance activity. An architectural contact noted flat activity since the last report. A large Minnesota-based law firm noted a slight decrease in July billable hours compared with a year ago primarily due to reduced merger and acquisition business.\nManufacturing\nThe District manufacturing sector continued to grow moderately. A July survey of purchasing managers by Creighton University (Omaha Neb.) indicated that manufacturing activity increased in Minnesota and the Dakotas; the pace of growth rose in South Dakota but declined in North Dakota and Minnesota. An electronics manufacturer recently broke ground on a new plant in Minnesota. However, a large beef slaughter and packing facility in South Dakota filed for bankruptcy in July.\nEnergy and Mining\nGrowth in the energy sector continued, while mining activity was flat. Oil and gas exploration activity decreased slightly in mid-August in North Dakota and Montana from a month earlier. The Bureau of Land Management in South Dakota recently auctioned off 50 oil and gas leases, indicating that exploration is expanding into the area, but activity is expected to be modest relative to North Dakota. An electricity utility completed multiyear upgrades to a nuclear power plant in Minnesota, at a total cost of nearly $600 million. Two facilities that will serve Canadian oil sands development are under construction in Montana. July output at District iron ore mines was slightly above its year-earlier levels after several slower months. Some Minnesota and Wisconsin mines that produce sand for hydraulic fracturing have idled recently.\nAgriculture\nConditions for District agricultural producers improved since the last report. While progress remains slower than average, recent warm and dry weather has helped crops catch up, as the majority of the corn, soybean and spring wheat crops are listed in good or excellent condition in all District states. According to the Minneapolis Fed's second-quarter (July) survey of agricultural credit conditions, 90 percent of respondents said farm incomes increased or held steady over the previous three months, with similar results for household and capital spending. Despite the wet beginning to the growing season, USDA estimates indicate that acres of corn and soybeans planted in District states saw only a small decline compared with last year. North Dakota wheat acreage fell nearly 1 million acres, or 12 percent, from last year. Prices received by producers increased in July from a year earlier for cattle, hogs, milk, eggs, chicken, hay and potatoes; prices for corn, wheat, dry beans and turkeys fell, while soybean prices were flat.\nEmployment, Wages, and Prices\nHiring announcements were more prevalent than layoff announcements since the last report. A new information technology support center broke ground in South Dakota that will bring 200 jobs to the state. In Minnesota, a manufacturer recently completed an expansion of its headquarters, with plans to hire 200 new workers over the next few years. Another manufacturer recently purchased a new industrial building in Minnesota and will hire 100 new workers. A representative of a Minnesota staffing firm noted continued solid demand for temporary work placements. Some district manufacturers were having difficulty filling job openings for technical positions due to a lack of suitable workers. In contrast, the aforementioned South Dakota meat packer laid off about 250 workers and a bank in Minnesota is laying off 160 employees due to slowdown in mortgage refinancing activity.\nWage increases were moderate. A Minnesota county recently offered a contract to union employees with wage increases of 4.5 percent, spread over three years.\nPrices were relatively level since the last report, with some exceptions noted. Recent fertilizer prices were down from a year ago, while lumber prices were up about 10 percent compared with last year. Metals prices increased somewhat since the last report. Representatives of health systems with operations in the District noted that medical cost inflation subsided recently, and they expect it to remain relatively subdued going forward.\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 4, 2013\nThe Eleventh District economy expanded at a moderate pace over the past six weeks. While many respondents noted steady demand, there were more noting improving versus declining demand. Sales grew for firms in residential construction, retail, accounting, fabricated metals, food and kindred products, and automobile dealerships. Financial firms and paper producers reported a decline in demand. The energy sector noted some flattening of activity at high levels. Drought continued to plague the region although recent rains have slightly improved growing conditions in some areas.\nPrices\nMost responding firms said that prices were stable since the last report. Contacts in oil, paper and beef production reported slight increases in prices while law firms and retailers noted slight price reductions. Fabricated metals producers and accounting firms said that increasing cost pressures may result in price increases in the coming months. Contacts in the residential housing sector noted that overall home prices in most major metros continued to rise at a moderate to fast pace. Energy prices were mixed, with natural gas prices holding steady and the price of West Texas Intermediate crude rising to an average of $104 per barrel over the past six weeks. Gasoline and diesel prices declined modestly.\nLabor Market\nEmployment was flat to slightly higher at most responding firms with few reports of layoffs. Wage pressures remained subdued except in the case of a few professions such as information technology and engineering. Construction-related contacts noted some labor shortages, although there were no reports of wage pressures. Contacts in auto dealerships, primary metals, high-tech manufacturing and accounting firms said that employment was up slightly. Retailers reported flat employment growth, except in oil and gas producing areas where jobs continued to grow. Financial firms reported a slight decline in jobs.\nManufacturing\nConstruction-related activity was mixed, according to respondents. Some contacts reported flat to slightly improved demand, although one contact noted strong demand from Houston infrastructure projects. Fabricated metals producers noted demand was up due to oil and gas activity and outlooks were positive. Primary metals producers said demand held steady, but outlooks were mixed, with some concern for the rest of the year.\nFood producers said demand picked up since the last report and the pickup was above normal seasonal increases. Paper producers noted weak demand and uncertain outlooks.\nRespondents in high-tech manufacturing said that growth in demand remained stable at a modest pace since the last report. Demand for tablets and cloud-related products continued to grow strongly while personal computer-demand remained weak.One contact noted a pickup in U.S. demand for communications infrastructure. Employment was reported as flat to slightly increasing. While overall wage pressures were modest, in some locations, such as Austin, respondents said that competition for skills such as electrical engineering was driving wages higher and causing employees to change jobs more frequently. Respondents remain cautiously optimistic about growth over the next six months with one respondent noting that growth has become more persistent in recent quarters\nRetail Sales\nRetail sales picked up since the last report, spurred in part by back-to-school shopping. According to two national retailers, Texas sales continued to outperform the national average. Contacts' outlooks through the end of the year were positive.\nAutomobile sales picked up over the reporting period, and demand was up from year-ago levels. Inventories continued to vary by manufacturer. Selling prices remained stable, but contacts expect an increase with the new model year this fall. Contacts' outlooks for the rest of the quarter and the rest of the year were optimistic.\nNonfinancial Services\nStaffing firms' reports were mixed, with one contact reporting near-record levels of direct hiring, especially in engineering and healthcare, and other contacts reporting declines in hiring in manufacturing and logistics. Outlooks were also mixed.\nLegal firms reported modest growth in demand for services, a positive sign after mixed growth in the second quarter. There was a continued absence of transactions and litigation work--with the exception of robust intellectual property litigation demand. Rates were unchanged, and collections were good, although not as good as last year. Employment was roughly flat, with many partners moving laterally, but some firms were actively seeking experienced associates. A small number of summer clerks were offered jobs starting next summer. Associate compensation at large firms rose to match associate compensation at New York firms. The outlook is for modest hiring and growth over the next two months, with some recent growth in transactions work spurring more optimism\nAccounting demand remained strong and exhibited growth across the board. Rates remained stable, and wages have increased or will increase moderately. Firms continued to hire, and headcounts were up. A San Antonio contact noted it was hard to find good, experienced candidates because of competition from other firms. The outlook is for a strong close to the quarter with robust backlogs for the next six months.\nTransportation service firms noted that cargo volumes were mixed, with increases in railroad and container volumes, but flat air cargo and declining small parcel volumes. Rail volumes were boosted by robust growth in petroleum shipments.\nAirline contacts said demand was seasonally down but bookings and yields were up year-over-year. Demand was strong over the summer and the outlook is quite optimistic compared to last year.\nConstruction and Real Estate\nSingle-family housing activity remained strong over the past six weeks according to contacts. Most responding firms noted that new home construction has increased in response to robust sales, especially in the Houston, Dallas and Austin metro areas. Some contacts expressed concern about the high level of multi-family construction in major Texas metros, but overall apartment occupancy rates improved since the last report. Contacts are mostly optimistic in their forecasts through year-end.\nOffice and industrial construction was reportedly rising, with several announced projects in the Dallas/Fort Worth and Houston areas. Overall, Texas commercial real estate markets continue to fare well compared to other parts of the U.S. Contacts noted moderate to strong growth in rental rates in most commercial real estate sectors as leasing activity has increased.\nFinancial Services\nFinancial institutions experienced a modest decline in loan activity and the level of loan demand was soft. Demand for real estate loans, especially in the San Antonio and Austin, areas was good, with the exception of weakness in multi-family real estate lending. Contacts reported loan quality was good and continued to improve and borrowers continued paying down debt. Loan pricing remained competitive. Deposit volumes remained strong and grew at a moderate pace, although slower than a year ago. Deposit rates were mostly unchanged, with increases on some long-term certificates of deposit. The outlook for financial institutions is for continued softness in lending; however, there is a good pipeline for loans, and there is hope for more mergers and acquisitions activity according to responding firms. The finalized Basel III regulations were a relief to community bankers.\nEnergy\nDrilling activity was little changed at high levels. Global demand held steady. Respondents expect improvement in energy activity in the second half of the year, due in part to anticipated increases in rig activity and production from the Gulf of Mexico. The recent increase in oil prices has increased the cost advantage of domestic petrochemicals firms.\nAgriculture\nDrought conditions continued to affect most of the district, although the severity in several areas was eased by unusually good July rainfall. Farmers began harvesting row crops, and conditions were mostly fair to good. The cotton crop is expected to be smaller than previously anticipated, causing cotton prices to improve slightly. Feeder cattle prices rose over the reporting period because of tight supplies and lower feed costs.\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 4, 2013\nEconomic activity in the First District continued to expand at a modest pace. Most contacts reported low-to-moderate single digit year-on-year growth rates. Higher interest rates appear to have different effects on commercial real estate where some contacts reported upward pressure on capitalization rates and residential real estate where contacts report that the prospect of rising rates \"nudged\" buyers into the market, increasing demand.\u00a0 No firms report major cyclical layoffs but hiring remains subdued except among fast-growing technology firms. Sequestration has yet to have had any direct effect on contacts with major government businesses but contacts anticipate weakness in the future. Contacts did not complain of higher input prices and did not report that they were raising prices significantly either.\nRetail and Tourism\nMost contacts report year-over-year comparable store sales increases between 4 and 5 percent. Demand remains quite strong for all apparel, home furnishing, and home improvement categories, as well as technology products like tablet computers. Contacts indicate that prices remain steady, and feel that consumer sentiment continues to improve. There is some cautious optimism that this more positive trend will continue but expectations for 2013 sales still center on modest single-digit increases.\nBoth business and leisure travel remain strong with leisure driven by both domestic and international visitors. Attendance at some museums and other attractions is below expectations. While a contact noted that July and August are not heavy months for government-related travel, there is some concern that U.S. government travel budgets, cut 30 percent because of the sequester, will start to have a negative impact on travel industry revenues later in the year.\nManufacturing and Related Services\nThree companies--a semiconductor industry supplier, a medical device maker, and a fitness equipment manufacturer--reported double-digit increases in sales compared to the same period a year earlier, four reported single-digit increases from the previous quarter and three companies reported declines. Some contacts reported that sales in Europe were finally growing again. The majority of contacts report no change in prices from the first quarter, either the input prices they face, or their own sale prices. Employment growth continues to be modest. A rapidly growing medical device manufacturer reports increasing headcount at a 15 percent annualized rate but most firms are hiring only \"selectively.\" One firm did report layoffs due to a repositioning of a formerly bricks and mortar business as e-commerce. Defense industry contacts reported little direct effect of sequestration but continued to worry with one contact mentioning rumors that major cuts would come in the fourth quarter. Contacts reported no major revisions of their investment plans and most expect single-digit year-on-year growth in the next quarter.\nSoftware and Information Technology Services\nNew England software and information technology services contacts generally report weaker than expected business activity through August, with slow revenue growth. Several attribute this sluggishness to continued macroeconomic uncertainty in the U.S. and Europe. In contrast, a contact which mainly works with health care firms attributes the slowdown to the expiration of federal stimulus funding for health records software; however, business in the post-stimulus slump has been better than expected. A business advisory contact sees early signs of improvement in the overall market, as evidenced by an uptick in Q2 sales activity in terms of customer expenditure. Four out of five contacts continue to be cautious in hiring, and plan to remain close to their current headcounts through 2013. Both selling prices and capital and technology spending have gone largely unchanged in recent months. Looking forward, New England software and IT firms are cautiously optimistic, with most expecting only modest growth through the second half of 2013.\nStaffing Services\nNew England staffing contacts generally report strengthened business conditions through August, characterized by mid-single-digit year-on-year revenue growth. This continued growth reportedly reflects both an increase in overall labor demand and a shift to more aggressive marketing strategies at the firm level. Generally, there is a high demand for skilled IT workers and engineers; contacts also report increased demand for manufacturers and medical assistants. On the supply side, there remains a shortage of skilled technical workers to fill high-end IT and engineering jobs. The general consensus is that despite a large pool of available workers, the skills mismatch prevents staffing firms from fully meeting client demand. The number of temporary-to-permanent placements continues to grow; a healthcare contact reports a 30 percent increase in permanent placements this year. Bill rates and pay rates are largely unchanged, with the exception of one firm reporting a decrease relative to May due to the current client mix. Looking forward, staffing contacts continue to be cautiously optimistic, expecting mid-single-digit year-on-year revenue growth through the remainder of 2013.\nCommercial Real Estate\nContacts were mixed in their analysis of the effects of higher interest rates. In Boston and Providence, contacts reported upward pressure on capitalization rates noting that the frequency of renegotiation (or \"re-trading\") of deals in progress increased in recent weeks. Contacts in Hartford reported no effects so far of higher rates on demand for commercial real estate. A regional lender to commercial real estate continues to face challenges securing desired loan volume in the face of competition from other lenders willing to offer commercial mortgages at very low rates. Construction activity remained robust in greater Boston and the pipeline of deals yet to break ground increased significantly over one year ago. Current and planned construction projects in the Boston area are concentrated in high-end multifamily and mixed-use (retail/residential) structures, although construction activity is poised to rise in the hospitality sector and among institutions of higher education. Contacts continued to expect slow improvements in commercial real estate fundamentals in the coming months, but roughly half of contacts raised the uncertainty around their projections relative to last report, with much of the growing uncertainty linked to uncertainty over long-term interest rates.\nResidential Real Estate\nThroughout the First district, the market for single-family homes and condos continues to make a healthy recovery as sales and prices continued to increase and days-on-the-market continued to fall. According to contacts, increases in the mortgage rates have nudged potential buyers, hoping to take advantage of low-interest rates, to enter the market. In some areas, particularly in the Greater Boston area and Massachusetts, realtors have observed an increasing frequency of multiple offers being made on properties. Despite shrinking inventory, sources state that modest appreciation in regions where multiple bids are common indicates that the market is not overheating.\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 4, 2013\nThe economy of 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 over the past three months have also been positive. Residential real estate market conditions have continued to improve, and commercial and industrial real estate markets have also improved. Lending activity at a sample of large District banks was little changed during the second quarter of 2013. Prices, wages, and employment levels over the past three months have stayed the same or increased for a majority of contacts across the District.\nConsumer Spending\nReports from retail contacts were generally positive. Two-thirds of contacts noted increases in sales over the past three months relative to the same period last year, while seventeen percent noted moderate decreases and the rest saw no changes. Half of retail contacts reported that sales levels met their expectations, and the other half reported that sales fell short of expectations. In addition, half of retail contacts reported an increase in the sales of low-end products relative to high-end products. The sales outlook for the next three months compared with the same period last year was slightly pessimistic: About half of contacts expect sales to stay the same, twenty-five percent of contacts expect sales to increase slightly, and the remaining contacts expect sales to decrease moderately.\nReports from auto dealers about sales over the past three months were generally positive. Seventy-five percent of the car dealers surveyed saw increases in sales relative to the same period last year, seventeen percent saw decreases, and the rest saw no changes. Similarly, seventy-three percent of contacts reported that sales met or exceeded their expectations. Two-thirds of car dealers reported an increase in used car sales relative to new car sales, and twenty-two percent reported the opposite. The sales outlook for the next three months relative to the same period last year was optimistic: Half of contacts expect sales to increase, while twenty-one percent expect sales to decrease.\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 that manufacture appliances, food, outdoor equipment, automobile parts, refrigeration compressors, safety products, automobiles, roofing shingles, barges, ammo, apparel, and watercrafts plan to hire new employees and expand operations in the District. In contrast, firms that manufacture plastic products and printing products reported plans to 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 benefit management, logistics, pharmaceutical benefit management, information, transportation, and restaurant services reported new hiring and expansion plans. In contrast, firms in information technology, health care, and disability benefit application services reported plans to reduce employment.\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, July 2013 year-to-date home sales were up 19 percent in Louisville, 21 percent in Little Rock, 10 percent in Memphis, and 9 percent in St. Louis. June 2013 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2012. Permits increased 15 percent in Louisville, 24 percent in Memphis, 3 percent in Little Rock, and 18 percent in St. Louis.\nCommercial and industrial real estate market conditions have continued to improve moderately. Compared with the first quarter of 2013, the second quarter 2013 industrial vacancy rates declined in Louisville, Little Rock, Memphis, and St. Louis. During the same period, downtown office vacancy rates decreased in Louisville, Little Rock, and St. Louis and increased in Memphis. A contact in Evansville reported new plans for speculative office space, while a contact in Louisville reported new plans for speculative industrial space. Contacts reported industrial construction plans in southwest Missouri and several commercial construction plans in St. Louis. A contact in Little Rock noted a mixed-use commercial project, while another contact noted an industrial factory expansion in Baxter County.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks found little change in overall lending activity during the second quarter of 2013. During this period, the credit standards for commercial and industrial loans remained mostly unchanged, while demand ranged from unchanged to moderately stronger. Credit standards for commercial real estate loans ranged from basically unchanged to eased somewhat, while demand was moderately stronger. Credit standards for prime residential mortgage loans remained unchanged, while demand was moderately stronger. Meanwhile, credit standards for auto loans were mostly unchanged, while demand ranged from moderately weaker to moderately stronger.\nAgriculture and Natural Resources\nFarmers in the District expect that the corn crop in 2013 will produce, on average, 59 percent more corn than last year. In contrast, the District cotton crop is expected to fall short of 2012 levels both in terms of acres harvested and production. Across the District states, 92 percent of the corn crop was rated in fair or better condition; the sorghum and soybean crops were similarly rated, with 93 percent and 91 percent in fair or better condition, respectively. District coal production improved modestly.\nPrices, Wages, and Employment\nFifty-eight percent of contacts indicated that prices charged to consumers over the past three months have stayed the same, while 35 percent indicated that prices have increased relative to the same period last year. In turn, 36 percent of contacts noted that wages over the past three months have stayed the same, while 64 percent noted that wages have increased. Meanwhile, 39 percent of contacts reported that employment levels have remained the same over the past three months, while 42 percent reported that employment levels have increased, compared with the same period last year.\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 4, 2013\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of early July through late August. Price inflation was subdued for most final goods and services, and upward wage pressures were very modest. Retail sales rose on net, while demand for business and consumer services was more mixed. District manufacturing activity edged up. Agricultural production and sales expanded. Demand for housing strengthened, and commercial real estate activity firmed. Reports from financial institutions indicated that loan demand increased slightly.\nPrices and Wages\nPrice inflation was subdued for most final goods and services. Reports indicated stable prices for steel and scrap metal products. Technology industry contacts reported that prices were slightly lower than had been anticipated for some business software and for computer hardware inputs. Hospitality sector contacts noted large price declines for linens, versus persistent price increases for a variety of food products.\nUpward wage pressures were very modest overall. Slack in the labor market held back wage gains in most sectors, occupations, and regions. Reports indicated that overall wages at technology firms have been mostly stable or modestly increasing. However, firms in various industries continued to compete vigorously for a limited pool of qualified workers to fill certain technical positions, spurring significant wage growth in these slots.\nRetail Trade and Services\nRetail sales rose on net, and most contacts' outlooks for future consumer spending improved slightly since the prior reporting period. Technology companies reported increased sales overall, with growth on the business side outpacing gains in consumer demand. However, grocery and apparel retailers noted soft sales. These contacts pointed to evidence of households taking advantage of attractive financing opportunities and devoting their budgets to big-ticket items, such as housing and autos. Large inventories at many dealerships fueled a robust pace for new and used automobile sales, especially light truck sales. Contacts indicated strong demand for hobby game products, as the core customers tend to work in relatively high-wage math and science professions.\nDemand for business and consumer services varied across sectors. Reports indicated that many service providers increased capital expenditures in anticipation of stronger demand. However, contacts noted that recent demand has been tepid for elective health-care and other discretionary services, including restaurant dining. Contacts also noted soft demand and downward pressure on fees for legal services. Travel and tourism activity in Hawaii maintained its solid pace of growth, and after slipping earlier in the year, tourist activity in Southern California picked up during the summer months. Contacts noted strong convention attendance in Las Vegas but some weakness in leisure travel.\nManufacturing\nDistrict manufacturing activity edged up during the reporting period of early July through late August. Demand for semiconductors increased, as indicated by modest growth in new orders and sales. Although capacity utilization for electronic components in general held steady, contacts noted that demand was somewhat subdued. Demand for commercial aircraft remained solid. Defense manufacturers noted more muted demand due to the ongoing effects of the federal sequester. Biotech drug manufacturing increased modestly. Shipments of steel products used primarily in nonresidential construction continued to increase, and steel producers reported that overall capacity utilization ticked up a bit further. In particular, reports indicated that capacity utilization for steel manufacturing was stronger for automobile and aircraft-related inputs than for nonresidential construction inputs. Many contacts expect manufacturing industry conditions to improve slightly in the second half of the year relative to the first half.\nAgriculture and Resource-related Industries\nSales of agricultural items and resource-related production activity expanded in the District. Demand was generally strong for most crop and livestock products. However, relatively light traffic at fast-food restaurants limited sales of some vegetables. In addition, some grain producers expect slightly lower profits due to price declines. Despite a modest decline in demand for various oil products, contacts expect overall sales to increase in the medium term. Refinery utilization rates and gasoline production increased. Utility providers reported that energy sales to aerospace and housing-related firms were robust.\nReal Estate and Construction\nDemand for housing strengthened further, and commercial real estate activity was stable or improved. Although levels remained significantly lower than in the pre-recession period, both home sales and house prices climbed further relative to the prior reporting period in many District cities. In some areas, demand for new homes substantially exceeded the supply, and shortages of construction workers held back the pace of new home construction activity. Multifamily residential construction projects increased. Rental rates for commercial real estate edged up as occupancies climbed. Contacts in some major metropolitan areas noted declining commercial real estate inventories and expressed near-term concerns about capacity constraints.\nFinancial Institutions\nFinancial institution reports indicated that loan demand increased slightly on net. Most contacts reported increased lending relative to a year earlier, but some reported a slight downtick more recently. Contacts noted that mortgage origination levels were mostly stable despite the increase in mortgage interest rates, although the number of new applications has dropped a bit in some areas. Some contacts expect the pace of refinancing activity to slow as well. Reports highlighted ample bank liquidity and substantial competition for high-quality commercial borrowers. In the District's Internet and digital media sectors, mergers and acquisitions activity and venture capital activity grew in terms of both deal value and volume. However, the pace of initial public offerings remained weak, and private equity activity was flat.\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 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 has leveled out after a six-month period of strong growth; sales of new and existing homes were above year-ago levels. Nonresidential builders experienced a rise in backlogs and the number of inquiries. Retailers were disappointed with sales during June and July, while new motor vehicle purchases posted robust gains on a year-over-year basis. Shale drilling picked up in regions rich in wet gas and was above year-ago levels. Output at coal mines trended lower. Freight transport volume remained strong. Applications for business credit were flat, while consumer demand for credit rose slightly.\nHiring was sluggish across industry sectors. Staffing firm representatives reported that the number of job openings increased, with vacancies found primarily in healthcare and manufacturing. However, job placements were lower. Wage pressures remain contained. Input and finished goods prices saw little change, apart from increases in construction materials and oil.\nManufacturing\nReports from District factories indicated that demand grew at a moderate pace during the past six weeks. Companies seeing the strongest activity were suppliers to the energy, housing, medical device, and transportation industries. Defense contractors are still coping with uncertainty. Compared to a year ago, manufacturing production levels are similar or higher. Many of our contacts are optimistic and they expect that demand will rise during the next few months. Steel producers and service centers reported that shipping volumes were stable or fell below expected levels. Some respondents continue to express concern about the quantity of steel imports and the negative impact it is having on domestic producers. The outlook by steel producers is uncertain. As a result, they have been reducing inventories. District auto production showed a substantial decline in July on a month-over-month basis, due to normal seasonal retooling for model changeovers. Compared to a year ago, July production figures revealed a sizeable increase.\nWe heard some reports about a need by motor vehicle parts suppliers and assembly plants to expand capacity in order to meet demand. Other reports indicated that small manufacturers have reduced capacity utilization rates and bypassed growth opportunities because they were unable to hire skilled production workers. A majority of our contacts anticipate increasing capital budgets in the upcoming fiscal year. Raw material and finished goods prices were generally flat or trended lower, although producers acknowledged volatility in commodity prices. Steel producers who attempted to raise prices met with limited success. Factories expanded payrolls at a modest pace. Wage pressures are contained, though there is concern about rising health insurance premiums. One executive commented that he sees downward pressure on domestic labor costs due to excess production capacity off-shore.\nReal Estate\nSales of new single-family homes have stabilized during the past couple of months, when compared to the solid growth seen earlier in the year. Builders characterized their sales as good, and most reported that they are higher than a year ago. One builder commented that he is concerned about a lot shortage in the near term. On-line traffic and inquiries are rising. New home contracts were found mostly in the mid- to higher-price-point categories. Demand for multifamily housing remains strong. Builders expressed confidence that demand for new homes will persist in the upcoming months, but they are apprehensive about rising interest rates and difficulties in obtaining construction loans. They also believe that a rise in consumer confidence would bring additional first-time buyers into the market. Selling prices of new homes across the District were up about 5 percent on average year-over-year due to rising costs and larger building footprints. The number of existing single-family homes sold year-to-date is up substantially across many regions of the District, relative to a year earlier. Contract prices rose moderately. In some regions, the supply of existing homes for sale is a challenge, which is leading to higher prices.\nNonresidential builders continued to see slowly improving business conditions. Although inquiries have picked up, uncertainty about interest rates and the economy led to hesitancy on the part of some customers. Backlogs have grown substantially. The strongest activity was on the industrial and manufacturing side. The former is related to shale gas work and the conversion of coal-fired generators to natural gas. Work in higher education has replaced government-sponsored projects as a major revenue source. Multifamily housing, including senior living, was also strong. Our contacts were more optimistic about near-term growth prospects than they have been in recent months.\nWe heard many comments from homebuilders about price increases for construction materials (lumber, drywall, and concrete), though the rate of increase has slowed during the past month. Several builders reported that they plan to retain their temporary summer workers through the fall season. Hiring of permanent employees (office and field) was modest. Wage pressures are contained. General contractors reported a shortage of qualified subcontractors. On the residential side, requests for higher rates by subcontractors were met with mixed results. Commercial builders said their subcontractors are having difficulty obtaining operating capital.\nConsumer Spending\nRetailers were disappointed with their June and July sales. They cited consumers being strapped for money and unseasonably cool weather as factors that held down spending. On a year-over-year basis, same-store revenues were fairly even or lower. Products in greater demand included core goods such as food, back-to-school items, and furniture. Looking ahead, fourth-quarter sales are expected to improve slightly when compared to those in the third quarter. Inventories were characterized as a little high, but manageable. Vendor and shelf prices held steady. Capital expenditures were on plan for the fiscal year, with no changes expected in the near term. Hiring will be limited to staffing new stores.\nSales of new motor vehicles increased at a robust pace during July, and year-to-date sales were running ahead of last year's pace. The number of new vehicles sold in July was moderately higher than in June. Buyers prefer smaller, fuel-efficient vehicles. One dealer commented that the unpredictability of gasoline prices is a primary factor behind the sales of smaller cars. New-vehicle inventories are rising, but a majority of dealers said that they are satisfied with their inventory positions. Our contacts are optimistic about sales for the remainder of the year. Dealers pointed to pent-up consumer demand, the availability of financing, and the option to lease as reasons for their optimism. Dealer service departments in the eastern third of the District are especially busy due to the influx of work generated by shale gas activity. Used-vehicle purchases rose during the past six weeks. Inventory is building as lease rollovers start to come in, which is putting some downward pressure on used-car prices. Even with an increase in business, dealers are reluctant to hire a large number of employees. For the few open positions, finding qualified applicants remains difficult.\nBanking\nBankers reported that their industry is functioning in an environment of low interest rates, rising operating costs, and over-capacity. Net interest margins are showing signs of widening but remain below acceptable levels. Demand for business credit is flat or up slightly, with no loan category or industry performing significantly better than others. Our contacts attribute this to firms holding large cash reserves. A financial intermediary reported on a loosening in venture capital funding and commented that a substantial number of startups in the District are now contemplating an S-1 filing. Consumer-credit demand improved slightly, especially for auto loans, credit cards, and home equity lines of credit. Several bankers reported a slowing in residential mortgage activity. While new-purchase mortgages are trending higher, refinancing has dropped off. No changes were made to loan-application standards. Delinquency rates declined slightly. There were few reports about workforce reductions.\nEnergy\nDistrict coal production remains below year-ago levels, with the largest declines seen in eastern Kentucky. Spot prices for steam-coal declined slightly, whereas metallurgical coal prices were flat. Unconventional drilling picked up in regions rich in wet gas since our last report, and the number of drilling rigs is higher than last year at this time. However, in dry gas regions, drilling has declined during the past 12 months due to the low price for natural gas. Total output from gas wells was down slightly, while oil production was stable. Well-head prices for natural gas are flat to down, while oil prices were up substantially. Capital expenditures remain at targeted levels. One driller commented that the low price for natural gas is affecting the value of his reserves, which he uses as collateral for loans. As a result, banks are increasingly reluctant to extend credit for drilling new wells. On balance, little change was seen in production equipment and material prices. Labor costs are steady other than for rising healthcare insurance premiums.\nFreight Transportation\nFreight executives reported that shipping volume remains strong and they are seeing an improvement in net profits. Their outlook is cautiously optimistic. Freight haulers are still sorting through the effects of the hours-of-service regulations (HOS) that went into effect on July 1. The primary concern focuses on the availability of drivers and the ability of shipping companies to effectively schedule those drivers. Prices for equipment and maintenance items were stable. Capital outlays were allocated more for equipment replacement than capacity expansion. Some of our contacts have begun evaluating the use of tractors that run on compressed natural gas (CNG). Preliminary results indicate that these trucks may be more suitable for short-haul situations due to infrastructure issues. The industry is still experiencing a shortage of drivers, due in part to HOS rules and a high turnover rate.\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 4, 2013\nThe pace of economic activity in the Seventh District improved in July and August, and contacts generally expected moderate growth for the rest of the year. Growth in consumer and business spending picked up. Manufacturing production increased, as did construction. Credit conditions tightened some. Cost and wage pressures were modest. Abnormally dry weather hurt crop prospects in many areas of the District, but to a much lesser degree than during last year's drought.\nConsumer Spending\nGrowth in consumer spending picked up a bit in July and August. Non-auto retail sales increased modestly, with sales of luxury and housing-related items such as furniture, appliances, plumbing-related hardware, and flooring improving. Compared with last year, retail contacts expected a slight increase in back-to-school sales with a high level of promotional activity. Auto sales rose, and continued to outpace growth in non-auto retail sales. Dealers reported an increase in demand across all vehicle segments, but especially for fuel-efficient cars and light trucks. Used vehicle sales remained strong. Several dealers indicated that they expect leasing and sales activity to pick up further in the fall, boosted in part by still-elevated replacement demand.\nBusiness Spending\nGrowth in business spending increased some in July and August. Contacts reported moderate investment in equipment and software and structures as well as a small increase in merger and acquisition activity. In contrast, inventory investment decreased, as manufacturing and retail contacts indicated a reluctance to increase inventories at the current pace of sales. Labor market conditions softened a bit. The pace of hiring slowed, with some contacts noting layoffs in recent weeks. Manufacturers and retailers, in particular, indicated that if they needed to add labor, they were more likely to boost hours or temporary and part-time hiring than expand their existing full-time workforce. Nonetheless, overall contacts reported an increase in their hiring plans for the remainder of the year. Demand for skilled workers remained relatively strong, particularly for finance, healthcare, engineering, accounting, and information technology occupations; and contacts again noted shortages of qualified truck drivers and workers in some skilled manufacturing and construction trades.\nConstruction and Real Estate\nConstruction and real estate activity increased further in July and August. Demand for residential construction grew steadily, as multifamily construction remained strong and single-family homebuilders reported an increase in showroom traffic. New single-family construction remained concentrated in infill areas, but an industry contact noted a number of homebuilders are planning new developments slated to begin later this year. In residential real estate markets, home sales, prices, and rents all continued to rise. Contacts speculated that recent increases in mortgage rates had stimulated home sales, as buyers attempted to make purchases before rates rose further. Several also noted that a limited supply of existing homes currently on the market had pushed home prices higher, and that residential rents in some areas were now back above their pre-recession peaks. Nonresidential construction grew at a more modest pace, again in large part reflecting the ongoing expansion of the auto industry. Commercial real estate conditions continued to improve, as rents rose slowly and vacancies fell. In particular, leasing activity for specialty food stores was noted to be strong.\nManufacturing\nManufacturing production increased in July and August. Steel output continued to grow at a moderate pace. In addition, specialty metal manufacturers reported an increase in orders, particularly from the auto and aerospace industries. The auto industry continued to be a source of strength for District manufacturing. In addition, a contact indicated that demand for heavy and medium-duty trucks is likely to increase over the remainder of the year in anticipation of new emission standards in 2014. Demand for construction equipment, construction materials, and household appliances continued to strengthen with the recovery in the housing market. However, overall demand for heavy equipment remained soft, hampered by weak export demand and a reduction in mining activity.\nBanking and Finance\nCredit conditions tightened some over the reporting period. Several financial market participants expressed concern about the impact of changing perceptions regarding monetary policy on long-term Treasury yields and equity markets. Net corporate borrowing costs were up slightly as benchmark interest rates rose. Banking contacts cited a modest reduction in overall business loan demand, but noted continued steady growth for commercial and industrial loans in the middle market. Contacts involved with commercial real estate finance indicated that the recent rise in interest rates was likely depressing some commercial investment. In contrast, consumer loan demand continued to increase, particularly for auto lending.\u00a0Mortgage lending also rose, with new originations beginning to outpace refinancing activity for some banks.\nPrices and Costs\nCost pressures were modest in July and August. Contacts noted an increase in some commodity prices, such as those for metals like steel, copper, and aluminum. A few also cited higher energy costs, particularly for fuel and natural gas. In contrast, prices paid for some building products such as lumber moved lower. Retailers again reported mostly small increases in wholesale prices; and, overall, pass-through to downstream prices was limited. Wage pressures were also modest, although many contacts again noted rising healthcare and other benefit costs.\nAgriculture\nDry weather affected crop conditions in much of the District during the reporting period, lowering expectations for crop yields. Soybeans especially needed rain in order to fill out pods. Some of Iowa once again faced drought conditions. Nonetheless, corn and soybean conditions remained much better than they were during the drought last year. There were even parts of the District that received adequate moisture and should have above normal yields. Indeed, corn and soybean prices decreased on both spot and futures markets. There were also reports that less of this year's harvest than usual was pre-sold. Milk, hog and cattle prices declined from the prior reporting period, with livestock producers benefiting from falling feed costs. District milk production once again outpaced the levels of 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\nSeptember 4, 2013\nAggregate business activity in the Third District continued at a moderate pace of growth during this current Beige Book period. Moderate rates of growth continued for general services, existing home sales, and home construction. Homebuilders felt their sales may have been partially dampened by rising mortgage rates; however, construction remained well above its level of a year ago. Meanwhile, auto sales continued their strong rate of growth; growth of freight shipping was also strong. General retail sales, commercial real estate leasing, staffing services, and tourism continued to expand at modest rates, while manufacturing and commercial real estate construction continued to expand only slightly. Loan volumes at Third District banks grew at a modest pace across most categories; credit quality continued to improve. Contacts reported slight increases overall for general price levels as well as for wages and home prices--similar to the last Beige Book period.\nAn overall outlook for moderate growth has continued since the last Beige Book. Contacts expressed greater confidence in the U.S. economy and in global conditions. However, firms remained cautious in their hiring and long-term capital expenditure plans and expressed concern about a potential fiscal crisis regarding the federal debt ceiling.\nManufacturing\nOverall, Third District manufacturers reported further increases in orders and shipments since the last Beige Book, although overall growth remained slight. Makers of food products, paper products, and fabricated metals reported gains. Producers of lumber and wood products, primary metals, electronic equipment, and instruments reported lower activity, much of it seasonal in nature. Reports were mixed for makers of industrial machinery. Overall, firms continued to report strong demand from auto- and residential construction-related businesses. Firms also reported some demand related to infrastructure repairs in response to Superstorm Sandy. Several firms reported difficulties meeting demand because of insufficient physical capacity, an inability to train new workers quickly enough, and/or customers' expectations of shorter delivery times. A large supplier to a broad base of industry reported that business improved from early summer through early August, with larger backlogs in key segments.\nOptimism has generally grown among Third District manufacturers that business conditions will improve over the next six months. A contact described U.S. manufacturing as \"poised to grow\" while citing signs of improvement globally, particularly in Europe and China. Some capacity expansion appears to be under way, as infrastructure projects that were being intentionally delayed are now coming on stream. Though generally positive, firms have lowered their expectations somewhat regarding hiring and capital spending plans since the last Beige Book.\nRetail\nThird District retailers reported modest growth overall since the last Beige Book, though results were mixed between outlets and traditional malls. Contacts said sales were soft in July, possibly dampened by excessive heat, but began to pick up in August with more back-to-school shopping. Sales of children's apparel were stronger at outlets than at traditional malls, indicating that consumers were doing more price-shopping. Mall retailers were optimistic that sales would continue to pick up into the fall.\nAuto dealers continued to report strong sales growth in July and the beginning of August. Pickup truck sales have been strong in the shore areas as rebuilding efforts continue. Contacts cited healthier household balance sheets, pent-up demand, and attractive leasing options as factors for strong sales. Dealers noted lean inventories as production has generally kept in line with demand. Dealers remain very optimistic, although their hiring continues to lag rising sales.\nFinance\nOverall, Third District financial firms continued to report modest increases in total loan volume. The most notable difference from the last Beige Book period was the further reduction in mortgage refinancing in response to higher interest rates. Contacts noted that demand for mortgages to purchase homes continued to increase modestly, as did demand for home equity lines and commercial real estate and C&I loans. Stronger increases were noted for most types of consumer lending, although credit card volumes fell off slightly. Contacts uniformly reported that small businesses remain very cautious, doing little or no borrowing for expansion and needed infrastructure. Credit standards have changed little, according to most banking contacts. However, many expressed concern about very tough competition on rates and terms \u00c2\u2013 reflecting a \"lack of reason,\" according to one banker. However, most bankers reported that business was good overall and the credit quality of their loan portfolios was healthier. They remained \"cautiously optimistic.\"\nReal Estate and Construction\nHomebuilders throughout most of the Third District remained moderately busy with existing projects from spring sales. However, several builders reported a dip in traffic and new sales contracts in July, with modest sales growth resuming in early August. Higher interest rates were partly blamed for the lull: Locking in a mortgage rate now for an existing home appeared preferable to getting a mortgage later when the new home is completed. Sales of existing homes continued to grow at a moderate pace into August, according to residential brokers. A broker in the greater Philadelphia area described sales growth as \"good steady improvement, not soaring.\" Sales closed and sales pending grew by double digits (year over year) in some of the larger metropolitan areas in the Third District and by nearly double digits in a few others. The estimated months of supply of homes has risen since May in several areas, described as a seasonal trend rather than evidence that the shadow inventory of homes is emerging.\nNonresidential real estate contacts continued to report little change in the modest pace of overall leasing activity and slight growth of construction. However, architecture and engineering firms were seeing greater interest and increased workflow, which are expected to generate construction activity in the future. Meanwhile, general contractors reported that activity was very slow, with heavy competitive bidding on each project. New and ongoing projects continued to be heavily represented by industrial structures, institutional facilities, multifamily residential units, and public utilities. Market analysts observed a shift in recent leasing activity by large users of commercial space away from a contraction in square footage to some expansion. In addition, some companies are opening branches in the Philadelphia area market. Contacts remained generally optimistic for slow, steady growth.\nServices\nThird District service-sector firms continued to report a moderate pace of growth overall. After a slow start to the summer, traffic counts, bookings, and boardwalk sales at shore destinations in Delaware and southern New Jersey picked up to a modest pace. A Delaware hotel group reported that its properties matched or exceeded last year's record; another hotel reported that July was its best month ever. However, those parts of central New Jersey hardest hit by Hurricane Sandy continued to struggle, with low numbers of returning summer residents and tourists. Throughout the District, tourists continued to spend cautiously. Atlantic City casino revenue continued its years-long downward spiral.\nOther service firms reported continued moderate growth, although some cited seasonal slowdowns for the summer. One staffing firm explained that its clients' decision-makers are away for much of the summer. A large consumer firm anticipates higher activity in September following a typical August lull. Freight shipments have grown robustly throughout the District, tied to the expansion of intermodal facilities along the I-81 and I-76 corridors and to refinery activity along the Delaware River. Overall, service-sector firms remained optimistic about future growth.\nPrices and Wages\nOverall, price levels continued to increase slightly, similar to the previous Beige Book. Manufacturing firms reported that prices paid and prices received again increased modestly; the increases were even slighter this period than last. Auto dealers reported no changes in pricing. A mall operator noted apparel inflation in recent months. Builders continued to report land selling at a premium, rising land development costs, and difficulty finding qualified tradespersons. Most real estate contacts reported rising prices for lower-priced homes; price trends for higher-priced homes are closely tied to local market conditions. Recent safety regulations for truckers are expected to tighten capacity and spur higher prices this fall until more workers and new equipment are brought online. Generally, however, there are few wage pressures, according to most firms, including staffing companies.\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 4, 2013\nThe Tenth District economy expanded moderately in July and early August with further gains anticipated during the coming months. Strong retail and auto sales fueled consumer spending with positive expectations for future sales. District manufacturing activity picked up, and some plant managers were hiring additional workers. Residential and commercial real estate markets continued to strengthen with an upswing in construction and a rise in sales. District banks reported improved loan quality and stable deposits, but slightly weaker loan demand. Agricultural growing conditions were affected by drought, but lower farm income expectations did not dampen farmland prices. District energy activity remained solid with stronger natural gas exploration offsetting a slight drop in oil drilling. The price of raw materials continued to trend higher, but finished goods prices generally held steady. More contacts commented that difficulty finding qualified labor, particularly in highly skilled fields, was placing modest upward pressure on wages. Most firms reported little or no effect on business activity from sequestration budget cuts, though some manufacturers reported a decline in defense orders and hotels noted fewer government employees were traveling.\nConsumer Spending\nConsumer spending strengthened in July and early August and was expected to rise further in coming months. District retailers reported higher sales, particularly for large-ticket home goods such as mid-priced appliances and furniture as well as seasonal items and clearance merchandise. However, sales of premium goods such as jewelry and high-end appliances slowed. Auto dealers reported somewhat easier access to credit and a rise in sales that was expected to continue in coming months. Economy cars and used vehicles sold well with strong demand for trucks in rural areas. Restaurant sales increased, as more diners paid higher average check amounts. Tourism activity remained solid through the summer, though gasoline sales were down from year-ago levels. After rising during the last survey period, District hotel owners reported a moderate drop in occupancy despite previous reductions in average room rates. Some hoteliers attributed fewer bookings to less government travel.\nManufacturing and Other Business Activity\nManufacturing activity rose moderately in July and early August while sales at high-tech service firms and transportation firms generally held steady. Following a downturn in June, District factory activity strengthened with increased production, especially for food processing, machinery and metal manufacturers. Some manufacturers noted a drop in orders from defense contractors due to federal spending cuts. Overall, however, the volume of new orders rose in July and was expected to strengthen during the next six months. In addition, a rise in the volume of shipments reduced order backlogs and finished goods inventories held steady. Plant managers indicated modest hiring and capital spending plans with solid expectations for future factory output. After slowing during recent survey periods, transportation activity stabilized, despite an upswing in prices charged. Several trucking firms noted more shipments of refrigerated goods. Sales at high-tech firms dipped during the survey period but were expected to bounce back during the next three months.\nReal Estate and Construction\nResidential and commercial real estate activity strengthened further in July and early August and was expected to remain robust through the fall. Home starts rose, though some builders were concerned that a shortage of skilled labor could constrain growth. Lot prices were expected to increase with tighter supplies of available sites. Sales at construction supply firms were up and some building materials, particularly drywall and roofing shingles, were in short supply. A rise in home sales supported higher home prices even with an uptick in the number of houses on the market. Residential mortgage lenders reported solid demand for home purchase loans but a sharp drop in refinancing activity that was attributed to higher interest rates. Commercial construction escalated during the survey period and was expected to expand further in the coming months. Commercial real estate prices and rents moved higher as sales activity picked up and vacancy rates trended down. Developers reported little change in access to credit.\nBanking\nIn the recent survey period, bankers reported slightly weaker overall loan demand, improved loan quality, and stable deposit levels. Respondents reported steady demand for commercial real estate, consumer installment loans, and commercial and industrial loans, while demand for residential real estate loans declined. Bankers noted a moderate improvement in loan quality since the last survey period with additional quality improvements expected during the next six months. Credit standards remained unchanged in all major loan categories and respondents reported stable deposits.\nAgriculture\nFarm income prospects dimmed since the last survey period as drought persisted and crop prices fell. While yields varied, winter wheat production was below average across the District. In some areas without irrigation, dry weather hindered corn development and weakened plants against disease. Much of the District's corn crop was considered in fair condition although the soybean crop was still rated in mostly good condition. Crop prices fell in August on higher global production estimates. Even with a drop in feed prices, losses continued for most feedlot operators as cattle prices moved lower. In contrast, a rebound in hog prices returned profits to some hog producers. Demand for farm operating loans strengthened with high input costs and reduced farm income. Despite weaker farm income prospects, farmland values continued to set records, with demand for farmland driven in part by high levels of wealth in the farm sector.\nEnergy\nDistrict energy activity remained solid in July and early August and was expected to strengthen somewhat in the coming months. The number of active natural gas rigs in the District edged up, particularly in Wyoming and Colorado, despite further declines in natural gas prices. Natural gas prices, however, were expected to rise seasonally as increased demand for winter heating draws down supplies. In contrast, the number of active oil rigs in the District tapered during August even though oil prices have recently risen. Some District contacts noted a lack of qualified labor and difficulty obtaining financing were constraining drilling activity. Several energy firms were also concerned that government budget cuts due to sequestration could cause further slowdowns in permitting. Wyoming's coal production through early August remained below year-ago levels. After falling in July, ethanol production rose modestly in early August when corn prices fell.\nWages and Prices\nWage pressures edged up during the survey period, raw materials prices trended higher, and finished goods prices generally held steady. On-going shortages of high-skilled labor in some specialized industries, particularly construction, energy, high-tech and transportation, placed slightly more upward pressure on wages during the survey period. Other firms, primarily in retail, leisure and hospitality industries, were beginning to raise wages to attract salespeople, housekeepers, maintenance and clerical staff. Builders and construction supply companies noted higher prices for construction materials in short supply. Some transportation companies charged more for freight hauling in light of higher input costs. The cost of raw materials for manufacturing rose at a similar pace compared to the previous survey period and most finished goods prices were flat. Despite an ongoing rise in food costs, most restaurant owners were not increasing menu prices. Retailers held selling prices steady and did not anticipate raising prices during the next three months. As occupancy rates fell, hotel operators planned to lower average room rates.\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 17, 2013\nPrepared at the Federal Reserve Bank of St. Louis and based on information collected on or before July 8, 2013. 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 indicate that overall economic activity continued to increase at a modest to moderate pace since the previous survey. Manufacturing expanded in most Districts since the previous report, with many Districts reporting increases in new orders, shipments, or production. Most Districts noted that overall consumer spending and auto sales increased during the reporting period. Activity in a wide variety of nonfinancial services was stable or increased in most reporting Districts. Transportation was stable or increased in several Districts. Tourism remained strong in some reporting Districts, although several Districts noted softness from bad weather. Residential real estate and construction activity increased at a moderate to strong pace in all reporting Districts. Commercial real estate market conditions and construction continued to improve across the Districts. Banking conditions generally improved across the Districts. Credit quality improved, while credit standards remained largely unchanged. Agricultural conditions were mixed, as weather patterns varied, while extraction was generally stable or increased.\nHiring held steady or increased at a measured pace in most Districts, with some contacts noting reluctance to hire permanent or full-time workers. Wage pressures generally remained contained, although some Districts reported modest or moderate wage growth in some sectors. Price pressures for inputs and final goods remained stable or modest.\nManufacturing and Other Business Activity\nManufacturing increased in most Districts since the previous survey. The exception was Kansas City, which noted a slight contraction, with storms retarding some activity. Most Districts reported stable or increasing new orders, shipments, and production. Reports from contacts in the Cleveland, Chicago, and St. Louis Districts indicated moderate growth in manufacturing. The Minneapolis District further noted that more manufacturing firms increased activity than in the previous report; the Boston, New York, Richmond, Atlanta, and San Francisco Districts noted that the uptick was modest; and the Philadelphia and Dallas Districts noted slight improvements. Firms in the Boston, Philadelphia, and San Francisco Districts were broadly optimistic about prospects for the second half of 2013, while manufacturers in the Richmond District were cautiously optimistic; contacts expressed mixed outlooks in the Dallas District, and contacts in the Cleveland and Atlanta District do not expect future production to be as high as previously projected.\nStrong demand in residential construction continued to stimulate the manufacturing sector in several Districts. Home-building suppliers in the Philadelphia and Cleveland Districts reported strong activity. Wood product manufacturers expanded operations and increased production in the St. Louis and San Francisco Districts. A cement producer in the Dallas District saw a very strong market. Demand for construction equipment picked up in the Chicago District.\nAutomobile manufacturing remained a source of strength in the Chicago, St. Louis and Minneapolis Districts. Steel and metal production increased in several Districts, including Philadelphia, Chicago, Minneapolis, Dallas, and San Francisco. Fabricated metal manufacturers in the Philadelphia and Dallas Districts reported gains. Primary metal production was steady at strong levels in the Dallas District, while reports on primary metal orders in the Philadelphia District were mixed. Specialty metal manufacturers in Chicago saw modest improvement in demand. The metal-forming business in Minneapolis is having a very strong year. Gains were reported by petroleum refining manufacturers in the St.\u00a0Louis and Dallas Districts. Reports on semiconductor orders in the Dallas District were mixed, and semiconductor firms in the San Francisco District said sales increased substantially. Electronic equipment firms in the Philadelphia District reported lower activity. Food producers in the Philadelphia and Kansas City Districts saw weaker activity, while demand for heavy equipment in the Chicago District remained soft.\nNonfinancial services activity was steady or increased in the New York, Philadelphia, Richmond, St.\u00a0Louis, Minneapolis, and Dallas Districts. Transportation services were stable in the Richmond and Kansas City Districts, increased in the Cleveland, Atlanta, and Dallas Districts, and contracted in the St.\u00a0Louis District. Consulting service firms in the Boston, St.\u00a0Louis, and Minneapolis Districts have experienced increased demand and expanded operations since the previous reporting period. Accounting service contacts in the Richmond and Dallas Districts saw strong demand, while telecommunication service providers in the Richmond and St.\u00a0Louis District reported increased activity. High-tech service firms in the Kansas City District and a software design firm in the Richmond District saw rising revenues, and software developers were in high demand in the San Francisco District.\nConsumer Spending and Tourism\nMost Districts noted that overall consumer spending increased during the reporting period. Reports from the Boston, Chicago, Philadelphia, Richmond, Atlanta, St.\u00a0Louis, Minneapolis, and San Francisco Districts indicated modest or moderate growth in retail spending, while reports from the Cleveland, Kansas City, and Dallas Districts indicated steady to slightly higher sales. The New York District noted that retail sales in May and June had softened. Retailers in the New York, Cleveland, Atlanta, and St.\u00a0Louis Districts reported that sales had not met expectations. Contacts in the New York, Philadelphia, Cleveland, Richmond, and Atlanta Districts also noted that weather conditions constrained retail activity. Demand for tech products was strong or increased in the Boston and San Francisco Districts. The Kansas City District reported that appliance purchases were slow, while the Richmond District reported that big ticket item sales were high. Inventories were at desired levels or slightly high in the New York and Cleveland Districts, and remained tight in the Chicago District. The outlook among retailers was positive in the Cleveland, Dallas, and San Francisco Districts and cautiously optimistic in the St.\u00a0Louis District.\nMost Districts that reported on automobile sales noted increased sales during the reporting period. Strong sales were reported in the Philadelphia, Richmond, Atlanta, Chicago, and San Francisco Districts. Reports from the Cleveland, St.\u00a0Louis, Minneapolis, and Kansas City Districts indicated steady to moderate sales growth, and contacts in the Dallas District reported that sales were slightly softer than the previous reporting period, although still strong. New car sales increased in the St.\u00a0Louis and San Francisco Districts, while they held steady at favorable levels relative to the same period last year in the New York District. Used car sales increased in the Cleveland, Richmond, St.\u00a0Louis, and San Francisco Districts. Auto dealers in the Cleveland, Richmond, Chicago, and Minneapolis Districts reported strong sales for pick-up trucks. The Kansas City and Cleveland Districts expressed an optimistic outlook for future sales.\nTravel and tourism increased in the Boston, Philadelphia, Richmond, Atlanta, Kansas City, and Dallas Districts. The New York District noted that tourism had been mixed but fairly robust since the previous report. San Francisco also reported that travel and tourism was mixed across the District. Weather conditions affected tourism in some areas of the Boston, Philadelphia, and Minneapolis Districts.\nReal Estate and Construction\nResidential real estate activity increased at a moderate to strong pace in most Districts. Most Districts reported increases in home sales. Cleveland noted that June sales of single-family homes were down compared with earlier in the spring but up from last year. Boston, New York, Minneapolis, Kansas City, Dallas, and San Francisco noted strong residential real estate markets. Home prices increased throughout the majority of the reporting Districts. Boston, New York, Richmond, Atlanta, Minneapolis, Kansas City, and Dallas noted low or declining home inventories and upward pressures on home prices in some areas. Residential construction activity also improved moderately across the Districts, and contacts in New York, Philadelphia, Chicago, Minneapolis, Dallas, and San Francisco reported faster growth in multi-family construction, in particular.\nCommercial real estate market conditions continued to improve across most Districts. New York, Philadelphia, Cleveland, Atlanta, Chicago, St.\u00a0Louis, Minneapolis, and San Francisco reported modest to moderate improvements in nonresidential real estate activity. Dallas reported strong growth in leasing activity for office and industrial space. Boston and Richmond reported that commercial real estate conditions were holding steady or improving, depending on location. Nonresidential construction activity was stable or increased throughout the nation. Philadelphia, Atlanta, and Richmond reported that commercial construction was flat to slightly up, while Cleveland, Chicago, St.\u00a0Louis, Minneapolis, and Dallas noted improvements in commercial construction.\nBanking and Finance\nReports on banking conditions were generally positive across the Districts. Overall loan demand increased modestly across most reporting Districts. New York District bankers reported mixed but generally steady loan demand. Some bankers in the Cleveland, Chicago, and Dallas Districts noted competitive pressures to reduce loan pricing. Bankers in the Philadelphia, Richmond, Cleveland, Atlanta, and Chicago Districts noted a shift toward new home mortgages and away from refinancing (which was led, in part, by increases in interest rates).\nReports on credit quality indicated slight to moderate improvements across the reporting Districts. Improvements were noted by the New York, Philadelphia, Kansas City, and Dallas Districts. Credit standards remained largely unchanged, although some bankers in the Atlanta and Philadelphia Districts noted increased competition to ease credit standards.\nAgriculture and Natural Resource Industries\nAgricultural conditions varied across the Districts because of differing weather conditions. Crop conditions improved in the Chicago and St.\u00a0Louis Districts, while agricultural production increased in the San Francisco District and is expected to improve in the Kansas City District. Extremely wet conditions delayed planting and even resulted in some farmers in the Richmond and Minneapolis Districts planting soybeans instead of corn. Excessive rains in the Richmond District also damaged the wheat crop in some areas. Contacts noted persistent drought conditions in some areas of the Kansas City and San Francisco Districts and in most of the Dallas District. Winter wheat harvest output yields were highly variable because of crop damage from freezing and drought in the Dallas and Kansas City Districts. The condition of pastureland in the Atlanta and St.\u00a0Louis Districts improved since the previous report.\nCoal production was lower compared with the same time last year for the Cleveland, St.\u00a0Louis, and Richmond Districts. Energy activity remained robust or steady at high levels in the Atlanta and Dallas District. Natural gas production was stable in the Cleveland District and continued to increase in the Richmond District. Drilling declined in the Cleveland District, was flat in the Kansas City District, and increased in the Richmond District. Oil and gas exploration was up slightly in the Minneapolis District. Mining was flat in the Kansas City District, weakened in the Chicago District, and was sluggish in the Minneapolis District.\nEmployment, Wages, and Prices\nHiring held steady or increased at a measured pace in most Districts. Contacts in the Philadelphia, Richmond, and Chicago Districts were cautious or reluctant to hire permanent or full-time staff. The Richmond and Chicago Districts noted relatively stronger demand for part-time workers. Transportation contacts in the Cleveland, Atlanta, and Kansas City Districts noted some difficulty finding qualified drivers. Contacts in the New York, Richmond, and San Francisco Districts reported high demand for technology workers.\nMost Districts reported that wage pressures remained limited or contained. The Chicago and Minneapolis Districts reported moderate wage pressures. The Chicago District noted that rising healthcare and other benefit costs were being passed onto employees. Contacts in the New York and San Francisco Districts noted that competition for technology workers had an effect on salaries. The Richmond District noted that wage growth picked up in the manufacturing sector, remained robust at non-retail establishments, and flattened at retail businesses.\nOverall consumer and input price pressures remained stable or modest in most reporting Districts, although some Districts noted price increases. Most notably, the Cleveland, Atlanta, Chicago, Minneapolis, and San Francisco Districts noted upward pressures on the prices of construction materials. The Philadelphia and Richmond Districts reported price increases for raw materials and finished goods among manufacturers. The New York District reported that input price pressures have abated further in manufacturing but remained widespread in services. Retail prices remained steady in the Boston, New York, Cleveland, Kansas City, and Dallas District, while retail price growth slowed in the Richmond District and wholesale retail prices increased in the Chicago District.\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 17, 2013\nThe Ninth District economy showed signs of moderate growth. Increased activity was noted in consumer spending, professional services, manufacturing and energy. Tourism-related activities slowed in May and June in some areas, but tourism businesses were optimistic for the summer season. Commercial construction and real estate grew moderately fast, while residential construction and real estate grew at a robust pace. The mining sector was sluggish, and agriculture decreased. Labor markets continued to tighten slightly, and wage increases were moderate. Price increases were subdued since the last report.\nConsumer Spending and Tourism\nConsumer spending increased modestly. A Minnesota-based bar and restaurant chain noted that sales were up moderately during May and June compared with a year ago. A mall manager in North Dakota reported that sales increased modestly while traffic decreased slightly during late May and June; apparel sales were particularly slow. Meanwhile, a Minnesota-based apparel retailer recently reported strong gains in same-store sales. Minnesota vehicle sales were up from a year ago during May and June with truck sales particularly strong, according to a representative of an auto dealers association.\nWhile wet and cool weather slowed May and June tourism-related activities in some areas, tourism businesses were optimistic for the summer season. New boat registrations in Minnesota were down 17 percent in 2013 compared with the same time period in 2012. Nevertheless, a Minnesota state tourism office survey of lodging and camping businesses in the state showed that 38 percent expect higher occupancy this summer with 46 percent expecting level occupancy. After a slow start to the summer season, lodging reservations and traffic to tourism destinations in the Upper Peninsula of Michigan have picked up. In Montana, lodging and visits to attractions during the first part of summer were up from last year.\nConstruction and Real Estate\nCommercial construction activity continued to increase since the last report. The value of June commercial permits in Billings, Mont., increased significantly from last year, while hotel building rose to $6 million in June compared with zero in the first six months of 2012. A manager of an industrial real estate company noted increased interest in building warehouses on speculation because some purchase prices for existing structures are higher than the cost of building new. Several national retailers are opening new stores this year in the Minneapolis-St. Paul area. However, in Sioux Falls, S.D., the value of June permits was down from a year ago. Residential construction increased at a fast pace over past year. The value of June single-family residential building permits in Billings was up 28 percent from last year; multifamily building also increased significantly. The value of June residential permits in the Minneapolis-St. Paul area was up by 19 percent from June of 2012, while it fell in Sioux Falls.\nActivity in commercial real estate markets increased since the last report. The University of St. Thomas semiannual survey (May) of 50 Minneapolis-St. Paul commercial real estate leaders noted higher rents, occupancy, land prices and building material costs. Minneapolis-St. Paul area second quarter vacancy rates dropped from the first quarter for retail and industrial space, according to a research firm. Residential real estate market activity increased at a robust pace. May home sales were up 13 percent from the same period a year ago in the Minneapolis-St. Paul area; the inventory of homes for sale was down 22 percent, and median sale prices rose 15 percent. In the Sioux Falls area, June home sales were up 16 percent, inventory was down 15 percent and the median sale price increased 5 percent relative to a year earlier.\nServices\nActivity at professional business services firms increased since the last report. In Minneapolis, a technology consulting firm reported a recent expansion and an intellectual property protection firm is expanding. A lawyer at a Minnesota-based firm noted an uptick in corporate legal work.\nManufacturing\nThe District manufacturing sector continued to expand since the last report. A June survey of purchasing managers by Creighton University (Omaha, Neb.) found that more manufacturing firms increased activity in Minnesota and the Dakotas than in previous months. An electronic equipment producer is moving forward on a plant in Minnesota. Another Minnesota firm that makes cable for utilities and telecommunications companies reported strong sales during the past few months. Several contacts in the metal forming business reported that they were having very strong years, with a few reporting their best year ever. A firm that supplies capital equipment to that industry is seeing strong demand; the auto sector was a particular source of strength.\nEnergy and Mining\nActivity in the energy sector increased moderately, while mining activity was sluggish. Late-June oil and gas exploration activity increased slightly in North Dakota from the last report and was flat in Montana. A Minnesota utility announced plans for $1.8 billion in upgrades to existing nuclear power plants. Recent output at District iron ore mines was below year-earlier levels. However, development will resume on a stalled copper-nickel mine project in the Upper Peninsula after the mine was sold to another company.\nAgriculture\nThe agricultural sector weakened since the last report. District farmers made progress after a late spring, but remain behind the five-year average for corn and soybean plantings due to recent heavy rains. In some areas, farmers are expected to switch from corn to soybeans due to the weather. Prices increased from a year earlier for wheat, corn, soybeans, chickens, milk, hogs, cattle and eggs; prices fell for turkeys and dry beans. The late plantings, along with concerns about warmer and drier weather later this summer, caused the USDA to increase its corn price forecast slightly, though prices are still expected to decrease from current levels.\nEmployment, Wages, and Prices\nLabor markets continued to tighten slightly. In North Dakota, a health care administrative services firm plans to hire 375 new employees by September. A wind tower manufacturer recently announced plans to hire 250 workers in South Dakota when site construction is completed next year. A pipeline company plans to add 110 jobs in Minnesota. May Minnesota unemployment insurance claims were down 2 percent from a year earlier; data in recent months have averaged close to prerecession levels. However, a cellular phone company recently announced plans to lay off 50 employees at a plant in North Dakota. A software distributor announced plans to move its corporate headquarters out of Minnesota, eliminating 150 jobs in the state. In May, federal government employment in Minnesota was at its lowest level in more than 20 years, while state government employment was at its lowest level since January 2008.\nWage increases were moderate. According to a recent St. Cloud (Minn.) Area Quarterly Business Report, 52 percent of respondents expect to increase compensation over the next six months, while 45 percent expect no change. In last year's survey, 38 percent expected to increase compensation, while 58 percent expected no change.\nPrice increases were subdued since the last report. A Minnesota-based food producer noted that it expects input cost inflation of 3 percent this year. Metals prices decreased over the past month. Minnesota gasoline prices decreased 90 cents per gallon from a spike in prices at the end of May; recent prices were about the same as 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 17, 2013\nAggregate business activity in the Third District maintained an overall moderate pace of growth during this current Beige Book period. In particular, auto sales accelerated to a strong rate of growth, lending firmed up to a modest rate of growth, and manufacturing activity appears to have grown slightly after declining slightly last period. The growth rate of residential construction, existing home sales, and general services continued at a moderate pace. Commercial real estate leasing continued to expand at modest rates, while commercial real estate construction continued to expand only slightly. General retail sales, staffing services, and tourism appear to have resumed a modest rate of growth this period after a small surge last period. Manufacturing has resumed at a slight rate of growth after declining slightly last period. Loan volumes at Third District banks grew at a modest pace across most categories, a little faster than last period. Credit quality continued to improve. Little change was reported for general price levels as well as for wages and home prices. Contacts reported slight increases overall--similar to the last Beige Book period.\nAn overall outlook for moderate growth has continued since the last Beige Book. Contacts expressed greater confidence in the consumer and in the sustainability of current trends. Firms remain cautious about hiring and about carrying out their long-term capital expenditure plans. However, firms are more comfortable investing when necessary to replace or upgrade aging equipment and to meet growing demand.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported that orders and shipments are rising again. The makers of paper products, rubber products, fabricated metals, industrial machinery, and instruments have reported gains since the last Beige Book. Firms supplying the home-building sector continued to report strong orders and ongoing hiring to keep pace. The makers of food products and electronic equipment reported lower activity (some was seasonal). Reports were mixed for makers of primary metals. Other contacts attributed growing demand to auto-related business and foreign demand. A negative impact from sequestration was cited by some firms, while others said they avoided the worst effects. Firms continued to report restraint in current hiring but a desire to hire more workers in the near future.\nAcross nearly all sectors, Third District manufacturers remained optimistic that business conditions will improve over the next six months. Business plans for the remainder of the year have been lowered slightly for some firms. However, firms appear more confident of ongoing, steady growth and more willing to invest in capacity and hire new workers as needed to keep pace with demand. Overall, firms have significantly increased their expectations of future hiring and their plans for capital spending since the last Beige Book.\nRetail\nThird District retailers have reported modest growth--dampened by rainy weather--since the last Beige Book. Contacts described June and July as seasonally slower months, as local residents head off for summer vacations. However, excessive rain in June kept still more people away from stores, while some showed up just to \"hang out\" at the mall. Mall operators reported that the general retail climate has improved, citing stronger demand for retail space and rising occupancy rates.\nAuto dealers reported that June sales accelerated to a strong rate of growth. Sales, described as \"on fire\" for the first couple of weeks of June, may have produced \"the best [June sales] in six years.\" Dealers attributed a better sales climate, in part, to no supply problems, no credit problems, and falling unemployment rates. Dealers are bullish for the next couple of years but continue to hire cautiously.\nFinance\nOverall, Third District financial firms reported modest increases in total loan volume--a slight improvement since the previous Beige Book. Banking contacts cited stronger demand for all major loan categories, including C&I loans, real estate loans, and consumer loans, including credit cards. Consumer lending and home equity loans remained slow, as refinancings remained a preferred option for homeowners. However, contacts reported a decline in refinance applications in the pipeline after rates rose. Meanwhile, increasing sales of new and existing homes are raising demand for home mortgages. Banking contacts continued to report strong competition for loans and concerns about competitors lowering their lending standards. However, most banks reported \"improvement in all aspects of business,\" including \"more upgrades of credits\" within their own portfolios. Contacts expressed continued optimism for future growth and sensed greater customer confidence.\nReal Estate and Construction\nHomebuilders throughout most of the Third District continued to report moderate growth. Though traffic and sales were soft in a few markets, most builders are meeting their plan for the year with increases as high as 40 percent. Builders reported no systemic impediments to sales, such as credit availability and mortgage issues. Some builders still face labor shortages for carpentry and framing work, and several contacts have reported a shortage of finished land. Moderate growth of existing home sales continued through June, according to residential brokers. Sales closed and sales pending grew by double digits (year over year) in several larger metropolitan areas in the Third District.\u00a0 The estimated months' supply of the existing inventory of homes has fallen to near six months in many areas. Brokers say the anticipated shadow inventory of homes has not yet emerged.\nNonresidential real estate contacts continued to report little change in the modest pace of overall leasing activity and slight growth of construction. Although the overall climate for new construction \"is getting incrementally better,\" contacts reported a renewed strong push for industrial structures along the I-81 and I-76 corridors throughout eastern Pennsylvania and into central New Jersey. Construction activity also remains greater for multifamily residential units, higher education facilities, and public utility infrastructure. Contacts continued to report heavy competition and thin margins on projects. Overall, contacts remained optimistic for a continuation of slow, steady growth.\nServices\nThird District service-sector firms continued to report a moderate pace of growth overall. Despite earlier strong bookings, shore destinations in Delaware and New Jersey reported somewhat lower activity (traffic counts, bookings, and boardwalk sales) and cited rainy weather through much of June as one source of the problem. A multimillion dollar advertising campaign has helped boost Jersey Shore activity, but tourism in the areas hardest hit by Hurricane Sandy is still down somewhat more than is necessitated by the actual damage. Casino revenues from Atlantic City and the state of Delaware remain on a downward trend, and reports from Pennsylvania casinos indicate that revenue from slot machines appears to be turning in the same direction.\nIn other sectors, firms cite steady progress--rising consumer confidence, limited cost pressures, and growing sales. A staffing firm reported a slight sag in billable hours for June following strong growth through May year to date. Other service-sector firms reported \"incrementally better\" growth, tight margins, and cautious hiring. Contacts offer mixed reports on their ability to attract qualified workers while generally citing no wage pressures. Overall, service-sector firms remain optimistic about future growth.\nPrices and Wages\nOverall, price levels continued to increase slightly, similar to the previous Beige Book. Manufacturing firms reported modest increases for prices paid and prices received. Auto dealers reported no changes in pricing. Homebuilders continued to face tight margins and higher prices for some skilled labor. Most real estate contacts reported stable, if not rising, prices for lower priced homes, and contacts in some markets noted stable prices for higher-priced homes. Contacts from retail, restaurants, and some services indicated that commodity prices have not been a big issue this year as in the recent past. Wage pressures remain constrained, according to most contacts other than homebuilders.\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 17, 2013\nEconomic activity in the Second District has continued to expand moderately since the last report. Manufacturers indicate that input price pressures have abated further, whereas service sector contacts report that they remain fairly widespread; prices of finished goods and services are stable to up slightly. Labor market conditions continue to improve gradually, and businesses have become more willing to negotiate on salary. \u00a0Retailers report that sales were on the soft side in May and especially in June, whereas new automobile sales are reported to be steady. Tourism activity remains steady at a strong level. Commercial and residential real estate markets have continued to firm throughout the region. Finally, bankers report mixed but generally steady loan demand, no change in credit standards, continued narrowing in loan spreads, and further declines in delinquency rates across all loan categories.\nConsumer Spending\nRetailers report that sales softened in May and especially in June. One major retail chain reports that same-store sales were little changed from a year earlier, running modestly below plan in May and noticeably below plan in June. Another chain indicates that sales were down noticeably from 2012 levels in both months. In general, New York City stores performed a bit better than those elsewhere in the District--likely buoyed by tourism. Major malls in upstate New York indicate that sales were steady to lower than a year earlier. Most of the retail contacts attribute at least part of the recent softness in sales to unseasonably cold and wet weather. Inventories are generally reported to be at desired levels or a little on the high side. Prices are characterized as steady, and no unusual discounting is reported.\nAuto dealers in the Buffalo and Rochester areas report that new vehicle sales were steady at favorable levels in May and June, and continued to run moderately ahead of comparable 2012 levels. Sales of used automobiles are characterized as soft--in large part because of attractive deals on new autos. Wholesale and retail credit conditions for auto purchases remain in good shape.\nTourism activity has been mixed but generally fairly robust since the last report. Manhattan hotels report continued strong business, with total revenues up 7 percent from a year ago: occupancy rates exceeded 90 percent and were roughly on par with a year ago, room rates were up 3-4 percent, and there are about 3 percent more hotel rooms than a year ago. On the other hand, attendance at Broadway theaters has continued to be weak, reflecting considerably fewer shows running than in the spring of 2012. Finally, consumer confidence in the region has improved since the last report: The Conference Board\u00c2\u2019s June survey of residents of the Middle Atlantic states (NY, NJ, Pa) shows confidence rising for the third straight month, approaching its five-year high set last October; Siena College\u00c2\u2019s survey of New York State residents shows consumer sentiment rising to its highest level this year in June, led by upstate New York.\nConstruction and Real Estate\nResidential real estate markets in the District have strengthened further since the last report. Sales prices for Manhattan apartments (co-ops and condos) were up moderately from a year earlier, while sales volume was up nearly 20 percent, further sharply reducing the inventory of units on the market. Rents on Manhattan apartments continue to rise and are running roughly 5 percent ahead of comparable 2012 levels, however, rents have slipped modestly in Brooklyn. New Jersey\u00c2\u2019s housing market has shown more modest signs of improvement: prices are rising slowly, reportedly restrained by an ongoing backlog of distressed properties on the market. However, new construction activity--particularly of rental apartment buildings--is running substantially ahead of a year ago. Finally, housing market conditions remain particularly strong in western New York State: very tight inventory levels have pushed prices up, and multiple offers and bidding wars have become commonplace, despite continued tight lending standards.\nCommercial real estate markets throughout the New York City metropolitan region also showed further improvement in the second quarter. Long Island\u00c2\u2019s office vacancy rate slipped below 8 percent for the first time in a number of years, while rates in northern New Jersey, Westchester and Fairfield counties edged down but remain on the high side. Office rents are little changed from mid-2012 in these areas. Manhattan\u00c2\u2019s office vacancy rate ticked up but remains low as of mid-year, while asking rents are up roughly 5 percent over the past year. Industrial markets have also tightened, particularly in Long Island, where vacancy rates have declined steadily and asking rents are up nearly 8 percent over the past year.\nOther Business Activity\nThe labor market continues to improve at a gradual pace. Two major employment agencies describe market fundamentals as favorable but note that the market is difficult to gauge at this typically slow time of year. One contact notes increasing difficulty in finding candidates with specific skill sets--especially for technology workers--and also finds companies becoming less reluctant to negotiate on salaries. This is described as the best year for college graduates since 2008.\nMore generally, manufacturing contacts report a modest increase in staffing levels and some pickup in business activity since the last report but do not expect to hire additional workers through the second half of 2013. Contacts in other sectors also report some pickup in both employment and business activity and do plan to ramp up hiring, as well as capital spending, in the months ahead. Input price pressures have abated further in the manufacturing sector but remain fairly widespread among service-sector businesses. Both manufacturers and service-sector contacts report that selling prices are relatively stable.\nFinancial Developments\nBankers report increased demand for commercial mortgages but decreased demand for residential mortgages. For other loan categories, as well as for refinancing, contacts report no change in demand. Respondents also note that credit standards remain unchanged across all loan categories. Bankers indicate a decrease in spreads of loan rates over costs of funds for all loan categories--particularly in commercial mortgages. Finally, bankers report decreased delinquency rates for all loan categories, but especially for commercial & industrial loans.\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 17, 2013\nEconomic activity in the First District continues to expand at a moderate pace, according to business contacts. Retailers, tourism contacts, manufacturers and consulting and advertising contacts all report modest increases in sales. Commercial real estate conditions are improving or holding steady, depending on location. Residential real estate contacts report increases in both house prices and sales. Overall prices are rising at a modest pace, generally in line with cost increases. Most businesses are holding employment steady, with substantial staffing changes only at firms experiencing significant increases or decreases in sales. Contacts generally expect the recent trend of moderate growth to continue.\nRetail and Tourism\nRetailers contacted for this round report year-over-year comp-store sales increases ranging between 1 percent and 5 percent. One contact had a low single digit decrease, but notes that sales trends have been improving. Demand is strong for all apparel categories, furniture, sporting goods, and mobile technology. Consumer sentiment continues to pick up, albeit very slowly, and prices at the wholesale and retail levels remain steady. All of the contacts expect continued slow-growth of the U.S. economy.\nThrough May, hotel revenues are up 1.5 percent year-over-year. Restaurant revenues are up 2 percent, slightly better than expected. Contacts attribute these increases to strong corporate business travel and entertaining. There is some softness in domestic leisure travel, as attendance at museums and other attractions is below expectations. Some of this decrease might be due to record-setting rainfall in New England during June. Contacts expect that leisure travel will increase during the summer travel season.\nManufacturing and Related Services\nMost of the 13 manufacturers contacted in this round report modest increases in sales. The one firm to report a significant decline in sales, a manufacturer of electric motors and brakes, could not pinpoint any specific reason for the weakness. Europe remains a source of weakness and China continues to inject volatility for manufacturing exports. One contact reports that sales in China of its products going into new commercial construction were up 46 percent in the second quarter. Only one contact, a manufacturer of textile and printing equipment, specifically mentions the evolving macroeconomic policy picture as an issue, saying that everything depends on what happens to interest rates. All but one of our contacts say that their outlook is for stable or higher sales going forward, but none report having raised their forecasts in the recent months.\nOnly one of our contacts cites significant staff reductions, the same firm that notes declining sales. That said, the only firms hiring in any significant way are rapidly growing companies in the technology and life science areas. Most of our contacts, 8 of 13, report no change in employment.\nAll of our contacts, including the one with declining sales, say that their investment plans have not changed and most report the same or higher levels of investment for 2013 as for 2012. Our contact at the firm with declining sales says that they try not to let the business cycle affect investment decisions as, \"A good investment is a good investment.\"\nAs far as pricing is concerned, no one reports anything out of the ordinary. Firms that need to raise prices, typically, appear to be able to do so; some raw materials prices, like copper, are less of an issue than they were a year ago.\nSelected Business Services\nConsulting and advertising contacts in the First District report a generally positive, but not exuberant, second quarter. Economic consulting has experienced very strong demand due to growth of high-stakes litigation. Healthcare and pharmaceuticals consulting contacts gave mixed reports, with several contacts reporting robust demand for services related to process efficiency, effectiveness analytics and marketing support, while another reports a slowdown in IT adoption. Strategy consultants had mixed results, with large firms faring better than smaller firms, largely due to greater exposure to the recently booming private equity industry. Marketing and advertising contacts report a slight uptick in growth from an already strong first quarter. Finally, a government contractor reports flat revenue.\nContacts report either no cost growth or costs rising roughly in line with 2 percent inflation, with the exception of one firm whose health and business insurance premiums rose 8 percent to 10 percent on an annual basis. Firms were roughly split between those facing pressure to keep rates flat and those with robust enough demand to institute rate hikes of 3 percent to 5 percent on an annual basis. About half of contacts report no net hiring, with the others increasing their workforces by 3 percent to 5 percent, mostly through larger incoming classes of entry-level workers beginning this summer. Firms reporting no net hiring were split between those who are waiting for stronger demand to justify hiring and those who hired rapidly in the recent past and are trying to adjust to their new size.\nAside from a government contractor who is too uncertain about the future of fiscal policy to offer any clear forecast, contacts expect growth to either pick up or remain strong for the rest of the year. Aside from the government contractor, contacts were minimally concerned about fiscal issues, the European debt crisis, and the state of the macro economy.\nCommercial Real Estate\nCommercial real estate markets in the First District are, for the most part, maintaining a solid footing. In Boston, rents on prime retail properties continue to climb and office rents are described as steady or rising, depending on location. Office leasing volume is holding steady in Hartford, although deals consist largely of short-term lease extensions with no expansion of space needs. Also in the Hartford area, investment sales demand remains strong for multifamily structures, while well-leased office buildings garner growing investor interest. In Providence, office leasing negotiations proceeded slowly as some tenants pushed back against landlords' rising rent demands, and some office sales fell through or stalled in response to June's spike in long-term Treasury rates. Also in response to the latter development, a regional banking contact reports that borrowing rates were raised on some commercial mortgages under negotiation and, moving forward, 10-year fixed-rate loans are likely to become more scarce. However, a Boston contact reports that borrowing rates and capitalization rates on commercial properties held largely steady in recent weeks.\nThe outlook among First District contacts is for slow improvement in fundamentals for the rest of 2013, but some downside risks were noted. For example, a gun manufacturer in Connecticut announced plans to relocate to South Carolina in response to the state's passage of stricter gun-control laws, taking jobs out of the state and vacating a significant amount of commercial space. Other gun manufacturers in the state are reportedly likely to follow suit in the coming months. A seasonal slowdown in leasing volume is expected in Providence for the summer months, and a few contacts across the District mention interest-rate movements as a considerable source of uncertainty for investment sales moving forward.\nResidential Real Estate\nSingle-family home and condominium sales rose throughout the First District in May. Contacts in the region report strong demand for housing, particularly in urban areas of New England. According to contacts, slight increases in interest rates will likely spur more buyer activity in the short term as households try to lock in historically low interest rates. In Massachusetts, particularly in the Greater Boston area, inventory levels remain low, placing upward pressure on prices. Contacts in the Greater Boston area caution that inventory remains the most significant constraint on sales growth. In other parts of the First District, smaller cities report depleting inventory levels in urban centers, though realtors in these areas feel that a sufficient number of homes are available to satisfy prospective buyers. In contrast to much of the region, Rhode Island maintains a high level of inventory, but that market appears to be recovering as sales activity and prices continue to increase.\nContacts expect sales activity and the median sale price to continue their upward trend. Inventory levels will likely remain an issue in urban areas due to a lack of new construction there. Contacts anticipate that homeowners may be more inclined to list their home for sale as house values continue to appreciate. Overall, contacts feel the market remains poised for healthy growth in the coming months.\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 17, 2013\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of late May through early July. Price inflation was minimal for most final goods and services, and upward wage pressures were mostly muted. Retail sales of goods grew modestly overall, although demand for business and consumer services was mixed. District manufacturing activity improved. Production and sales of agricultural items expanded. Demand for housing strengthened, and commercial real estate activity trended up further. Contacts from financial institutions reported increased overall loan demand.\nPrices and Wages\nPrice inflation was minimal for most final goods and services. Food industry contacts noted price increases for some protein items, including fish, poultry, and beef. Reports from health-care organizations mentioned that the pace of increases in insurance premiums has slowed. Competitive industry pressures constrained fees for legal and accounting services. Driven by demand, prices of some construction inputs, such as logs, edged up further.\nContacts reported that upward wage pressures were muted overall. Slack in the labor market held back wage gains in most sectors, occupations, and regions. However, firms in various industries continued to compete vigorously for a limited pool of qualified workers to fill certain technical positions, spurring significant wage growth for occupations such as software developers.\nRetail Trade and Services\nRetail sales grew modestly. Grocery and apparel retailers noted modest sales growth at retail store locations and relatively strong sales growth online. The retail grocery industry in particular appears to be shifting away from traditional large stores and towards e-commerce. Most contacts' outlook for consumer spending improved slightly since the prior reporting period. Contacts noted that an increase in demand for new devices has spurred some technology firms to expand their medium-term hiring plans. Suppliers of food and beverage products noted improved conditions, although sales of selected discretionary items, such as pet supplies, were a bit soft. As home purchases have increased, so has spending on housing-related products, such as furniture. New and used automobile sales were robust, and some dealers expanded their inventories in anticipation of a further pickup in summer sales.\nDemand for business and consumer services remained mixed. Robust activity in Hawaii supported the District's travel and tourism sector, although there is some concern that the flow of international visitors could subside in coming months due to weakness in the global economy. After slipping early in the year, travel and tourist activity in Southern California appeared to pick up somewhat toward the end of the second quarter. However, tourist activity in Las Vegas remained soft through the first half of 2013. Demand for elective health-care services stayed relatively weak, while demand for other discretionary services, such as restaurant dining, appeared to strengthen.\nManufacturing\nDistrict manufacturing activity grew overall in the reporting period of late May through early July. Although demand was weak for some electronic components, contacts indicated substantial increases in new orders for semiconductors. Led by launches of innovative products, demand for pharmaceuticals gained further. Wood product manufacturers appeared to ramp up output to levels that exceeded demand in recent weeks. As such, firms are expected to pare back production plans for the second half of the year. Demand for steel products used primarily in nonresidential construction continued to increase. Steel producers reported that capacity utilization ticked up a bit further, and reports of intensified energy usage across multiple goods-producing sectors in the Pacific Northwest implied improved capacity utilization in the region.\nAgriculture and Resource-related Industries\nAgricultural sales and production activity expanded. Demand was strong for most crop and livestock products. However, some contacts expressed concern about the lack of availability of manual laborers. Insufficient water also was a concern in parts of the District, with this year's rain and snow pack levels running well below seasonal norms. Contacts from the oil and gas industry faced challenges finding qualified geologists, geophysicists, and drillers to fill open positions. Inventories of natural gas rose further, and demand for gasoline edged up. Reports from the utilities industry indicated that business demand for electricity from wood products and aerospace firms has risen robustly, although overall demand growth was more modest.\nReal Estate and Construction\nDemand for housing strengthened substantially, and commercial real estate activity continued to trend up in most areas. Both sales transactions and house prices climbed further in many District cities. The pace of housing starts exceeded the expectations of some contacts. In some areas, the supply of homes for sale remained low, and some properties have received multiple offers from prospective buyers. Construction of multifamily residential projects increased on balance. Commercial real estate activity expanded rapidly in some major metropolitan areas, even though construction of publicly funded commercial projects has slowed in some regions due to funding constraints from state and local governments.\nFinancial Institutions\nReports from financial institutions indicated that loan demand continued to increase. Contacts noted an uptick in applicants seeking residential construction loans and commercial office building mortgages. In line with reports of an improved outlook for business investment, banking contacts indicated that some firms have recently expanded their borrowing in order to invest in long-deferred expansion and capital improvement plans. Although banking contacts highlighted generally stiff competition for well-qualified business borrowers, they also noted more lending opportunities. However, hiring plans were mixed, with some financial institutions expecting to expand their payrolls significantly and others mentioning possible layoffs. In the District's Internet and digital media sectors, mergers and acquisitions activity stepped up in recent months. However, the pace of initial public offerings remained slow, and both venture capital and private equity activity were relatively weak.\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 17, 2013\nDistrict economic activity strengthened moderately in recent weeks. Manufacturing shipments and new orders increased. Consumer spending firmed somewhat and auto sales remained solid. Services providers also reported steady to stronger demand. Additionally, tourist bookings were up year over year. In banking, demand rose for new residential mortgage lending. Commercial and industrial lending was flat to slightly higher. Residential real estate sales and construction increased, with speculative building returning to some areas. Commercial construction was little changed and leasing was steady overall, with occasional reports of rising rental rates. The effect of continued heavy rainfall on agriculture was mixed, slowing planting or damaging some crops while bolstering others. Natural gas production increased since our last report, particularly shale gas, and coal production was steady but well below year-ago levels. In labor markets, temp hiring picked up, although many firms were reluctant to hire permanent workers. Average wage growth was flat to faster, and price changes were mixed.\nManufacturing\nManufacturers expressed cautious optimism in the weeks since our last report, as activity in that sector strengthened modestly. Shipments and new orders rose, and the average workweek increased. Despite the improved conditions, producers preferred to use cash to update technology and existing infrastructure, rather than undertake expansion. A plastics manufacturer commented that his company was purchasing new machinery in response to increased work levels, and he saw industrial confidence as being up, but still cautious. A lumber company executive said he will not hire new full-time employees until next year, but that, so far, this has been his best year since 2007. Moreover, according to a representative of several manufacturers, some firms have gone to two shifts and further growth is expected for the second half of this year as backlogs build. Even so, he described confidence as \"fragile, and nobody takes it for granted.\" Federal spending reductions, tax changes, and slower overseas demand affected some manufacturers. A manufacturer of packaging materials commented, \"There is a light at the end of the tunnel, but it only flickers at times.\" Price growth increased for raw materials and finished goods, according to our latest survey of manufacturers.\nPorts\nPort volumes were little changed overall in recent weeks. Lumber imports picked up, while imports of auto parts and auto assembly inputs softened slightly from very high volumes. Imports and exports of autos remained strong. Exports of containerized agricultural products rose, particularly logs and animal feed inputs, while exports of wheat sprouts declined. Energy-related exports and agricultural equipment were solid, with agricultural equipment peaking in late spring as usual, albeit somewhat below year-ago record levels. Overall, coal exports were unchanged. Port administrators expected seasonal increases in the weeks ahead for back-to-school and holiday imports.\nRetail\nRetail sales strengthened slightly in recent weeks, helped by big-ticket sales. A wholesaler of heavy construction equipment commented that his firm had seen significant improvement. Additionally, a contact at a large auto and light truck dealership remarked that sales volume was strong and the market was extremely competitive. He noted that new vehicle sales were being driven by full-size pickups that are typically purchased by homebuilders and construction-related services businesses. Used car sales were exceptionally strong and some dealers had shortages of used vehicles. A report from a large department store chain said that cold and damp weather, along with the payroll tax change, had constrained sales. Retail price growth slowed since our last report.\nServices\nNon-retail services firms reported steady to stronger activity. Telecommunications firms, accountants, and a firm specializing in software design for clinical use reported rising revenues. Hospital consolidation remained \"intense,\" according to a contact in North Carolina. Non-retail prices rose more slowly in this reporting period.\nTourism picked up. Bookings rose in the Tidewater, Virginia region. Additionally, a hotel manager in western North Carolina noted that his bookings have risen compared to a year ago and that expectations were for continued year-over-year growth for the remainder of this year. A contact on the outer banks of North Carolina reported general optimism and added that cutbacks in government funding for tourist sites have led to increased fund-raising events, such as concerts. Rates were little changed.\nFinance\nBanking activity increased slightly since our last assessment. Demand for residential mortgages was up in most markets and bankers across the Fifth District commented that there had been a noticeable shift toward new purchases and away from refinancing. A Virginia banker proclaimed that \"refinancing had died,\" although a lender in South Carolina said that refinancing still made up the majority of his residential mortgage business. However, some customers no longer qualified for loan refinancing due to higher rates. Similarly, \"the phone rang more often\" for a Virginia banker while a lender in Maryland reported that people were waiting to see what rates would do. Demand for residential construction loans rose in South Carolina. Commercial and industrial loan demand was flat to slightly higher. There were several loans in the pipeline at a West Virginia bank, most of which were for new structures (i.e., office buildings, car showrooms, and a retirement community). However, higher interest rates caused some deals to be reevaluated and put on hold or pulled. Contacts also stated that clients were surprised at the higher rates and that businesses were trying to figure out how best to budget for them.\nReal Estate\nResidential real estate sales expanded. Two Washington, D.C. area agents reported that it was now routine to see multiple offers for a home, as well as escalator clauses in those contracts. Another contact in the region said that home repair and specialized construction were benefitting from strength in the housing market. Due in part to its proximity to D.C. and Baltimore, home sales in the eastern panhandle of West Virginia finally saw some improvement. In addition, home sales in western North Carolina were up, causing inventories to erode and speculative building to resume. Inventories were also low in the Charlotte region where home sales and prices had both increased. Lastly, a source on the eastern shore of Maryland stated that appraisals were below the sales price of homes in some areas.\nCommercial real estate and construction markets were little changed overall in recent weeks. Demand for commercial real estate in Washington. D.C. continued to be scarce as people were \"waiting on the sidelines\" to see what would happen with the economy and government spending. In addition, one large business in the D.C. area sold its buildings and turned to renting space while another shifted out of large leased spaces and consolidated into buildings owned by the firm. There were conflicting reports from our North Carolina contacts about multi-family housing: one reported there was now some overbuilding while another said there was still a lot of strength in this type of housing. This latter sentiment was echoed by a report from the Tidewater area of Virginia indicating that multi-family was doing well and stalled projects were coming back on line. Contacts in other parts of the state reported that lot inventory was low or \"almost nil.\" Retail, office, and industrial leasing activity was steady in Virginia and West Virginia while rental rates edged up in Charlotte and Richmond.\nAgriculture and Natural Resources\nRecent reports on agricultural conditions were mixed. While a South Carolina farm loan banker reported that the wet weather earlier in the year \"started the crop season off in a positive light,\" other reports from South Carolina and Virginia indicated that the rains delayed planting and even resulted in one farmer planting soybeans and cotton instead of corn. In addition, a South Carolina contact noted that heavy rains had damaged the regional wheat crop to the extent that sprouts were unacceptable for export. A North Carolina source also noted a recent shift to cotton over corn, due to declining corn prices. Nevertheless, another source remarked that agricultural lending was \"booming\" and demand for wood products continued to rise.\nNatural gas production--particularly shale gas--continued to increase in West Virginia. Moreover, one shale plant was less than fully staffed because of a worker shortage. Although rig counts were down nationwide, West Virginia was one of five states that recently saw an increase in rig counts. Coal production remained steady in recent weeks though well below a year ago. Coal lay-offs in southern West Virginia were expected to come later this year.\nLabor Markets\nConditions in the District labor market were somewhat better since our last report. Employment rose in several industries, including home repair and construction, hotels, and medical software. In addition, a contact from a temp agency in North Carolina reported there was high demand for technology professionals, particularly for healthcare-related IT, as well as accounting, finance, and real estate. He added that contingent labor was in much greater demand than full-time employees due to uncertainty about the economy; another source said that small businesses were going out of their way to avoid the long-term commitment of permanent hiring. In contrast, a web consulting firm in Virginia and a social assistance organization in North Carolina planned to add employees. Also, a staffing agency in South Carolina reported weak demand for labor, and two electrical equipment manufacturers laid off employees. According to our latest surveys, wage growth picked up in the manufacturing sector, remained robust at non-retail establishments, and flattened at retail businesses.\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 17, 2013\nReports from Sixth District business contacts indicated that economic activity expanded at a modest pace in June and early July. The outlook for the rest of the year remains optimistic for most firms.\nRetailers noted mixed sales results and vehicle sales grew at a robust pace. The hospitality sector continued to experience strong demand. Most brokers and homebuilders reported increases in sales and prices, and declining home inventories. Commercial contractors cited improvement in overall demand and a slight increase in construction. Manufacturing firms indicated that activity grew, albeit at a slower rate than in our previous report. Loan demand remained stable for residential real estate, while loans for autos outside of the dealership remained constrained by competitive offers from auto manufacturers. Employment growth for the District was modest. Firms remarked that stable input prices have helped improve profit margins slightly.\nConsumer Spending and Tourism\nReports from District retailers were mixed. While most merchants experienced modest growth, growth was lower than expected in some cases. Some attributed lackluster sales to weather conditions. Auto dealers continued to experience strong growth.\nTravel and tourism activity continued to exceed expectations. Contacts throughout the District reported that key indicators of demand (visitation, hotel occupancy, average daily rate, and revenue per available room) and profitability were positive and steadily rising. In spite of increases in accommodation rates, demand remained strong with advanced bookings for the next three to six months increasing to levels above those from a year ago. With strong convention and group meeting activity planned for the remainder of 2013 and positive lead volume for 2014, District hospitality contacts anticipate the positive momentum of 2013 to continue in 2014.\nReal Estate and Construction\nDistrict brokers continued to report that existing home sales remained ahead of last year's level were mostly ahead of expectations. However, brokers still report that inventories remain at low levels, and thereby restraining sales. Shortages were also said to be putting upward pressure on home prices. Existing home prices continued to rise on a year-over-year basis. The outlook for sales growth remained positive, with the majority of brokers anticipating sales gains over the next several months.\nDistrict homebuilders reported that new home sales and construction were ahead of year earlier levels. Recent activity was mostly in line with expectations and buyer traffic remained strong. However, builders noted that access to financing and a shortage of developed lots continued to constrain construction activity. Most contacts reported that new home inventories were below the year earlier level and prices rose modestly. The outlook for construction and new home sales remained positive, but the outlook for growth moderated somewhat compared with our last report.\nDistrict commercial real estate contacts indicated that demand continued to improve from earlier in the year. Construction activity was described as flat to slightly up from earlier this year and was dominated by build-to-suit projects and renovations of existing space. While a wider variety of projects seems to be in the works compared with a year ago, activity was still concentrated in medical office space, certain types of retail, and apartments. Commercial brokers indicated that demand for space improved at a modest pace. Brokers reported that most markets still favored tenants; however, rate increases continued to be noted in select submarkets. The outlook among District commercial real estate contacts remained positive with further improvements expected this year.\nManufacturing and Transportation\nRegional manufacturers reported expanding activity; however, the rate of growth slowed as a result of a decrease in new orders, production, and finished inventory. Contacts reported a slight decline in commodities prices and some expressed that inventories may build in some sectors as manufacturers take advantage of favorable prices. Less than half of purchasing managers expect production to be higher in the next three to six months, slightly lower than our previous report.\nDistrict port contacts cited notable year-over-year growth in container trade, autos and machinery, and bulk cargoes, including a significant increase in the exporting of natural gas. Trucking companies cited a rise in shipments of building construction materials, as well as chemicals; however, capacity remained constrained due to driver shortages. Total year-to-date railroad volumes were reported to be flat through June, but significant activity was noted for petroleum-related products and other chemicals, forest, lumber and wood products, and metallurgical coal.\nBanking and Finance\nSome institutions reported a pickup in mortgage loan demand attributed to improved housing markets and increasing interest rates. They also indicated that while mortgage refinancing had slowed, new purchase loan demand had increased. Demand for automobile loans declined as banks and credit unions noted they could not compete with zero percent deals from auto manufacturers.\nSome bankers indicated vigorous competition for loans has led them to change loan features, such as relaxing guarantee requirements or covering a substantial chunk of closing costs. Local community bank contacts had eased up on covenants and guarantees and were willing to take more risks, particularly when a loan fit a category in which they were interested.\nSome businesses were courted with offers to refinance debt with eased covenants and restrictions, while others indicated financing was still a major impediment to new construction projects and securing funding remained difficult.\nEmployment and Prices\nSince the last report, District payrolls grew at a modest pace. Tennessee experienced moderate payroll gains in retail, trade and transportation, professional and business services, and manufacturing. Alabama continued to see hiring in hospitality services, most notably in accommodation and food services. Louisiana added jobs in construction, and education and healthcare. All District states saw payroll contractions in their government sectors, with the exception of Mississippi, which showed a mild gain at the state government level.\nIn general, most input costs remained relatively stable, helping to support slightly stronger profit margins in the face of improving, but still below pre-recession sales levels. Some notable exceptions were costs related to construction materials such as lumber, concrete, and drywall, which increased for a number of contacts. The Atlanta Fed's Business Inflation Expectations survey showed year-ahead unit cost expectations ticking down from 2 to 1.8 percent in June, marking the lowest reading since January.\nNatural Resources and Agriculture\nRegional oil and gas activity remained robust. Significant capital investment continued in liquefied natural gas (LNG) facilities along the Gulf Coast. Expansion projects on existing refineries were noted as moving along, marking the first time such investments have been made in twenty years. There were some comments that high costs to transport oil and gas by rail, barge, and truck were exerting upward pressure on prices for refined products. Contacts also indicated that capacity for oil and natural gas products remained abundant and that domestic demand for energy products was beginning to rise for the season.\nSince our last report, soil throughout much of the District improved to more favorable, drier conditions. Pasture conditions improved as well. \u00a0Monthly prices paid to farmers were up for cotton, soybeans, corn for grain, rice, citrus, hogs, and broilers. During this same period, beef prices were down slightly, but still moderately higher than this time last year.\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 17, 2013\nThe Eleventh District economy generally expanded at a slightly stronger\u00a0pace over the past six weeks than during the previous reporting period. Manufacturing activity increased somewhat overall, with stronger reports from metals and petrochemical producers. However, retail sales were flat after rising in the previous six weeks, and auto sales softened slightly. Nonfinancial services firms noted a continued rise in activity, and demand for accounting services grew at a stronger pace. The housing sector continued to improve, with a rise in new construction. Office and industrial leasing activity remained strong. Financial institutions noted growth in loan demand was stronger than six weeks ago, and energy activity remained at high levels. Drought continued to dampen the agricultural sector. Prices held steady at most Eleventh District reporting firms, and employment levels were flat overall with scattered reports of hiring.\nPrices\nMost responding firms said prices were stable, although there were some reports of increases. Airline ticket prices rose slightly because of summer demand, and transportation service firms expect shipping rates to increase due to a recent upturn in jet fuel prices. Home prices rose rapidly as demand continued to outstrip supply. Financial institutions reported a notable rise in mortgage rates. Accounting contacts said billing rates stabilized after earlier increases were successfully implemented. Retail prices were unchanged since the last report.\nOil prices rose slightly over the reporting period. Natural gas prices fell below $4 per mcf. Gasoline prices edged down and diesel prices increased.\nLabor Market\nEmployment held steady at most responding firms, although there were more reports of hiring than at the time of the last report. Nominal employment increases were reported by retailers, and hiring was noted by some primary metals and cement manufacturers. Accounting and legal firms continued to add workers in selected business areas. A railroad contact reported employment growth, but the hiring was concentrated outside the Eleventh District. Difficulty finding qualified workers became more widespread, with scattered reports among accounting, finance, single-family construction, auto sales, and primary metals manufacturing firms, as well as from retailers in the Eagle Ford Shale area.\nWage pressures remained mostly subdued, although increased compensation was reported in accounting and legal services.\nManufacturing\nManufacturing activity improved slightly over the reporting period. Construction-related manufacturers said demand was flat or up, and a cement producer noted very strong demand from residential construction, allowing the company to choose which projects to take on. Outlooks were more optimistic than in prior periods. Primary metals manufacturers said demand held steady at strong levels, although there wasn\u00c2\u2019t much enthusiasm regarding the remainder of the year. An exception was commercial construction-related demand, which is expected to pick up. Fabricated metals firms noted improved demand and positive outlooks.\nHigh tech orders and production were flat to slightly up since the last report. Semiconductor manufacturers reported some improvement in demand for memory equipment but weakness for logic devices. Demand is expected to be flat in the second half of the year, although there was increased concern that orders may weaken.\nPaper manufacturers said demand was less volatile than earlier in the year, and business is expected to stay roughly at current levels in the near-term. Food producers said demand held steady and outlooks remained positive.\nTransportation manufacturing contacts reported steady or slightly increased demand, with business generally improved from a year ago. Most firms expect strong demand through year end.\nPetrochemical producers noted some pickup in activity since the last report, although most markets were stable. Contacts remained positive in their domestic outlooks, but global weakness was weighing on the overall picture. Refiners said operating rates and margins were up over the reporting period.\nRetail Sales\nRetail sales volumes held steady over the reporting period and were up from a year ago. Outlooks for the rest of the year were positive, with growth expected to continue at about the same pace as in the first half.\nAutomobile sales were slightly softer than six weeks ago but remained strong. Demand was up year over year. Selling prices held steady at very competitive levels over the reporting period. Outlooks for the third quarter were optimistic, and contacts expect the rest of 2013 to be strong. However, there was continued concern about rising costs, particularly from the Affordable Care Act.\nNonfinancial Services\nMost nonfinancial services firms noted increased demand since the last report, although staffing services contacts offered mixed reports: high-level IT workers and engineering project managers were in high demand, while demand weakened for lower-skilled positions. One staffing services firm saw more placements at the end of the quarter than usual. Accounting firms reported a strong increase in demand since the last Beige Book, led by transactions work. There was a good backlog of work, so contacts are expecting a strong third quarter. Legal firms noted modest demand growth, but work was down year-over-year on a per-lawyer basis. Real estate work continued to rise, although lawyers became somewhat concerned about interest rate risk. Contacts noted a lack of litigation work, and demand for energy work experienced a little softness although it remained strong. Firms expect to see improvement on a year-over-year basis in the fourth quarter.\nTransportation service firms said cargo and container volumes increased over the reporting period, except for air cargo, which held steady. Railroad contacts reported a slight increase in overall volumes, with notable increases in motor vehicles and crushed stone. Container volumes were up strongly in May, and retail trade continued to lead the growth in small parcel shipments, which increased in May for the third consecutive month. Outlooks were generally less positive than at the time of the last report.\nAirline contacts noted a seasonal increase in passenger demand over the past six weeks, with demand roughly in line with year-ago levels. Firms expect demand to slow as the leisure travel period ends. One contact expects 2013 to be about the same or slightly better than 2012, while another has an uncertain outlook.\nConstruction and Real Estate\nActivity in the housing sector continued to grow at a strong pace over the reporting period. Single-family home sales continued to outpace supply, leading to very low inventories and rapid price increases. Building activity picked up but was not yet able to meet demand in the major metro areas. Slightly higher mortgage rates are not expected to derail demand, according to most contacts. Apartment demand remained at high levels. Apartment construction rose in the major metros, where occupancies were above 90 percent.\nLeasing activity for office and industrial space was strong over the past six weeks, particularly in Houston and Dallas. Construction activity picked up in both Houston and Dallas, with numerous office and industrial projects underway. Contacts noted that the recent increase in interest rates has caused concern in the commercial investment markets, although the impact has been minimal so far\nFinancial Services\nFinancial institutions experienced moderate growth in loan demand. Commercial real estate and transactions lending increased solidly, especially in oil and gas areas around the Eagle Ford Shale and West Texas. Demand for auto loans grew strongly. Loan quality was good and continued to improve, and borrowers were still paying down debt rapidly. Loan pricing remained extremely competitive, and community banks were often outbid by regional banks. Mortgage rates rose in June. Deposits and deposit rates were flat to slightly down. The outlook for loan demand is optimistic, with a robust pipeline for mortgages.\nEnergy\nEnergy activity was little changed at high levels. Global demand held steady, although there was some weakness from Mexico and Canada. Respondents expect improvement in energy activity in the second half of the year, due in part to anticipated increases in rig activity and production from the Gulf of Mexico.\nAgriculture\nMuch of the Eleventh District remained in severe drought, with conditions little changed from the last reporting period. Row crop farmers completed planting, and crop conditions were mostly fair to good, according to respondents. The wheat harvest continued, but production was sharply reduced as a very large share of the acres planted was abandoned because of drought and freeze damage. Livestock feedlots and meat processors continued to suffer greatly from high feed costs and a shrinking cattle herd.\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 17, 2013\nThe economy of the Eighth District has expanded at a moderate pace since our previous report. Recent reports of planned activity in manufacturing and services have been positive. Residential real estate market conditions have continued to improve, and commercial real estate markets have also improved. Total lending at a sample of small and midsized District banks increased from mid-March to mid-June.\nManufacturing and Other Business Activity\nReports of manufacturing activity plans have been positive since our previous report. Several manufacturing firms reported significant plans to add workers, expand operations, or open new facilities in the Eighth District, while a smaller number of manufacturers reported plans to reduce their employee count. Firms in automobile, automobile parts, lumber, bakery, petroleum refining, and firearm manufacturing plan to hire new employees and expand operations in the Eighth District. In contrast, firms that manufacture boats, housewares, turbines, and medical equipment reported plans to lay off workers in the District.\nReports of plans in the District's service sector have also been positive since the previous report. Firms in television, prescription benefits management, electronics retail, residential care, utility, consulting, and automobile sales services reported new hiring and expansion plans in District states. In contrast, firms in transportation, financial, food wholesale, healthcare, and security services plan to lay-off employees. Reports from retail contacts were generally positive. There were more new retail store openings than store closings. However, many retail contacts noted that year-to-date sales were below expectations, and contacts were cautiously optimistic about sales for the remainder of 2013. Finally, sales reports from auto dealers were generally positive, citing increased sales for new and used cars as well as plans to open new dealership locations.\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, May 2013 year-to-date home sales were up 17 percent in Louisville, 24 percent in Little Rock, 8 percent in Memphis, and 14 percent in St. Louis. May 2013 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2012. Permits increased 18 percent in Louisville, 23 percent in Memphis, and 18 percent in St. Louis. Permits decreased 3 percent in Little Rock.\nCommercial and industrial real estate market conditions have continued to improve moderately throughout most of the District. A contact in Memphis reported that commercial and industrial real estate activity continued to strengthen. A contact in Louisville noted a strong demand in industrial real estate. Contacts in St. Louis reported that downtown office leasing appeared to bottom out compared with last year. A contact in northwest Arkansas also reported that commercial real estate activity was moving in the right direction. Commercial and industrial construction activity continued to improve throughout most of the District. A contact in south central Kentucky reported several commercial construction plans in Bowling Green, while a contact in central Arkansas noted a few retail construction projects. In contrast, contacts in Memphis and Louisville commented that industrial construction activity was low.\nBanking and Finance\nTotal loans outstanding at a sample of small and midsized District banks increased 1.8 percent from mid-March to mid-June. Real estate lending, which accounts for 73.4 percent of total loans, increased 0.9 percent. Commercial and industrial loans, accounting for 15.7 percent of total loans, increased 0.7 percent. Loans to individuals, accounting for 4.7 percent of total loans, increased 1.9 percent. All other loans, accounting for 6.2 percent of total loans, increased 15.3 percent. During this period, total deposits at these banks decreased 0.8 percent.\nAgriculture and Natural Resources\nAt the end of June, the condition of over 90 percent of the cotton, corn, soybeans, sorghum, and rice crops was rated as fair or better in all the District states. Furthermore, at least 70 percent of total pastureland across the District states was rated in good or excellent condition. The winter wheat harvest was behind its 5-year average and behind the progress made by the same time last year. Year-to-date coal production for the District states at the end of May was lower than the same period last year because of lackluster production in Illinois, Missouri, Tennessee, and Indiana. In contrast, year-to-date coal production in Arkansas was 55 percent higher than the same period last year.\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 17, 2013\nEconomic activity in the Seventh District expanded at a moderate pace in June, and contacts remained cautiously optimistic about growth prospects in the second half of the year. Growth in consumer and business spending picked up. Manufacturing production increased as did construction, led by continued improvement in the residential sector. Credit conditions tightened moderately. Cost pressures were again mild, and wage pressures remained moderate. Crop conditions improved, with the crop ending the period in better shape than a year ago.\nConsumer Spending\nGrowth in consumer spending increased in June. Contacts attributed the pick-up in the pace of growth to recent gains in consumer confidence, an increase in auto dealer incentives and other retail promotions, and the rebounding housing market. Auto sales increased at a faster rate than non-auto retail sales. Auto dealers reported strong sales of both pick-up trucks and small passenger cars, as well as an increase in activity in the leasing market. For non-auto retail sales, contacts noted that high-end retailers and discount stores both continued to fare better than middle market retailers.\nBusiness Spending\nGrowth in business spending also picked up in June. Spending on equipment and software increased slightly, as did spending on structures. A few contacts reported an increase in merger and acquisitions activity, but noted that deals were being delayed by uncertainty surrounding the economic outlook. Inventory investment was also impacted by elevated uncertainty. Retail contacts reported that inventories remained tight, as many retailers were planning to wait until after the back-to-school season to re-assess the state of demand and before placing the bulk of their holiday orders. Manufacturers were also limiting inventory investment, with a contact noting that steel service centers were liquidating inventories given weak demand. Labor market conditions continued to improve slowly. Demand for skilled workers remained relatively stronger, particularly for healthcare, information technology, engineering, and other technical occupations. Manufacturing contacts, however, were generally more cautious in their hiring plans, with some layoffs reported in industries where activity has slowed considerably in recent months. In addition, several retailers reported that the Affordable Care Act would lead to more part-time and temporary versus full-time hiring.\nConstruction and Real Sstate\nConstruction and real estate activity continued to increase gradually in June. Demand for residential construction grew steadily, as multifamily construction remained strong and single-family construction continued to improve. A homebuilder noted that while new single-family development remained limited, improvement of vacant lots in existing developments was increasing. Activity in the residential real estate market continued to increase as well, with home sales, prices, and rents rising. Nonresidential construction grew at a modest pace, driven in large part by the ongoing expansion of the auto industry. However, a contact noted that planned upgrades to auto supplier facilities were nearly complete; and that with auto production getting back to pre-recession levels, any additional capacity expansion was likely to be incremental. Commercial real estate conditions continued to improve as rents rose slowly and vacancies fell.\nManufacturing\nManufacturing production increased in June. The auto industry continued to be a source of strength, with the traditional summer shut-down period scaled back this year to meet the increase in customer demand. Vehicle demand was strong across all sectors, and auto industry contacts reported growing confidence that activity will remain robust in the second half of the year. Steel production again grew at a moderate pace, and specialty metal manufacturers reported a modest improvement in new orders and order backlogs. In contrast, demand for heavy equipment remained soft, although contacts anticipated a slight improvement in the remaining months of the year. Mining activity continued to weaken, and contacts expressed concern over the effect environmental regulations would have on the coal mining industry moving forward. Demand for construction equipment picked up some as the housing market continued to improve.\nBanking and Finance\nCredit conditions tightened moderately over the reporting period. Volatility increased across a number of asset classes and corporate borrowing costs rose. Financial market participants noted lower activity in fixed income markets, particularly the high-yield corporate debt market. Banking contacts cited less demand among their larger clients for leveraged financing, and continued uneven growth in the middle market driven mostly by refinancing of existing debt. Credit standards remained roughly unchanged, although contacts reported additional downward pressure on pricing. In contrast, consumer loan demand increased over the reporting period, particularly for auto lending.\u00a0With the recent increase in mortgage rates, mortgage refinancing slowed, but contacts again noted an increase in new mortgage originations.\nPrices and Costs\nCost pressures remained mild in June. Commodity prices continued to trend lower, although some contacts noted increases in the prices paid for concrete, drywall, metals such as steel and copper, and energy goods and services. Retailers again reported mostly modest increases in wholesale prices; and, overall, pass-through to downstream prices was limited. Wage pressures remained moderate, although many contacts again noted rising healthcare and other benefit costs. Some of these higher costs were being passed on to employees.\nAgriculture\nCrop conditions improved over the course of the reporting period, with the crop ending the period in better shape than a year ago. District farmers managed to get their crops in the ground despite additional planting delays caused by the unseasonably wet weather. Only a small percentage of acres will not grow a crop, where water pooled in low-lying areas and replanting was not possible. Fruit crops could produce record yields this year, in sharp contrast with the large losses seen a year ago. With stocks of corn and soybeans expected to remain at very low levels until the fall harvest, corn and soybean prices moved higher. The increase in feed costs negatively affected livestock operations, and contacts noted that it would lead to careful management of feed purchases until anticipated declines in crop prices are likely to materialize following a potentially record fall harvest. The first cutting of hay was mostly complete and was much better than last year. Supported by rejuvenated pastures, milk output also increased. Milk prices were roughly unchanged during the reporting period, while hog prices surged, and cattle prices were lower.\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 17, 2013\nThe economy in the Fourth District expanded at a moderate pace during the past six weeks. Manufacturing orders and production were steady or higher. The momentum seen in residential construction since the beginning of the year has slowed, but activity remains above year-ago levels. Nonresidential builders experienced a rise in the number of inquiries and backlogs. Retail sales were lackluster during May, while new motor vehicle sales posted moderate gains on a year-over-year basis. Conventional and unconventional natural gas and oil production was stable, and drilling has declined since the start of the year. Output at coal mines trended lower. Freight transport volume exceeded projections. Demand for credit increased slightly.\nHiring picked up in manufacturing and residential construction. Staffing firm representatives reported that the number of job openings and placements was fairly steady, with vacancies found primarily in healthcare and manufacturing. Wage pressures remain contained. Input and finished goods prices saw little change, apart from increases in construction materials.\nManufacturing\nReports from District factories indicated that new orders and production were largely stable or increased during the past six weeks. Companies seeing the strongest activity were suppliers to the residential construction and transportation industries. Compared to a year ago, production levels were mixed. Steel producers and service centers reported that shipping volumes were little changed. Our contacts expressed concern about downward pressure on domestic steel prices, which they attributed to rising imports. Motor vehicle production at District plants held steady during May on a month-over-month basis. Compared to a year ago, auto production rose slightly. Many of our contacts believe that demand will soften during the next couple of months, although part of the expected decline was attributed to seasonal factors. In response, there was some reduction in finished goods inventories.\nManufacturers commented that capacity utilization rates have fallen slightly but remain within their normal ranges. Capital expenditures are either on plan or slightly ahead for the fiscal year. Several companies anticipate increasing capital budgets in the upcoming fiscal year to better position themselves for expected growth opportunities. Raw material and finished goods prices were generally flat or trended lower. Steel producers who attempted to raise their prices met with limited success. Factories expanded payrolls at a modest pace, although finding qualified production and salaried personnel was difficult. Wage pressures are contained.\nReal Estate\nSales of new single-family homes were down slightly in June when compared to earlier in the spring, although they remain above year-ago levels. Construction starts also fell slightly. One contractor commented that the recent decline in sales is not abnormal for this time of year. Traffic and inquiries were described as much better relative to last year. New home contracts were found mostly in the mid- to higher-price-point categories. Demand for multifamily housing was strong. Builders were confident that the turnaround in the housing market will persist in the upcoming months. Nonetheless, they cited difficulty in obtaining financing and a lack of buildable lots as barriers to more robust growth. List prices of new homes increased by as much as 5 percent in certain markets this year due primarily to rising costs for land, building materials, and to a lesser extent, labor. Home builders have cut back on discounting. Sale prices of existing single-family homes continued to rise across the District on a year-over-year basis, but the rate of increase is somewhat lower than the national average.\nNonresidential builders have seen a small improvement in business conditions since our last report. Inquiries have picked up and backlogs are slowly rising. The strongest activity was on the commercial side, especially in distribution and warehousing. Bank financing is difficult to obtain, so many smaller projects are being funded with cash. Our contacts are hopeful that the improvement in business conditions they have recently experienced will continue at the same pace or accelerate during the remainder of this year.\nWe heard many comments about large price increases for building materials, especially lumber, drywall, and concrete, though the rate of increase has slowed during the past month. Home builders reported moderate hiring, especially for office personnel, while nonresidential builders limited their hiring to seasonal help. Wage pressures are contained. General contractors are concerned about the availability of qualified subcontractors if demand in the construction sector begins growing at a robust pace.\nConsumer Spending\nRetailers described May sales as lackluster and noted that they fell below plan. However, sales were fairly even with the same month a year ago. Some of our contacts cited poor weather conditions for holding down consumer spending. Looking ahead, third-quarter sales are expected to be modestly higher when compared to those in the second quarter. A few contacts reported that their inventories were slightly higher than desired. Vendor and shelf prices held steady. Capital expenditures were on plan for the fiscal year. Monies are allocated primarily for store improvements and expansions. No hiring is anticipated, except for staffing new stores.\nYear-to-date sales of new motor vehicles showed a moderate increase during May compared to the same time period a year ago. Buyers preferred smaller, fuel-efficient vehicles; however, purchases of large pickup trucks trended higher, especially in the eastern half of the District. New vehicle inventories are rising, but a majority of dealers said that they are satisfied with their inventory positions. Our contacts are fairly optimistic about sales prospects for the remainder of the year. Dealers pointed to pent-up consumer demand and the option to lease vehicles as reasons for their optimism. Used-vehicle purchases rose during the past six weeks. Inventory is building as lease rollovers start to come in. Prices for quality used cars remain high. Dealer investment in facility upgrades and expansions has increased as they grow more confident about the sustainability of higher sales volume. Dealers are looking to hire a small number of personnel, though some have postponed hiring decisions as they gauge the effectiveness of new technology that is being integrated into their selling model.\nBanking\nDemand for commercial real estate and multi family construction loans has picked up since our last report, while requests for other business loan categories were little changed. Almost all bankers reported aggressive credit-pricing pressure. Consumer credit demand rose slightly, especially for auto loans and home equity products. Residential mortgage activity remains relatively strong. Several bankers attributed a decline in refinancing to a rise in interest rates. New purchase mortgages are trending higher. No changes were made to loan-application standards. Aggregate core deposits grew at a steady pace, with a movement from CDs to demand deposits still taking place. There were a few reports about workforce reductions and shifting personnel as a means of cutting costs.\nEnergy\nDistrict coal production remains below year-ago levels, although the downward trend seen during the first five months of 2013 was showing signs of leveling off. Producers reported that demand from domestic utility companies is up slightly, while offshore demand is slowing (Asia) or stagnant (Europe). Spot prices for steam-coal rose slightly, whereas metallurgical coal prices were flat. The number of drilling rigs across the District has fallen significantly since the beginning of the year; however, the state of Ohio continued to issue shale gas drilling permits at a robust pace. Output from conventional and unconventional gas wells was stable during the past couple of months, while oil production picked up slightly. Well-head prices were little changed. Capital expenditures remain at targeted levels. On balance, little change was seen in production equipment and material prices. Energy payrolls and labor costs were flat.\nFreight Transportation\nOur contacts reported that shipping volume remains higher than expected, but the rate of growth has slowed since our last report. Freight executives are positive, but cautious about growth prospects for the near term. Of particular concern is how the new hours of service regulations (HOS) that went into effect on July 1 will play out. Our contacts believe that the primary impact of HOS will be on the availability of drivers and the ability of shipping companies to effectively schedule those drivers. Potential reductions in capacity will tend to drive up shipping costs. Prices for equipment and maintenance items were stable. Capital spending is on plan for the fiscal year. Monies are used mainly for tractor/trailer replacement and capacity expansion. The industry is still experiencing a shortage of drivers and skilled mechanics. The former may worsen under the new HOS regulations.\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 17, 2013\nThe Tenth District economy grew modestly in June, and expectations for future activity improved slightly. Tourism and restaurant sales edged up, while retail and automobile sales were steady since the last survey. District manufacturers reported slowdowns in production and shipments, principally due to regional storms over the survey period. Residential real estate activity continued to be strong, while commercial real estate activity marginally increased. Overall banking conditions improved slightly, with marginally higher loan demand and generally better loan quality. Agricultural growing conditions improved somewhat with recent rains, which led to a drop in expected harvest prices for corn and soybeans. District drilling and mining activity was flat, though energy contacts expected stronger oil and natural gas drilling in coming months. District contacts from most sectors reported little change in prices for food, building supplies and raw materials. Labor shortages ticked up, but wage pressures remained modest.\nConsumer Spending\nConsumer spending edged up in June, with increased tourism and restaurant spending, but little change in automobile and retail sales. Contacts in most sectors expected consumer spending to improve over the next three months. District retail sales were flat over the survey period. Purchases of large ticket items, such as appliances, slowed relative to lower-priced goods. Tourism activity and hotel occupancy rates both rose relative to the last survey period, but were similar to levels a year ago. Average daily room rates were unchanged and were expected to remain the same in the coming months. Restaurant sales ticked up since the last survey, and respondents expected similar levels of activity over the next few months. Automobile dealers reported sales were steady and above year-ago levels, but inventories continued to increase. The majority of dealers still expected faster sales growth in the coming months.\nManufacturing and Other Business Activity\nManufacturing activity contracted slightly in June, while high-tech activity rose and transportation was flat. A number of factories reported production delays and shipment interruptions due to recent regional storms and flooding. Activity was especially weak among producers of food and machinery. However, expectations for future factory activity continued to increase. High-tech service firms reported that sales improved during the survey period, but activity was expected to be flat over the next three months. Transportation activity and capital expenditures were unchanged in June compared to the previous survey period. Transportation firms reported difficulty finding qualified drivers, and some anticipated increased costs due to compliance with the Affordable Care Act.\nReal Estate and Construction\nResidential real estate activity remained robust, while commercial real estate activity ticked up in June. Residential real estate sales continued to rise. Prices continued on an upward trend while inventories were somewhat lower compared to the prior survey period. Contacts in some District markets reported that low inventories slowed sales and put upward pressure on prices. Views on the likely impact of rising interest rates were mixed. Some contacts expected that recent increases in mortgage rates would encourage more people to buy before rates increased further, while others anticipated a reduction in activity. Recent storm damage to homes in some parts of the District was also expected to add to the demand for housing in those areas. Residential builders reported solid construction activity, with expectations for further modest growth. Commercial real estate activity ticked up during the past month, as construction activity continued to strengthen. Sales prices held steady, and vacancy rates fell further in some areas. Contacts expected stronger activity in coming months, but several noted uncertainty around rising interest rates.\nBanking\nBankers reported slightly stronger overall loan demand, moderately improved loan quality, and slightly lower deposit levels. Respondents reported stable demand for commercial real estate and consumer installment loans. Demand for commercial and industrial loans increased, while demand for residential real estate loans declined. Nearly all bankers reported slight improvements in loan quality compared to a year ago. They also expected loan quality to marginally improve over the next six months. Credit standards remained unchanged in all major loan categories and respondents reported slightly lower deposits.\nAgriculture\nAgricultural production expectations improved somewhat with recent rains, but varied regionally. Summer storms eased dry conditions in eastern parts of the District, though drought persisted in western regions. The winter wheat harvest was underway or complete in Oklahoma and Kansas with highly variable yields depending on the extent of drought and freeze damage. Despite expectations of a poor wheat harvest in some areas, wheat prices fell since the last survey period. The corn and soybean crops, however, were rated in mostly good or better condition with the improved soil moisture. Although corn and soybean prices remained historically high, improved growing conditions led to a drop in expected harvest prices for both crops. Feedlot operators struggled with high input costs and falling cattle prices, but losses narrowed for hog producers after a rebound in hog prices. Cropland values moved higher but were expected to hold steady during the growing season.\nEnergy\nDistrict energy activity held steady over the survey period. Overall, drilling activity remained stable for both oil and natural gas in June. With oil prices elevated and natural gas prices low, drilling activity was expected to continue to shift away from natural gas to oil. However, energy contacts expected oil and natural gas drilling to accelerate over the next few months. Wyoming coal production was unchanged in June, but demand has weakened over the past year. Ethanol production continued to edge higher, and inventories trended down as profitability in the sector improved modestly.\nWages and Prices\nWage pressures remained low during June, and prices were generally unchanged during the survey period. The percentage of firms reporting labor shortages increased slightly, but recent wage increases remained modest. Firms reported strong demand for long haul drivers, delivery drivers, skilled auto technicians and hotel housekeeping staff. Retail prices were steady during June, and retailers did not expect to raise prices over the next three months. Menu prices and food costs were flat during the survey period. Food costs were expected to rise over the next three months, but most restaurants did not anticipate passing the increases through to consumers. Raw material prices for manufacturers were unchanged in June, but expectations did move up moderately. Finished goods prices increased slightly, but manufacturers projected future finished goods prices would be lower. Construction supply firms and builders reported that prices for construction materials were unchanged and neither expected prices to rise over the next three months. Similarly, transportation firms responded that input prices were flat.\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 5, 2013\nEconomic activity in the Seventh District again expanded at a modest pace in April and May. While most contacts remained optimistic about growth prospects in the second half of the year, many also expressed a greater sense of caution due to elevated uncertainty over the economic outlook. Growth in consumer spending increased slightly, while growth in business spending slowed. The decline in manufacturing production growth flattened out. In contrast, construction picked up, led by continued improvement in the residential sector. Credit conditions eased somewhat. Cost pressures were steady, and wage pressures remained moderate. Corn, soybean, milk, and hog prices increased, while cattle prices were stable.\nConsumer Spending\nGrowth in consumer spending increased slightly in April and May. The delayed arrival of warmer weather spurred sales of spring and summer items such as clothing, building materials, and lawn and garden items. In contrast, furniture and restaurant sales slowed. Promotional activity was heavy during the reporting period. Even absent from sales, contacts noted a more general tendency for customers to move to lower-priced items within shopping categories, especially in food and clothing. Several retail contacts also pointed to the expiration of the payroll tax credit and less spending out of tax refund checks as having a negative effect on their sales. Auto sales were moderately higher. New vehicle sales fell short relative to expectations, but used vehicle sales increased at a faster pace. Small, fuel efficient, crossover vehicles were the strongest sellers, while pick-up truck sales were a little soft.\nBusiness Spending\nGrowth in business spending slowed in April and May. Inventory investment decreased. Retail contacts reported that inventories were at comfortable levels, and, because of low sales expectations, they did not anticipate any substantial stockbuilding over the remainder of the year. Manufacturers also noted closely monitoring inventories given recently weaker demand. Capital expenditures were limited. A number of contacts reported that elevated uncertainty was curtailing their capital spending, pointing to doubts about the durability of the recovery as well as concerns over national fiscal policy. Labor market conditions continued to improve slowly. Uncertainty over health care costs and the pending implementation of the Affordable Care Act caused some firms to delay hiring plans or increase usage of temporary workers. Demand for skilled workers, however, remained strong, with a recruiting firm noting an increase in client orders for healthcare, information technology, and engineering occupations. Contacts indicated that even in the mining industry, where activity has weakened substantially, firms continue to hire engineers at a rapid pace.\nConstruction/real estate\nGrowth in construction and real estate activity picked up in April and May. Demand for residential construction grew steadily, as multifamily construction remained strong and conditions for single-family construction continued to improve. Activity in the residential real estate market increased, with home sales, prices, and residential rents rising. Contacts noted that the still large number of underwater mortgages, extended foreclosure processes, and low level of new construction meant that the inventory of existing homes on the market was tight and that this was restraining sales. Nonresidential construction increased at a modest pace. Contacts noted, however, increased activity in the manufacturing sector, particularly from the auto industry. Commercial real estate conditions continued to improve, although vacancy rates remained elevated. Contacts also reported an increase in demand for leasing was pushing up commercial rents, with demand from the healthcare sector noted as being particularly strong.\nManufacturing\nThe decline in manufacturing production growth flattened out in April and May. Although the auto industry remained a source of strength, it too grew at a more moderate pace. An increase in imports of steel displaced domestic production; nonetheless, a steel industry contact reported that capacity utilization gradually increased over the reporting period. Specialty metal manufacturers reported small increases in new orders, noting that their customers had become more cautious, ordering only as necessary with very short lead times and reassessing supply chains in an effort to cut costs. Exports of heavy machinery were lower, due to weaker demand in Europe and Asia. Contacts in the heavy equipment industry reported that equipment dealers continue to reduce their inventories and that most mining companies have trimmed their orders due to cutbacks in mining investment. In contrast, demand for heavy trucks increased. Suppliers to the aerospace industry noted a pick-up in orders following resolution of the issues affecting the Boeing 787. Improvement in the housing sector also continued to benefit manufacturers of household products such as appliances and fixtures.\nBanking/finance\nCredit conditions eased some over the reporting period. Corporate borrowing costs declined and demand increased in corporate debt markets as investors continue to reach for higher yields. Banking contacts reported modest growth in business loan demand, with greater competition for high quality assets among larger banks leading to some downward pressure on pricing. Mortgage refinance activity, while still strong, began to slow, but contacts noted a slight increase in purchase applications. Several contacts also reported that the new rules regarding eligibility for GSE backed mortgages are likely to limit the number of people who qualify. With demand deposits growing and comfortable liquidity levels, banks are increasing their willingness to lend. Smaller banks, however, continue to lag behind larger ones, with many noting greater regulatory uncertainty in their traditional areas of lending as a key reason why. Contacts also noted that risk profiles remain slow to change, indicating that a lack of secondary loan market demand and low appraisals of commercial real estate values continue to constrain lending.\nPrices/costs\nCost pressures were steady in April and May. Commodity prices were generally somewhat lower, although some contacts noted increases in the prices paid for natural gas, lumber, drywall, copper, steel, and aluminum. Retailers again reported mostly modest increases in wholesale prices, with the exception of continued cost pressures for some food items originating from last year's drought. Overall, pass-through to downstream prices remained limited. Wage pressures were again moderate, although many contacts noted rising healthcare costs and uncertainty about future employee healthcare obligations associated with the Affordable Care Act.\nAgriculture\nHeavy precipitation in the District aided the recovery from last year's drought by replenishing subsoil moisture. The rain also dramatically slowed planting of corn; farmers almost caught up, often by working around the clock once fields had dried sufficiently. However, the emergence of corn plants significantly lagged that of a typical year. Soybean planting progressed at about its normal pace once the corn crop was in the ground. Flooding from the heavy rains also resulted in river closures, delaying deliveries of agricultural products and farm inputs, particularly fertilizer. Current corn and soybean prices rose, as stocks remained low. Late planting pushed back the availability of new supplies into September. However, price declines were anticipated for the new crop in the fall, as concerns over major yield losses abated. Milk and hog prices moved higher; cattle prices were flat.\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 5, 2013\nOn balance, Sixth District business conditions improved modestly in April and May. The outlook for most sectors remained positive as contacts anticipate further improvement in activity for the remainder of the year.\nMost retailers noted an increase in sales activity since our previous report. The hospitality sector continued to be a bright spot for the District as occupancy and room rates and revenues remained solid. District real estate activity continued to strengthen from positive but uneven sales growth, rising home prices, and declining home inventories. Commercial real estate contacts have seen improvements in construction since the beginning of the year. Manufacturers cited growth in new orders and production. Bankers asserted that the demand for new loans remained weak. Hiring activity was positive, but muted. Prices continued to remain stable and most firms indicated having little pricing power.\nConsumer Spending and Tourism\nDistrict retail contacts noted an improvement in consumer spending but were cautiously optimistic regarding their outlook. Reports indicated that consumers remained focused on deals and discounts but high-end luxury stores continued to perform well. Relatively stable gasoline prices along with improvements in the housing market were cited as contributing positively to consumer behavior. Automobile sales remained steady at high levels.\nHospitality contacts reported that the sequestration has not significantly deterred travel bookings. Leisure and international travel continued to experience healthy demand, with several contacts reporting that activity exceeded expectations. Hotel occupancy, average daily rates, and revenue per room showed strong increases across the District from the same period last year. Contacts also noted uncertainty regarding the impact of gasoline prices on summer travel but their outlook remained positive, with expectations that activity would be robust through the end of the year.\nReal Estate and Construction\nSimilar to our last report, District brokers reported that existing home sales remained ahead of last year's level. Sales growth still remained the strongest among Florida contacts. Brokers continued to report that low home inventories were restraining sales. Homes were also noted as appraising below market price which was either slowing sales or in some cases halting sales altogether. Existing home prices continued to rise on a year-over-year basis and brokers indicated that price growth was a bit stronger than in our last report. The outlook for sales growth remained positive, with the majority of brokers anticipating sales gains over the next several months.\nDistrict homebuilders reported that new home sales and construction activity were stronger than in our last report and from a year ago. Buyer traffic continued to increase, as well. However, despite improved sales, access to financing and a shortage of developed lots continued to constrain construction activity. Most contacts reported that new home inventories were below the year earlier level and prices have risen slightly. Once again, the outlook for construction activity and new home sales remained positive with most anticipating levels to be slightly ahead on a year-over-year basis.\nDistrict commercial real estate contacts indicated that demand continued to improve from earlier in the year. Construction activity rose modestly again. Activity remained dominated by build-to-suit projects. Commercial brokers reported that demand for space, particularly office and industrial, increased from earlier in the year while retail continued to lag. Brokers cautioned that most markets still favor tenants but that concessions had eased somewhat and increases in rental rates were noted in select submarkets. Apartment development continued to grow at a strong pace across the region and absorption remained positive. The outlook among District commercial real estate contacts continued to be positive and further improvements were expected this year.\nManufacturing and Transportation\nDistrict manufacturers continued to report expanding activity in April and May. Growth was driven by increases in new orders, production, and employment. Much of this expansion was attributed to the region's large auto and energy manufacturing presence. Nearly half of the region's purchasing managers expect production to be higher in the near term.\nDistrict railway contacts reported increased intermodal traffic; however, total volume was flat to slightly down compared with a year ago. Movement of petroleum products was up significantly on a year-over-year basis, as were volumes of primary forest products, lumber and wood products, and metallurgical coal. Volumes of grain products, metallic ores, military machinery, and transportation equipment decreased notably. Orders for heavy duty trucks increased considerably from a year ago; however, this pickup in demand reflected equipment replacement rather than additions to overall trucking capacity. District ports reported solid growth in containerized traffic and general cargo, especially imported steel, export chemicals, and petrochemical products.\nBanking and Finance\nOverall demand for new loans remained weak as banks faced significant pressure to improve net interest margins and increased competition from non-bank providers of capital, such as private equity groups. Bankers noted that businesses were taking on debt where necessary to maintain and refurbish equipment to meet current demand rather than making capital investment aimed at future growth.\nEmployment and Prices\nDistrict payrolls grew at a mild pace since our last report. The bulk of jobs added were concentrated in Florida and Georgia. Hiring in professional and business services was especially strong in these states; in addition, employment in retail and real estate was notably strong in Florida. Hiring in leisure and hospitality services, particularly accommodation and food services, increased in Alabama, Georgia, Louisiana, and Tennessee. Government employment decreased in every District state except for Georgia, where gains were meager.\nMost firms continued to experience fairly stable input costs. The Atlanta Fed's Business Inflation Expectations survey showed input cost expectations hovering around 2 percent in April and May, roughly unchanged since the beginning of the year. Though most firms continued to report having little pricing power, retailers indicated that profit margins continued to improve since the beginning of the year as they have been able to successfully contain costs.\nNatural Resources and Agriculture\nLow natural gas prices continued to provide cost savings for industrial contacts in the region. Refiners along the Gulf of Mexico completed the seasonal process of switching from winter to summer gasoline blends and were ramping up production to meet higher demand from the summer driving season. Although the total number of rigs operating in the Gulf was roughly constant over the reporting period, drilling activity continued to shift from gas to oil,in part as a response to the ongoing price disparity between the two natural resources. In line with historical seasonal patterns, inventories of crude oil in the region rose considerably, supported by rising national oil production and soft demand.\nAdditional rains continued to improve drought conditions in Georgia and Florida. However, prolonged rainy periods and cool temperatures delayed planting of some crops. Since our last report, monthly prices paid to farmers for beef, broilers, corn for grain, and soybeans decreased while cotton prices increased slightly. Contacts continued to voice concern about citrus greening and its effect on Florida citrus crops while cotton producers reported China's large cotton stocks were becoming a growing risk factor for domestic cotton production. Agricultural producers also reported that they are turning more and more to technology and other capital investments to improve production and reduce the need for labor.\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 5, 2013\nEconomic 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, on net. Reports of retail and auto sales over the past three months have also been positive. Residential real estate market conditions have continued to improve, and commercial real estate markets have also improved. Lending activity at a sample of large District banks was little changed during the first quarter of 2013. Prices, wages, and employment levels over the past three months have stayed the same or increased for a majority of contacts across the District.\nConsumer Spending\nContacts reported that retail sales in the past three months were up, on average, relative to the same period last year. Forty percent of contacts noted moderate increases in sales, while 40 percent noted minor decreases and the rest saw no changes. Forty percent of retailers reported that sales levels met their expectations, and the rest reported that sales fell short of expectations. About sixty percent of retailers noted that their inventories were at desired levels, while the rest reported that their inventory levels were too high. The sales outlook over the next three months was slightly positive: 40 percent of retailers expect sales to increase over 2012 levels, and the remaining contacts expect sales to stay the same. The general outlook for the retail industry over the next three months was largely positive. Contacts noted increases in new store openings, but some expressed concern about the effects of the online sales tax bill on their sales.\nReports from auto dealers about sales in the past three months were generally positive. Fifty-seven percent of the car dealers surveyed saw increases in sales, while 29 percent saw decreases and the rest saw no changes. Fifty percent of car dealers reported an increase in used car sales relative to new car sales, and 17 percent reported the opposite. About 36 percent of respondents reported that their inventories were too high, while 14 percent reported that their inventories were too low. The sales outlook for the next three months was optimistic: 64 percent of car dealers expect sales to increase over 2012 levels, while 21 percent expect sales to decrease.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our last report. Several manufacturing firms reported plans to add workers, expand operations, or open new facilities in the District, while a smaller number of contacts reported plans to reduce employment. Firms in automobile, automobile parts, appliance, asphalt products, plastics packaging, chemical, steel, and furniture manufacturing plan to hire new workers and expand operations. In contrast, firms in medical devices, commercial printing, and beverage manufacturing reported plans to lay off workers. A recent survey of manufacturers showed increased new orders and capacity utilization for the majority of firms.\nReports of planned activity in the District's service sector have also been positive since the previous report. Firms in information technology, financial, distribution, business support, healthcare, engineering, and hospitality services reported new hiring and expansion plans. In contrast, firms in retail and wireless communication services reported plans to reduce employment.\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, April 2013 year-to-date home sales were up 16 percent in Louisville, 32 percent in Little Rock, 7 percent in Memphis, and 13 percent in St. Louis. April 2013 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2012. Permits increased 20 percent in Louisville, 4 percent in Little Rock, 27 percent in Memphis and 20 percent in St. Louis.\nCommercial and industrial real estate market conditions have continued to improve moderately. Compared with the fourth quarter of 2012, the first quarter 2013 industrial vacancy rates declined in St. Louis and Memphis and increased in Little Rock and Louisville. During the same period, downtown office vacancy rates increased in Louisville, Little Rock, Memphis, and St. Louis, while suburban office vacancy rates declined in St. Louis and Little Rock and increased in Memphis. Contacts in central Arkansas noted large ongoing retail construction projects. Contacts in Louisville and Memphis reported build-to-suit construction plans for industrial space.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks found little change in overall lending activity during the first quarter of 2013. During this period, credit standards for commercial and industrial loans ranged from unchanged to eased somewhat, and the demand for such loans ranged from moderately stronger to moderately weaker. Credit standards for commercial real estate loans ranged from basically unchanged to eased somewhat, while demand ranged from mostly unchanged to moderately stronger. Credit standards for prime residential mortgage loans remained unchanged and demand ranged from unchanged to moderately stronger. Meanwhile, credit standards and demand for consumer loans remained mostly unchanged. Demand for auto loans ranged from moderately stronger to moderately weaker, while demand for other consumer loans was unchanged.\nAgriculture and Natural Resources\nBecause of persistent rains, District farmers are behind their average planting schedules. Planting progress for cotton, rice, and soybeans in Mississippi was approximately half the 5-year average. Across all other District states, soybean planting progress was approximately 15 percent slower than its 5-year average. As of mid-May, well over 90 percent of the District's winter wheat crop was rated in fair or better condition and close to 70 percent was rated as good or excellent. Year-to-date coal production across the District states (excluding eastern Kentucky) for April was 3.3 percent lower compared with the same period in 2012, while coal output for April 2013 was similar to April 2012.\nPrices, Wages, and Employment\nFifty-five percent of contacts indicated that prices charged to consumers over the past three months have stayed the same, while 34 percent indicated that prices have increased relative to the same period last year. In turn, 30 percent of contacts noted that wages over the past three months have stayed the same, while 66 percent noted that wages have increased. Meanwhile, 45 percent of contacts reported that employment levels have remained the same over the past three months, while 37 percent reported that employment levels have increased, compared with the same period last 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\nJune 5, 2013\nFirst District business contacts generally report year-over-year increases in economic activity, although some--notably in software and information technology services and staffing--indicate the pace of growth is slowing. Retailers mostly say demand is recovering well after weather-related softness during the winter; manufacturing contacts' sales are also ahead of last year. With only a few exceptions, businesses are not hiring much beyond replacement. Aside from food, input prices are generally said to be unchanged, although a few manufacturers have raised their own prices. The outlook is fairly positive, with most respondents expecting the current pace to continue or pick up.\nRetail and Tourism\nRetailers are rebounding from the negative impact of harsh and prolonged winter weather earlier this year, but the late arrival of warmer spring weather has affected the sales of some seasonal items. Merchant contacts report April year-over-year comp-store sales ranging from a 0.5 percent decline to a 9 percent increase. Demand is strong for women's apparel, home furnishings, and furniture. Respondents say consumer sentiment seems a bit more positive, especially over the last month or so, yet overall expectations remain cautious. Contacts continue to predict low-single digit sales increases for 2013.\nGreater Boston tourism revenues are up after softer performance attributed to harsh winter weather earlier in the year. Through Q1 2013, hotel revenues are up 2 percent year-over-year, and occupancy rates are also up 2 percent. Restaurants revenues are 1.5 percent ahead of a year ago. Much of this increase is attributed to strong domestic and foreign business travel. Attendance at museums and attractions is down, perhaps due to weather affecting leisure travel plans. Boston-area tourism was reduced by the marathon bombings as some groups were forced to reschedule visits.\nManufacturing and Related Services\nThree-quarters of contacted manufacturers report higher sales compared with the same period a year ago. Geographically, firms say that Europe remains weak and that both the U.S. and Asia are growing but slightly below expectations; by contrast, one contact called Europe a bright spot because it exceeded somewhat low expectations. An electrical equipment manufacturer reports low to middle single-digit growth across the board except for their products going into residential construction, which consistently rack up double-digit growth versus the year-earlier period. Several contacts, including the electrical equipment manufacturer and a supplier to the semiconductor industry report unusually volatile month-to-month readings.\nAll of our contacts report little or no pricing pressure on the input side and several say they were able to make price increases stick on the sell side. A dairy firm says food prices are up because of drought conditions, but notes that recent rainfall may change that. Winter storms had some temporary effect on energy prices for some firms.\nFive of eight contacts are hiring, although only one is hiring in any significant way and their hiring is outside the U.S. Of the contacts not adding to headcounts, only one is laying off workers; this firm--a maker of parts for machinery--is planning to reduce headcount by 2 percent to 3 percent over the next six months on top of a similar reduction over the last six months.\nSix of eight respondents are increasing capital expenditures and one of the others says its expenditures are low only relative to some exceptional investments in 2012. One contact in the electrical equipment business says they have \"too much cash\" and are looking for investments. Firms cite mixed opportunities to acquire other companies, with one having a \"full pipeline\" of acquisitions and another saying there is nothing to buy.\nThree-quarters of contacts are reasonably optimistic about the outlook. Several who reported some softness in the winter said their customers were talking about demand growing in the second half.\nSoftware and Information Technology Services\nNew England software and information technology services contacts generally report continued sluggishness through May to date, with year-over-year revenue increases moderating further in the most recent quarter to the low or middle single digits. Two contacts attribute the slowdown to economic uncertainties in the U.S. and Europe, which they say have led many manufacturers to delay the execution of long-term license agreements. A healthcare contact, by contrast, attributes the dip to the ending of federal stimulus funding for electronic health records software. Only one contact, a provider of cloud-based payment and banking software, reports accelerated growth, with revenues in the first quarter up more than 15 percent relative to Q1 2012. Lackluster activity has led the majority of contacts to slow the pace at which they are hiring; many now plan to maintain their current headcounts through the end of the year. Selling prices and capital and technology spending are largely unchanged. Looking forward, software and IT firms in New England remain cautiously optimistic, with most expecting more robust growth in the second half of 2013.\nStaffing Services\nFirst District staffing contacts report weaker-than-expected demand in recent weeks, with billable hours generally falling towards their year-earlier levels. The dip in activity reportedly reflects a leveling off in the IT sector and downticks in temporary and permanent hiring in the light industrial and manufacturing sectors. There is, however, renewed activity in the healthcare sector, with one contact reporting a substantial increase in demand for ambulatory nurses. In terms of labor supply, candidates with high-end skill sets, such as mechanical and electrical engineers and software developers, remain hard to find. Nevertheless, bill rates and pay rates have gone largely unchanged in 2013. Looking forward, staffing contacts are generally less upbeat than they were three months ago, with most expecting only modest growth through the end of 2013.\nCommercial Real Estate\nCommercial real estate leasing and sales activity held roughly steady or improved in recent weeks in the First District. A Hartford contact notes a modest increase in foot traffic for downtown and suburban office space but no significant changes in rents or vacancy rates since the last report, virtually no construction, and a flat industrial market. In Boston's inner-suburban corridor, office rents are up and vacancies down. In Boston proper, prime retail rents are up at least 5 percent over the quarter; office fundamentals continue to improve across the city, very slowly in the financial district and at a brisker pace in the Seaport/Innovation district. Leasing volume dipped slightly in downtown Providence and mostly improved in suburban Rhode Island, with rents about flat. Defense-industry tenants in southern Rhode Island are reducing their space needs in response to federal spending cuts, moves that are likely to put downward pressure on rents in the local submarket in coming months. In Portland, retail leasing activity picked up and apartment rents rose while the office leasing market was flat. Business confidence in southern Maine reportedly improved but no major expansions or hiring plans were announced.\nValues for prime downtown Boston properties--including office buildings and apartment buildings--continue to rise, leading to talk of overheating. Investors are purchasing empty retail space in Boston for the first time since the onset of the Great Recession. Continuing a recent trend, investors are increasingly purchasing prime, well-leased commercial properties in Hartford, Providence, and Portland, markets which are seen as value propositions in comparison with higher-priced Boston. So far in the cycle, however, new construction in these markets has been very limited. Commercial real estate loan demand rebounded at one regional lender as competition for such loans drove mortgage interest rates to new lows.\nContacts are mostly optimistic that commercial leasing fundamentals will continue to improve at least slowly in the coming months. The outlook includes upside potential for absorption in Providence, Hartford, and Boston based on deals in progress and current employment trends. In Rhode Island, however, the upcoming gubernatorial election and state and local budget deficits--as well as the defense cutbacks noted above--present downside risks. In Connecticut, negative effects of sequestration on defense-industry tenants seem inevitable, but the commercial leasing implications are uncertain.\nResidential Real Estate\nThroughout much of the First District, the median sales price of single-family homes and condos rose year-over-year in March and April. Sales of single-family homes also increased from a year earlier in most of the region during April, after weaker sales results in March. According to contacts, demand for homes remains strong due to low interest rates, relatively low prices, and improving confidence among buyers. However, contacts continue to report that shrinking inventory levels are slowing sales and placing upward pressure on prices. In Massachusetts and the Greater Boston area, dwindling inventory levels have been a significant source of concern; contacts in the other states also express worry about falling inventory levels, but to a lesser extent. Several respondents note that much of the housing recovery has been centered around urban areas while rural areas have experienced more modest improvements. Within the Greater Boston area, realtors have observed an increasing frequency of multiple offers on properties.\nContacts anticipate that single-family home and condo prices will continue to rise over the next several months, with inventory levels a significant factor determining the degree to which sales can grow. Overall, contacts say they feel optimistic about the trajectory of the housing market and believe the market will continue to recover as general economic conditions improve.\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 5, 2013\nPrepared at the Federal Reserve Bank of Minneapolis and based on information collected on or before May 24, 2013. 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.\nOverall economic activity increased at a modest to moderate pace since the previous report across all Federal Reserve Districts except the Dallas District, which reported strong economic growth. The manufacturing sector expanded in most Districts since the previous Beige Book. Most Districts noted slight to moderate gains in consumer spending and a moderate increase in vehicle sales. Tourism showed signs of strength in several Districts. A wide variety of business services expanded, and transportation traffic increased for producer, consumer, and trade goods. Residential real estate and construction activity increased at a moderate to strong pace in all Districts. Commercial real estate and construction activity grew at a modest to moderate pace in most Districts. Overall bank lending increased since the previous report. Credit quality and deposits increased, while credit standards were largely unchanged. Agricultural conditions remained mixed across Districts, as weather patterns varied. Overall activity in the energy sector was flat, and mining was down.\nHiring increased at a measured pace in several Districts, with some contacts noting difficulty finding qualified workers. Wage pressures remained contained overall, although several Districts reported a modest or moderate rise for selected occupations. Districts reported level prices to mild price increases; some manufacturers raised prices and some increases for input prices were noted.\nManufacturing\nThe manufacturing sector expanded in most Districts since the previous Beige Book. Activity increased in the Boston, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Districts. Manufacturing contacts in the New York District reported steady business activity. In the Philadelphia District, manufacturers reported that orders and shipments have fallen somewhat, and in the Richmond District, manufacturing activity softened since the previous report, although there were scattered reports of improvement. Most firms in the Boston District are reasonably optimistic about the outlook, and many contacts in the Cleveland District believe that business conditions will continue to improve slowly during the second half of the year. However, the near-term outlook has waned somewhat in the New York District.\nContinuing a theme from the previous report, strength in residential construction was a boon to manufacturers who supplied that industry. Firms in the Philadelphia District supplying the home-building sector reported strong orders, and the Cleveland District noted that suppliers to residential construction were among those seeing the strongest activity, while the Richmond, St. Louis, Dallas, and San Francisco Districts all reported increased demand for lumber or wood products. Growth in the auto industry was noted by the Philadelphia, Cleveland, Atlanta, Chicago, and St. Louis Districts, although the Chicago District reported that the auto industry grew at a more moderate pace. Producers of inputs for the oil and gas industries saw growth in the Philadelphia, Cleveland, and Atlanta Districts. The food processing industry grew in the Philadelphia and Dallas Districts. Electrical equipment saw increased activity in the Boston and San Francisco Districts but lower activity in the Philadelphia District. Demand for fabricated metals expanded in the Philadelphia District, while specialty metal manufacturers in the Chicago District reported small increases in new orders, noting that their customers had become more cautious. Fabricated metals producers in the Dallas District reported that demand remained steady for both private and public projects.\nThe defense industry experienced weakening activity in the Cleveland District, and a producer of defense equipment in the Richmond District cited government sequestration and orders being canceled or delayed. Steel production was mixed. Steel producers in the Cleveland District reported that shipping volume was stable but remains below levels seen early in the first quarter, and both the Cleveland and Chicago Districts noted an increase in imports of steel. The St. Louis and San Francisco Districts reported an increase in demand for steel. Lower demand for primary metals was noted in the Philadelphia and Dallas Districts.\nConsumer Spending and Tourism\nMost Districts noted that consumer spending increased during the reporting period, ranging from slight to moderate gains. Retail activity in the Boston, Philadelphia, and Dallas Districts was characterized as modest or moderate, while the Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, and San Francisco Districts reported slight growth. Retailers in the New York District reported that sales were tepid in April but picked up in May. Meanwhile, the Richmond District noted that sales were flat during the reporting period. The Boston, New York, Philadelphia, Cleveland, Richmond, Chicago, and Minneapolis Districts reported that late winter weather slowed retail sales; the Chicago District noted that sales picked up once warmer weather arrived. Demand for home furnishings and furniture was strong or picked up in the Boston, Cleveland, and Richmond Districts; however, furniture sales slowed in the Chicago District. The Kansas City District reported that appliance purchases were particularly strong. Inventories were generally at desired levels in the New York and Chicago Districts. The outlook for retail spending was positive in the Kansas City and Dallas Districts, while more cautious expectations were noted in the Boston, Cleveland, and St. Louis Districts.\nVehicle sales generally increased moderately across Districts. The New York, Richmond, and San Francisco Districts reported that sales remained strong or at high levels. Meanwhile, the Minneapolis District reported modest growth in auto sales, and contacts in the Kansas City District reported that sales declined. Used car sales increased in the Chicago and St. Louis Districts, while the Richmond District noted that the availability of used cars improved. Meanwhile, the New York, Cleveland, and San Francisco Districts reported a shortage of used cars or a decline in used car sales. Inventories increased in the Cleveland and Kansas City Districts, while inventories were lean in the Philadelphia District. More respondents to a St. Louis District survey indicated that inventories were too high than too low. The Philadelphia, Cleveland, St. Louis, Kansas City, and Dallas Districts noted that the outlook for future sales was generally positive.\nTourism showed signs of strength in several Districts. The Boston District reported increased tourism revenues but noted that attendance at museums and attractions was down, perhaps due to weather affecting leisure travel plans. The New York District noted that tourism activity was mixed but fairly robust since the previous report. The Richmond District reported that unseasonably cool weather negatively affected some resorts. Leisure and international travel continued to experience healthy demand in the Atlanta District. Extended winter weather boosted skiing in parts of the Minneapolis District. The San Francisco District reported that travel and tourism activity in Hawaii was robust, while activity in southern California declined a bit. Hotel occupancy and room rates were higher in the Atlanta and Kansas City Districts. Advanced bookings and the overall outlook for summer travel were optimistic, but the San Francisco District noted some concern that the flow of international visitors could taper off in coming months due to potential weakness in the global economy.\nNonfinancial Services\nNonfinancial services activity grew at a modest to moderate pace since the previous report. The Philadelphia District noted steady gains, while moderate growth was reported in the Minneapolis District. The San Francisco District saw flat demand for health care and legal services. The Boston District noted sluggish activity in information technology services, while the Kansas City District saw increased demand for high tech services. Information technology, distribution, business support, health care, engineering, and hospitality firms expanded in the St. Louis District. The Richmond District reported \"renewed vigor,\" especially for technology and architectural firms. The Dallas District saw strong demand for accounting services and modest increases in legal services.\nTransportation activity increased. The Cleveland District noted strong activity, while both import and export traffic increased in the Richmond District. The Atlanta District reported increased movement of petroleum products and wood products but decreased shipments of grain products, metallic ores, military machinery, and transportation equipment. The Dallas District saw increased cargo and container volumes. The Kansas City District reported slower transportation activity due to poor weather conditions. Minneapolis District contacts expected small increases in freight traffic in the second half of the year.\nReal Estate and Construction\nResidential real estate and construction activity increased at a moderate to strong pace in all Districts. Several Districts reported that higher demand and low inventory of homes available for sale are resulting in multiple offers on properties. Almost all Districts reported higher home sale prices. The Kansas City District reported concerns that appraisals were not keeping pace with price increases. Foreclosed properties available for sale have declined significantly in the San Francisco District. The rental market remains tight with noticeable increases in rental rates in the New York District. Residential construction increased across all of the reporting Districts. Several Districts noted increases in multifamily projects. The Minneapolis District reported that many markets saw huge percentage increases in building permits from a year ago. Builders are cutting back on discounting in the Cleveland District. The Richmond District noted that increased construction has pushed up the price of building lots, and the Atlanta District reported that the lack of available lots has constrained building activity. The Philadelphia District commented that builders are facing problems, as the long housing recession has disrupted the supply chain for materials and the pool of skilled workers.\nCommercial real estate and construction activity expanded at a modest to moderate pace in most Districts. The New York District reported that the Manhattan market is particularly robust. The Chicago District noted that an increase in demand for leasing was pushing up commercial rents, with strong demand from the health care sector. However, a market in the Boston District indicated no change in commercial rents or vacancy rates since the previous report. A market in the Richmond District had more hotels complete construction, and retail space was absorbed at a faster pace. Commercial construction continues to expand. The Philadelphia District said that most construction activity is related to ongoing demand for industrial warehouse space, higher education facilities, and public utility infrastructure. The Atlanta District reported that most activity was coming from build-to-suit projects. The Dallas District noted an increase in office building construction. The Cleveland District said that many projects are in development, but new inquiries are weak. The San Francisco District noted that in some regions, construction of publicly funded commercial projects has slowed due to funding constraints from state and local governments.\nBanking and Finance\nOverall bank lending increased modestly since the previous report. The Cleveland District noted that consumer demand for auto loans increased and that demand for residential loans shifted from refinancing to new purchases. The Chicago District indicated modest growth in business loan demand. The Dallas District reported robust growth in residential mortgages and auto lending with continued weakness in corporate transactions. The New York District saw an increase in demand for all types of loans except commercial and industrial loans, where demand was unchanged. San Francisco District banking contacts reported ample liquidity and competition among lenders for well-qualified business borrowers but limited credit availability for small businesses. The Philadelphia District noted slow loan growth, and the Atlanta District reported weak loan activity.\nCredit quality improved, on balance. The New York and Cleveland Districts reported widespread decreases in delinquency rates for business and consumer loans. Several Districts reported that credit standards have not changed much since the previous report.\nAgriculture and Natural Resources\nAgricultural conditions remained mixed across Districts, as weather patterns varied. Recent rains brought drought relief to the Atlanta, Chicago, and Minneapolis Districts but delayed or slowed plantings in the Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City Districts. Meanwhile, drought conditions worsened in the Dallas District, and contacts in the San Francisco District remained concerned that limited water availability in parts of the District could pass through to lower seasonal hiring and reduced agricultural output in coming months. Farm incomes increased in the Minneapolis District, while farm income growth softened in the Kansas City District. Well over 90 percent of the St. Louis District's winter wheat crop was rated in fair or better condition, but winter wheat crop conditions deteriorated further in the Kansas City District, with much of the crop in relatively poor condition. Forage crops were having a great spring in the Richmond District, and pastures and hayfields were in good condition.\nOverall activity in the energy sector was flat, and mining was down. The San Francisco District saw decreased natural gas drilling. The Cleveland, Atlanta, and Kansas City Districts noted that oil activity was flat and that natural gas activity was up. The Minneapolis District reported that the energy sector remained strong. The Dallas District said that drilling activity was up. Coal mining was down slightly in the Cleveland and St. Louis Districts, while coal mining in the Kansas City District was steady. Iron ore mining production was down in the Minneapolis District.\nEmployment, Wages, and Prices\nHiring increased at a measured pace in several Districts, with some contacts noting difficulty finding qualified workers. Labor markets continued to improve in the New York District. The Boston District reported that with only a few exceptions, businesses were not hiring much beyond replacement, while labor markets in the Richmond District were uneven. Labor markets continued to improve slowly in the Chicago District. The St. Louis District reported that employment levels over the past three months have stayed the same or increased for a majority of contacts. Labor markets tightened in the Minneapolis District, particularly near the oil boom area in western North Dakota and eastern Montana, although some easing in the pace of growth was noted over the past six months. Labor markets were steady in the Dallas District. The New York, Philadelphia, Richmond, Minneapolis, Kansas City, and Dallas Districts cited examples of contacts reporting difficulty finding qualified people to fill vacancies. The Richmond and Cleveland Districts noted that new hours of service regulations may exacerbate difficulty finding truck drivers. A number of Districts reported solid demand for workers in information technology, health care, and engineering. The Richmond and Atlanta Districts cited employment reductions due to cutbacks in government orders or staffing at government offices. Among staffing services firms, billable hours increased in the Philadelphia District but decreased in the Boston District. Meanwhile, staffing services were steady in the Dallas District and mixed in the Cleveland District. The outlook for hiring was generally positive in the Richmond and Minneapolis Districts.\nWage pressures remained contained overall, though several Districts reported a modest or moderate rise for selected occupations. The Cleveland, Minneapolis, Dallas, and San Francisco Districts indicated that overall wage pressures were subdued. The Philadelphia and Kansas City Districts reported that wage pressures increased slightly, while reports were mixed in the Richmond District. The New York District noted that although qualified job candidates were said to be increasingly hard to find, most employers were holding the line on compensation. Exceptions included increased wages for home builders in the Philadelphia District, and legal and financial services in the Dallas District. Contacts in the Richmond, Chicago, and Kansas City Districts expressed concern over the effect of health care reform on labor costs. The Philadelphia and Cleveland Districts reported increased costs for health insurance.\nDistricts reported level prices to mild price increases. The Boston District reported that aside from food, input prices were generally unchanged, although a few manufacturers have raised their own prices. Manufacturers in the Richmond District indicated that finished goods prices grew at a somewhat quicker pace. The Kansas City District reported that while finished goods prices remained fairly flat, manufacturers planned to raise finished good prices over the next few months to partially offset higher input costs. However, most firms in the Atlanta District continued to report having little pricing power, and the Chicago District noted that pass-through to downstream prices remained limited. The Philadelphia and Cleveland Districts reported higher construction materials prices. Meanwhile, the San Francisco District noted that prices for cement, logs, and lumber edged up, while prices for wood products, steel, and some metals declined. Gasoline prices spiked higher in the Minneapolis District, and several Districts noted that natural gas prices increased since the previous report. The Dallas District reported that most contacts expect price increases to remain modest for the remainder of the year.\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 5, 2013\nThe Tenth District economy grew at a modest pace in late April and early May, while expectations for activity over the summer months strengthened further. Retail sales and tourism activity increased since the last survey, but automobile and restaurant sales declined. District manufacturers reported modest growth with an increase in production, shipments and new orders in May. Robust growth continued in the residential real estate sector, while commercial real estate activity improved modestly. Slightly higher loan demand and improving loan quality led to improvements in the District banking sector. Falling crop prices and rising production costs limited farm income growth, while the brisk pace of farmland price appreciation moderated slightly. District drilling and mining activity held steady, though energy contacts expected oil and natural gas drilling to accelerate over the next few months. District contacts from most sectors reported moderate price increases, particularly for food, building supplies and raw materials. Wage pressures and labor shortages picked up slightly, but were limited to skilled positions.\nConsumer Spending\nConsumer spending rose slightly in late April and early May, with an increase in retail and tourism spending and a decline in automobile and restaurant sales. Contacts in all sectors expected consumer spending to improve substantially over the next three months. District retail sales grew at a slightly faster pace over the survey period, with appliance and seasonal bridal purchases particularly strong. Tourism activity also rose, and hotel occupancy rates moved sharply higher due to an increase in tourists and business travelers. Average daily room rates moved higher and were expected to rise slightly in the months ahead. Restaurant sales declined slightly since the last survey but were expected to improve over the next few months. Automobile dealers reported fewer sales, increased inventories and fewer incentives offered. However, the majority of dealers still expected faster sales growth in the coming months due to pent-up demand, low interest rates and increased consumer confidence.\nManufacturing and Other Business Activity\nAfter contracting for seven months, District manufacturing activity increased modestly in May. Contacts reported a rise in production, shipments and new orders, though hiring activity and average employee work weeks continued to decrease. Manufacturing expectations were strong for the coming six months, led by optimism for increased shipments, new orders, production, and capital spending. High-tech service firms reported that sales activity and capital spending increased modestly in late April and early May, and were expected to grow over the next three months. Transportation activity slowed with some contacts reporting weather disruptions affecting the industry. Many transportation contacts reported that they planned to adjust cost structures and hiring practices to offset anticipated health care and fuel cost increases.\nReal Estate and Construction\nResidential real estate activity remained strong, and commercial real estate improved modestly in late April and early May. Residential real estate sales continued to rise sharply. Prices trended upward and inventories are lower compared to the prior survey period. District contacts reported that low inventories have slowed sales and put upward pressure on prices in some areas. They also reported concerns that appraisals were not keeping pace with price increases. Contacts expected residential sales and prices to increase further, supported by low interest rates and a rise in consumer confidence. As a result of improved sales activity and higher traffic of potential buyers, many agencies hired additional real estate agents over the past month or expected to hire in coming months. Residential builders reported steady construction activity with expectations of moderate growth over the next three months. Commercial real estate activity rose modestly during the past month. Construction activity strengthened and prices and sales inched up, while vacancy rates fell slightly. Contacts expected stronger activity in coming months, noting that several future projects are currently in planning stages. Optimism differed across District states, with commercial real estate construction in Oklahoma expected to be particularly strong, and construction in New Mexico and Missouri fairly soft.\nBanking\nIn the recent survey period, bankers generally reported slightly stronger loan demand, improving loan quality, and steady deposit levels. Respondents, on average, reported stable demand for residential real estate loans, commercial real estate loans, and consumer installment loans, while demand for commercial and industrial loans increased modestly. All bankers reported steady or improved loan quality compared to a year ago, and they 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 average deposit levels remained stable. Bankers reported that the main factors driving positive expectations for future activity were continued economic improvements and increased consumer confidence.\nAgriculture\nFarm income growth softened since the last survey period, and farmland value gains moderated slightly. Farm income growth was limited by falling crop and livestock prices and by high production costs, particularly for fertilizer, seed and livestock feed and forage. Crop prices fell in early April with an announcement that grain supplies were higher than earlier estimates, although some District contacts expressed concerns about crop progress. Winter wheat crop conditions deteriorated further with much of the crop in relatively poor condition. The corn and soybean crops were behind schedule as unseasonably cold weather and late snows delayed spring planting in many areas. Demand for new farm loans remained weak, and contacts reported fewer requests for farm loan renewals and extensions. Farmland values continued to rise, but at a slightly slower pace than last year.\nEnergy\nEnergy activity was stable over the survey period, while expectations for future activity improved. Overall, drilling activity held steady for both oil and natural gas in late April and early May. District contacts reported that drilling in areas rich with natural gas liquids was particularly strong over the past month, and that they expected drilling activity for both oil and natural gas to pick up further in coming months. Wyoming coal production held steady in late April and early May, though demand has weakened over the past year with a shift toward coal alternatives for power generation due to low natural gas prices and environmental regulations. Ethanol production rebounded since the previous survey period due to lower corn prices and steadily improving profit margins.\nWages and Prices\nWage pressures increased slightly but remained weak during the survey period, while prices rose for raw materials and most finished goods across industries. Labor shortages and wage pressures inched up, with strong demand for skilled workers including technicians, truck drivers, engineers and software developers. Many employers remained concerned about the impact of recent healthcare legislation on labor costs and how these costs might be passed onto consumers or impact profit margins. Retail prices increased moderately over the survey period, and retailers planned to raise prices at a similar pace over the next few months. Food costs continued to rise, and restaurant owners increasingly expected to raise menu prices in response. Similarly, raw material prices rose moderately for manufacturers. While finished goods prices remained fairly flat over the survey period, manufacturers planned to raise finished good prices over the next few months to partially offset higher input costs. Builders and construction supply firms continued to report higher prices for construction materials, particularly lumber. In some cases, construction supply costs rose faster than anticipated, which resulted in more frequent price adjustments and reduced margins. Transportation firms also noted an increase in input prices.\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\nJune 5, 2013\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of early April through late May. Price inflation was subdued for most final goods and services, and upward wage pressures were limited overall. Retail sales were a bit soft, while demand for business and consumer services was mixed. District manufacturing activity rose on net. Production and sales of agricultural items increased modestly. Residential real estate activity expanded robustly, and commercial real estate activity trended up, although somewhat unevenly across geographic areas. Contacts from financial institutions reported slight increases in overall loan demand.\nPrices and Wages\nPrice inflation was subdued for most final goods and services. Food industry contacts noted decreased prices of grain products but increased prices of some fruit and nut items. Contacts from retail grocery and restaurant chain establishments reported that overall food price inflation appears to have leveled off at a relatively modest pace. Fees for legal services declined a bit. Several construction inputs, such as cement, logs, and lumber, edged up further. However, prices for other wood products, steel, and some metals declined.\nContacts reported that wage gains were limited overall. Labor market slack continues to put downward pressure on wages and compensation for most sectors, occupations, and regions. However, various contacts indicated some upward wage pressure for skilled construction workers, software developers, and certain technical and managerial positions in high-tech manufacturing.\nRetail Trade and Services\nRetail sales were fairly soft overall. Sales of various digital and technology products slowed. Among computer and electronic products, sales of personal computers remained weak relative to sales of mobile computing devices, including smart phones and tablets. Demand for some gaming and entertainment products grew slightly, as did demand for apparel. Traditional retail grocers reported flat sales, with intensifying competition from discount and online retailers. Suppliers of food and beverage products noted increased sales. Automobile sales remained at high levels, although a shortage of used vehicles has restrained the pace of activity in some parts of the District.\nDemand for business and consumer services was mixed. Food service providers reported strong sales on net, with some discount chains faring particularly well. Robust activity in Hawaii supported the District's travel and tourism sector, although there is some concern that the flow of international visitors could taper off in coming months due to potential weakness in the global economy. Travel and tourist activity in Southern California has declined a bit. Demand for both health-care and legal services was flat. Compared with previous months, contacts dialed back their expectations for robust growth of various technology services such as cloud computing and data processing this year.\nManufacturing\nDistrict manufacturing activity rose on net in the reporting period of early April through late May. New orders for electronic components were up a bit, and contacts indicated that they expect demand for semiconductors to pick up over the next couple of quarters. Pharmaceutical producers reported that innovative product launches contributed to continued modest gains for some firms, although overall activity seemed to be on a slight downward trajectory. Wood product manufacturers stated that demand grew further, fueled by rebounding domestic residential construction activity. However, contacts noted potential headwinds such as limited labor availability and transportation capacity. Demand for steel products used primarily in transportation infrastructure and nonresidential construction projects continued to increase, and capacity utilization ticked up.\nAgriculture and Resource-related Industries\nAgricultural sales and production increased modestly. Demand for most crop and livestock products grew further. Grain production was robust, but contacts reported some variability in vegetable production. Some contacts remained concerned that limited water availability in parts of the District could pass through to lower seasonal hiring and reduced agricultural output in coming months. Reports indicated that industry demand for electricity and natural gas grew robustly, although demand from households grew more sluggishly. While natural gas inventories rose slightly, the number of natural gas drilling rigs has fallen significantly since last year, due in part to the sustained low relative price of natural gas. Demand for gasoline was up in most regions.\nReal Estate and Construction\nResidential real estate activity expanded robustly, and commercial real estate activity trended up at a more moderate pace overall. Home sales climbed in many regions, and tight inventories coupled with healthy demand supported continued house price appreciation. Reports indicated that the number of foreclosed properties available for sale has continued to decline significantly. Construction of multifamily residential projects increased in many areas, driven by low vacancy rates and strong demand for rental properties. Commercial real estate leasing and development activity expanded in most major metropolitan areas. However, several contacts in less-urban areas reported persistently high vacancy rates for office properties. In some regions, construction of publicly funded commercial projects has slowed due to funding constraints from state and local governments.\nFinancial Institutions\nFinancial institutions reported that loan demand improved slightly on balance. Increased demand for mortgage and automobile loans drove growth in overall loan demand. However, some contacts recognized softness in business loan demand, due to continuing caution among borrowers. Banking contacts highlighted ample liquidity and generally stiff competition among lenders for well-qualified business borrowers. However, contacts reported that credit availability for small businesses remains limited. Although in past months contacts had pointed to a buildup of privately held technology companies poised for public offerings, the actual pace remains slow for initial public offerings, new venture capital deals, and private equity financing in the District's Internet and digital media subsectors.\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 5, 2013\nAfter many months at a generally more modest pace of growth, aggregate business activity in the Third District has accelerated somewhat to a moderate pace of growth during this current Beige Book period. In particular, the growth rate of residential construction, general retail sales, general services, staffing services, and tourism appears to have accelerated somewhat from a more modest rate of growth to join auto sales and existing home sales at a moderate growth rate. Commercial real estate leasing continued to expand at modest rates, while commercial real estate construction continued to expand only slightly. Manufacturing appears to have declined somewhat after expanding slightly last period. Loan volumes at Third District banks resumed growing slightly across most categories, while credit quality continued to improve. General price levels, as well as wages and home prices, were reported to have increased slightly overall--similar to the last Beige Book period.\nThe overall outlook for growth has improved slightly since the last Beige Book to anticipate a continuation of the current moderate pace of growth. Despite lingering uncertainties, contacts expressed greater confidence in the underlying strength of the economy, especially as the housing market recovery begins to gain strength. Firms are more comfortable reinvesting where necessary; however, many continue to hold off on major expansion plans of capital and labor until the recovery gains more momentum.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported that orders and shipments have fallen somewhat. The makers of food products, lumber and wood products, paper products, and fabricated metals have reported gains since the last Beige Book. The makers of primary metals, electronic equipment, and instruments reported lower activity. Reports were mixed for makers of industrial machinery. Firms supplying the home-building sector reported strong orders and ongoing hiring to keep pace. Other contacts attributed growing demand to the oil and gas, auto-related, and aerospace sectors. Firms supplying other sectors reported flat or weakened demand. Employment levels were generally reported as flat to down.\nAcross all sectors, Third District manufacturers remained optimistic that business conditions will improve over the next six months. One contact from a housing-related manufacturer reported that orders from contractors were 22 percent ahead of last year; still, another stated that \"firming in the housing market is key to a more favorable outlook\" from his firm's dealers. Overall, firms have somewhat increased their expectations of future hiring and their plans for capital spending since the last Beige Book.\nRetail\nThird District retailers reported moderate growth overall. Since Easter sales shifted to March this year, April began with a continuation of modest growth; however, retailers reported strong sales for Mother's Day weekend. Restaurants were booked with moms and their families, which generated heavy traffic and sales for adjacent retailers. Volatile spring temperatures created challenges for apparel retailers as shoppers shifted their interest between winter and summer lines with the rise and fall of the thermometer. Promotional sales remained critical for producing the best results for many retailers.\nAuto dealers have continued to report a moderate pace of sales growth since the last Beige Book, with some weekly variability. Sales in the Philadelphia market were described as strong. Dealers continued to maintain lean inventories and have retained a positive outlook. However, hiring plans remain tentative and modest; expectations of rising health-care costs further constrain the willingness of dealers to expand their workforces.\nFinance\nOverall, Third District financial firms have reported slight increases in total loan volume since the previous Beige Book. Banking contacts cited stronger demand for C&I loans and real estate loans--commercial and residential. Credit card loan volumes were relatively unchanged, while reports of other consumer lending were mixed. A nascent housing recovery in many Third District markets has increased demand for new mortgages and the ratio of purchases to refinancings. A small amount of hiring has been prompted at banks and bank servicing companies by the moderate recovery, as well as by changing compliance regulations. Banking contacts reported little change in lending standards overall; however, a few banks reported some easing for commercial real estate loans. Most banks continued to report improving credit quality. Many banks cited strong competition within their local markets. Financial institutions remain generally optimistic about future growth.\nReal Estate and Construction\nFollowing a little softness, homebuilders throughout most of the Third District resumed a moderate growth of contracts signed for new construction. Contracts signed from January through May--\"Five good months in a row!\" one builder exclaimed--have generated significantly greater construction activity than last year for many builders, large and small. Significant cost pressures face builders as the long housing recession has disrupted the supply chain for materials and the pool of skilled workers. In addition, some builders have faced labor shortages due to higher wages offered for certain trades that are in demand for the Hurricane Sandy recovery. Residential brokers reported moderate activity during April and May for the Third District overall. Existing home sales that closed during the period varied geographically with strong growth reported in the Philadelphia market. Brokers were also pleased by even stronger growth of sales contracts pending, which was more widely reported throughout the District. The estimated months' supply of the existing inventory of homes continued to fall significantly. Brokers still expect that a shadow inventory of homes held by reluctant, if not underwater, owners will emerge as prices begin to rise once more.\nNonresidential real estate contacts continued to report little change in the modest pace of overall leasing activity and slight growth of construction. New office construction remains limited to an occasional build-to-suit client, while most construction activity is related to ongoing demand for industrial warehouse space, multifamily residential units, higher education facilities, and public utility infrastructure. Contacts continue to report the presence of too many firms chasing too few projects, such that margins are squeezed thin on winning bids. Overall, contacts expect slow steady growth but remain optimistic, citing greater prospect activity and a greater willingness to make decisions.\nServices\nThird District service-sector firms are reporting a moderate pace of growth overall--a bit stronger than the last Beige Book. On the heels of a strong winter/spring season, resorts in the Poconos are entering their summer season with strong bookings and many sold-out weekends. Stronger cash flows are allowing properties to reinvest by refurbishing and adding new amenities. At least one major new resort is making plans to enter the market. Early bookings are also up along the shore in Delaware and New Jersey. In the wake of Hurricane Sandy, the state of New Jersey has launched a sizeable marketing campaign to remind people that most of the shoreline tourist area remains intact and ready for vacationers.\nIn other sectors, staffing firms have reported strong increases in billable hours--an improvement since the prior Beige Book. Staffing contacts cited no wage pressures and expressed more positive outlooks for future growth. Other service-sector firms reported steady growth and credited the recovering housing markets with strengthening and expanding the base of consumer spending. Firms are hiring, although not aggressively. Overall, service-sector firms remain generally optimistic about future growth.\nPrices and Wages\nOverall, price levels continued to increase slightly, similar to the previous Beige Book. Manufacturing firms continued to report slight overall increases for prices paid and slight overall decreases in prices received. Auto dealers reported no changes in pricing. Despite passing along some costs, homebuilders continued to face tight margins with lumber and skilled labor commanding high prices. Most real estate contacts reported stable, if not rising, prices for lower priced homes, and contacts in some markets noted stable prices for higher priced homes. Wage pressures remain constrained, according to most contacts other than homebuilders. Rising costs associated with medical insurance benefits remain a concern for many employers.\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 5, 2013\nThe Ninth District economy posted moderate growth. Increased activity was noted in consumer spending, tourism, commercial construction and real estate, professional services and manufacturing. Residential construction and real estate grew at a fast pace, the energy and agriculture sectors were steady and mining decreased. Labor markets tightened since the last report, particularly in the western part of the district. Wage increases were generally modest, and overall prices were stable, with some exceptions noted.\nConsumer Spending and Tourism\nConsumer spending grew slightly due in part to a late spring. A Minneapolis area mall reported that recent traffic was level with a year ago, but sales for most tenants were up. A mall manager in Montana noted that apparel sales were slow, but jewelry sales were much higher than a year ago. A Minnesota-based retailer reported that the extended winter weather slowed spring sales of apparel and other items. A Minnesota auto dealer reported level sales over the past couple of months. A representative of an auto dealers association in Montana noted moderate growth in recent auto sales compared with a year earlier at dealerships in the state.\nWinter tourism finished very strong in northern Wisconsin and Minnesota as snowpack remained into May in some areas. A tourism official in northwestern Wisconsin noted that summer bookings at resorts were strong. Recent hotel occupancy in Billings, Mont., was down somewhat from 2012, but still at high levels compared with the prior few years.\nConstruction and Real Estate\nDespite the inclement weather, commercial construction activity continued to increase since the last report. The value of April commercial permits in Billings increased 11 percent from last year, while hotel building rose to $11 million in April compared with zero in the first four months of 2012. In Sioux Falls, S.D., April permits were up 2 percent from a year ago. A Minnesota manufacturer plans to build an office building. However, in the Minneapolis-St. Paul area, April nonresidential construction activity decreased from a year ago, according to a market research firm. Residential construction increased rapidly over past year. The value of April residential permits in Sioux Falls more than quadrupled from a year earlier. In the Minneapolis-St. Paul area, April residential permitted units more than doubled compared with April 2012. The value of April residential building permits in Billings was up 77 percent from last year, mostly due to multifamily building.\nActivity in commercial real estate markets increased since the last report. A real estate analytics firm noted that Minneapolis-St. Paul area industrial vacancy rates dropped in the first quarter and are forecast to fall throughout 2013. Residential real estate market activity increased at a solid pace. In the Sioux Falls area, April home sales were up 28 percent, inventory was down 19 percent and the median sale price increased 6 percent relative to a year earlier. Recent home sales were up 16 percent from the same period a year ago in the Minneapolis-St. Paul area; the inventory of homes for sale was down 28 percent, and median sale prices rose 12 percent. Multifamily vacancy rates in Minneapolis-St. Paul dropped in the first quarter, but are forecast to rise for the remainder of 2013.\nServices\nActivity at professional business services firms increased at a moderate pace since the last report. Preliminary results of the Minneapolis Fed's annual survey of professional services companies (conducted in May) showed that over the past four quarters, sales revenue, space usage, productivity and profits grew, and these are expected to increase over the next year. Contacts from the trucking industry expect minimal growth in freight volumes during the second half of the year.\nManufacturing\nManufacturing activity continued to expand moderately. An April survey of purchasing managers by Creighton University (Omaha, Neb.) found that manufacturing activity increased in Minnesota and the Dakotas at a slightly faster pace than in recent months. A Minnesota tractor manufacturer announced a $43 million expansion plan, while a vehicle producer is investing $20 million to expand research and development at a North Dakota facility. Plans were announced for a $1 billion fertilizer plant in North Dakota.\nEnergy and Mining\nThe energy sector remained strong, while mining activity slowed. Late-May oil and gas exploration activity increased in North Dakota and was flat in Montana compared with the last report. In North Dakota, a $400 million oil refinery will break ground this spring and a 120-car rail terminal is in the works to handle crude oil. Exports of coal from Montana's Powder River basin hit record levels even as domestic demand dwindled. Meanwhile, production at Minnesota iron ore mines through April was about 5 percent lower than for the same period in 2012.\nAgriculture\nWhile a late spring delayed planting, recent rains brought drought relief for District agricultural producers. According to the Minneapolis Fed's first-quarter (April) survey of agricultural credit conditions, nearly 90 percent of respondents said farm incomes increased or held steady over the previous three months, with similar results for farm household and farm capital spending. Expectations for the second quarter were more moderate. District corn, soybean and spring wheat planting progress was behind average for late May, but producers were catching up quickly after a delayed spring. Prices increased from a year earlier for corn, wheat, soybeans, hay, eggs, chicken and dairy products; prices fell for hogs, turkey and dry beans, while cattle prices were flat. USDA forecasts call for substantially lower prices for corn and soybeans for the coming year, with slight reductions in wheat prices.\nEmployment, Wages, and Prices\nLabor markets tightened since the last report, particularly in the western part of the District. Labor markets remained very tight in and near the oil boom area in western North Dakota and eastern Montana, although some easing in the pace of growth was noted over the past six months. Contacts in manufacturing and agribusiness in eastern South Dakota expect to increase employment slightly over the next six months. Results from the aforementioned professional services survey show that respondents saw employment growth over the past 12 months and expect more growth in the next year.\nMeanwhile, employment levels declined in Minnesota during March and April, partially due to extended winter weather. A Minnesota employment services firm noted that temporary placements in light industrial companies were level during the second quarter after posting strong gains since early 2012. A paper mill in northern Minnesota recently announced 300 layoffs.\nWage increases were generally modest. The professional services survey indicated that respondents on average expect wages and benefits to increase 2 percent over the next 12 months.\nOverall prices remained stable, with some exceptions noted. Lumber prices decreased since the last report after making strong gains since October 2012. Gold and silver prices also decreased since the last report. Average Minnesota gasoline prices spiked to $4.34 per gallon toward the end of May, about 85 cents per gallon higher than a month earlier, as major refineries that supply the Midwest closed for maintenance.\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 5, 2013\nThe economy in the Fourth District grew at a moderate pace since our last report. Manufacturing orders and production were steady or higher. The momentum seen in residential construction since the beginning of the year, including multifamily, has been maintained. In nonresidential construction, projects are moving very slowly from the development to the construction phase. Retail sales were below our contacts' expectations during April, while new motor vehicle sales posted moderate gains on a year-over-year basis. Conventional and unconventional natural gas and oil production was flat, and drilling has declined during the past few months. Output at coal mines trended lower. Freight transport volume exceeded projections made at the beginning of the year. Demand for business credit increased more slowly, whereas large numbers of consumers continue to apply for auto loans.\nHiring picked up in the manufacturing and freight transport sectors. Reports by staffing-firm representatives on the number of job openings and placements, primarily in the service industries, were mixed. Wage pressures are contained. Input and finished goods prices were stable, apart from increases in construction materials and natural gas.\nManufacturing\nReports from District factories indicated that new orders and production were largely stable or increased during the past six weeks. Domestic sales were stronger than those to offshore customers, with declines in Europe being more acute than in China. Companies seeing the strongest activity were suppliers to the oil and gas, residential construction, and transportation industries. Defense contractors and suppliers to the coal industry experienced weakening activity. Compared to a year ago, production levels were mixed. Steel producers and service centers reported that shipping volumes were stable but remain below levels seen early in the first quarter. Several contacts expressed concern about the quantity of steel produced in China and Europe that is now being imported into the United States. Motor vehicle production at District plants rose at a robust pace during April on a month-over-month and year-over-year basis. Looking forward, many of our contacts believe that business conditions will continue to slowly improve during the second half of the year.\nCapacity utilization rates stood within their normal ranges. Several manufacturers noted that they have considerable excess capacity. For the most part, finished goods inventories are in-line with demand. Capital expenditures are on plan for the fiscal year. Outlays are primarily allocated for productivity enhancements and equipment replacement. Little capacity expansion is planned due to lingering uncertainty about future demand. Raw material and finished goods prices were flat or trended lower. Our respondents said that their ability to raise prices during 2013 is likely to be limited. We heard numerous reports from manufacturers who intend to increase payrolls at a modest to moderate pace during the next few months. Wage pressures are contained, while premiums for healthcare insurance spiked higher.\nReal Estate\nSales of new and existing single-family homes trended higher and they were above year-ago levels. Our contacts attributed this trend to low interest rates, favorable prices, and an improving labor market. One builder commented that young people are less inclined to buy a house than were their parents due to a perceived lack of value and a desire for mobility. He believes that this reluctance may put downward pressure on the housing industry for years to come. New home contracts were found mostly in the mid- to higher-price-point categories. Demand for multifamily housing remains strong. Builders expressed confidence that the turnaround in the housing market will persist in the upcoming months. However, they cited difficulty in obtaining financing and low inventory as barriers to more robust growth in their industry. List prices of new homes increased by as much as 10 percent in certain markets this year due primarily to rising construction costs. Builders have cut back on discounting.\nNonresidential builders told us that while inquiries have weakened, there were still a large number of projects in the development phase. However, backlogs are lower than what most builders would like. The strongest activity was in multifamily housing, energy, and manufacturing. The office and large-footprint retail segments were relatively weak. Our contacts are cautious about near-term activity. While they expect some growth, especially in the second half of the year, many of their clients are not in a rush to move projects into the construction phase. A substantial rise in commercial and industrial leasing is seen as a positive indicator by builders. They believe that some of their clients may commit to new building in the upcoming months.\nThere were many reports about large price increases for building materials, especially lumber (softwoods) and drywall. Residential builders felt the brunt of these increases. Little change in payrolls or wages was reported. Hiring for the prime construction season is expected to be limited. Subcontractors are having difficulty obtaining working capital and attracting skilled labor.\nConsumer Spending\nMost retailers reported that April sales fell short of expectations. Some of our contacts cited colder-than-normal weather for holding down consumer spending. Others saw a pickup in purchases of large home goods such as furniture and exercise equipment. On a year-over-year basis, volume was up slightly. Going into summer, sales are projected to be modestly higher, when compared to the same time period last year. Vendor and shelf prices held steady. A food retailer commented that his customers remain sensitive to changes in gasoline prices, with any hike in gas prices negatively impacting his sales. Capital expenditures were on plan for the fiscal year. Monies are allocated primarily for improvements to distribution systems and new store construction. No hiring is anticipated, except for staffing new stores.\nYear-to-date sales of new motor vehicles showed a moderate increase during April compared to the same time period a year ago. Buyers preferred smaller, fuel-efficient cars, crossovers, and SUVs, and the number of customers opting to lease continued to trend higher. Large pickup trucks were big sellers in regions with significant shale gas activity. New vehicle inventories are rising, but a majority of dealers said that they are satisfied with their inventory positions. Our contacts are cautiously optimistic about sales prospects for the year, with a few projecting 5 percent growth over 2012. Used vehicle purchases declined in April on a month-over-month basis. Several dealers commented that it is difficult to find a quality used car. However, they believe that as lease rollovers start to come in this year, the availability of low mileage used cars will improve. Two of our contacts noted that financing activity in the subprime market is starting to pick up. Dealers want to hire a small number of sales and technical personnel, but they are having a difficult time finding qualified workers.\nBanking\nDemand for business credit has increased, but at a slower rate, since our last report. Although loan requests originated from many sectors, commercial real estate and industrial production stood out. A few bankers commented that insufficient collateral was the primary reason behind small business owners being denied credit. Consumer credit demand rose slightly, especially for auto loans. Installment loans are growing in popularity, whereas drawdowns on home equity lines of credit trended lower. Residential mortgage activity was stable. The shift in applications from refinancing to new purchase grew. Delinquency rates declined across consumer and commercial loan categories. No substantive changes were made to loan-application standards. Aggregate core deposits grew at a steady pace, with a movement from CDs to demand deposits still taking place. Customer preferences for online banking, rising use of ATMs, and shrinking net interest margins were factors cited by some of our contacts for cutting payrolls and reducing the number of branches.\nEnergy\nCoal production continued to trend down across the District, although lower production numbers are showing signs of stabilizing. One producer noted that demand from domestic utility companies is up slightly, while offshore demand is slowing or stagnant. Spot prices for steam-coal rose slightly, whereas metallurgical coal prices were flat. The number of drilling rigs across the District was little changed over the past six weeks but has fallen since the beginning of the year. Ohio and West Virginia issued shale gas drilling permits at a robust pace. Output from conventional and unconventional oil and natural gas wells was flat during the past couple of months. In the wet gas regions of Ohio and West Virginia, output should begin to increase later in the year as newly constructed gas processing units come on line. Well-head prices for natural gas are trending higher, but not to the point that would encourage aggressive drilling. Capital expenditures were at targeted levels, with little change expected. No change in production equipment and material prices was reported. Energy payrolls held steady. Labor costs were stable except for increases in health insurance premiums.\nFreight Transportation\nOur contacts described shipping volume as robust and higher than expected. Demand was particularly strong from motor vehicle and energy-related customers. Freight executives are optimistic about growth prospects for the remainder of the year. Diesel-fuel prices trended lower, and costs associated with equipment and maintenance items were stable. The biggest concern facing trucking companies at this time is the potential impact on operations (number of trucks and drivers, productivity, and pricing) due to the new hours of service (HOS) rules that go into effect on July 1. Capital spending is on plan for the fiscal year. Two of our contacts reported that they will be investing heavily in equipment that will service their energy customers. Another commented that his firm will order more trucks than originally budgeted to add capacity. Hiring is for replacement and capacity expansion. The industry is still experiencing a shortage of drivers and skilled mechanics. The former may worsen under the new HOS regulations.\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 5, 2013\nThe Eleventh District economy expanded at a stronger pace over the past six weeks than in the previous reporting period. Manufacturing activity increased overall, and many contacts were more optimistic in their outlooks. Retail sales activity improved during the reporting period, and auto sales held steady. In the nonfinancial services sector, demand for accounting services was strong, legal firms reported modest growth, and most transportation services firms noted improvement. Staffing services contacts said demand was steady. The housing sector continued to improve, with further gains in sales and construction. Office and warehouse leasing activity remained steady. Financial institutions noted modest growth in loan demand, and energy activity improved during the reporting period. Drought conditions worsened across the Eleventh District. Prices remained stable at most firms, and employment levels were steady.\nPrices\nMost responding firms said prices were steady and they expect increases to remain modest for the remainder of the year. One exception is home prices, which have risen strongly due to pent-up demand and low inventories. While some contacts said prices for construction materials were up, others said increased competition had lowered prices. There were some reports that builders expect less price pass-through going forward. Transportation service industry contacts noted increased shipping rates earlier in the year, but expect price gains to ease with recent declines in the price of jet fuel. Automobile dealers said prices held steady. Cattle prices trended lower over the past six weeks while retail beef prices rose to a record-high due to strong demand.\nOil prices fell slightly over the reporting period. A late winter brought natural gas inventories back into the seasonally normal range and pushed prices above $4. Gasoline and diesel prices declined since the last report.\nLabor Market\nEmployment held steady at most responding firms. There were scattered reports of hiring from some transportation manufacturing and transportation services firms. Financial firms added employees to comply with regulatory stress testing and wealth management, and noted employment growth in Austin and the Eagle Ford Shale area. Several contacts reported difficulty finding qualified people to fill vacancies, particularly in staffing services, accounting, machinery manufacturing, IT and IT-related retail. A construction-related manufacturer noted truck drivers were in short supply. Wage pressures remained largely subdued, although increased compensation was reported in legal and financial services.\nManufacturing\nReports on construction-related manufacturing were mixed, although firm outlooks remain mostly optimistic. Some lumber producers noted increased activity, while others said sales were less than expected. A cement producer noted strong growth in residential demand--especially in Houston--and a recent boost from commercial infrastructure construction in Dallas. Fabricated metals producers said demand remained steady for both private and public projects. Primary metals producers said demand had slowed slightly since the last reporting period, and outlooks were cautious.\nContacts in the high-tech manufacturing industry reported that orders and shipments were flat to slightly improved since the last survey. Respondents who reported a slight improvement in orders said that growth was broadly based across sectors. Inventories were reported to be lean in general and at or near desired levels. Respondents expect demand to improve slightly in the second half of this year.\nPaper manufacturers said demand increased to normal levels after the decrease reported in the last report. Contacts are slightly more optimistic. Food producers said demand was about 15 percent higher than last year at this time. One contact noted the successful introduction of new products to schools and said sales in that market were up 30 percent. Inventories were at the right levels for contacts, customers and suppliers.\nTransportation manufacturing contacts said orders were steady to up. Outlooks were generally positive, although aviation contacts were more uncertain than in the last report.\nPetrochemical producers reported a slowdown in activity since the last report, mostly due to weakness in Europe. Still, contacts remain very optimistic in their outlooks. Refiners said operating rates and margins were up over the reporting period.\nRetail Sales\nRetail sales volumes increased over the reporting period and are up from a year ago. According to one national retailer, Texas continued to outperform the nation. Outlooks for the upcoming quarter and the rest of the year are positive.\nAutomobile sales were steady over the reporting period, and demand remains above year-ago levels. Contacts are positive in their outlooks for the remainder of the year, although increasing costs were a concern.\nNonfinancial Services\nStaffing services contacts said demand was flat over the past six weeks. Placements were strong in mortgage-related finance and residential construction jobs. One firm noted an increase in the number of jobs but a decline in workweeks as businesses redistribute hours to minimize the impact of health care reform. Since the last Beige Book, accounting demand was strong and firms noted a moderate increase in non-tax-related work over the reporting period, with advisory work leading the way. Legal firms reported modest demand growth, particularly for intellectual property litigation, real estate, wealth planning and health care work. Outlooks were mildly optimistic, with strength expected in real estate and corporate work.\nTransportation service firms said overall cargo and container volumes increased over the reporting period. Railroad contacts reported notable increases in motor vehicles, petroleum, lumber and wood and crushed stone volumes, while volumes for grain and metallic ores declined. Small parcel shipments picked up, with demand growth led by retail trade. Air cargo volumes were flat both domestically and internationally.\nReports from airline contacts were mixed. Some said demand increased during the reporting period while others noted flat travel demand due to bad weather and reduced demand from the government sector. Outlooks were fairly strong for the near term, but contacts are less optimistic about demand in the longer-term due to sluggish economic growth and fiscal uncertainties.\nConstruction and Real Estate\nThe Texas housing sector continued to improve over the past six weeks. Contacts said home sales remained strong with inventories still low, despite some reports that more homes were being listed. New home construction activity picked up pace since the last report, although some contacts mentioned higher prices may slow sales growth later in the year. Apartment construction remained at high levels and investment activity for multifamily projects continued to be strong, according to respondents.\nContacts in the commercial real estate sector said leasing activity for office and industrial warehouse space continued at a steady pace. Contacts noted a pickup in building activity in the office sector.\nFinancial Services\nFinancial institutions experienced modest growth in loan demand, with robust growth in residential mortgages and auto lending and weakness continuing in corporate transactions. Non-performing loans continue to improve and debtors are rapidly paying down mortgages and auto loans. Loan pricing remains very competitive. Deposits increased modestly and deposit rates remained mostly unchanged. Employment and compensation growth were flat for the most part. Mortgage lending is expected to remain robust.\nEnergy\nEnergy activity improved since the last report. The Texas rig count increased, and contacts noted strong global demand. Respondents expect further improvement in the second half of the year, especially due to anticipated increases in rig activity and production from the Gulf of Mexico.\nAgriculture\nDrought conditions continued to worsen slightly across most of the District over the reporting period, despite scattered rainfall. The Texas wheat crop suffered from dry weather and late freezes and production is expected to be significantly below average. Conditions for other crops are generally worse than at this same time last year but not quite as bad as in 2011.\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 5, 2013\nEconomic activity strengthened modestly across the District, however growth was constrained by softness in manufacturing, federal spending limits, and unusual weather conditions. Retail sales flattened, although auto sales generally remained strong. Business was also strong at most non-retail services firms, but tourism in some areas fell below expectations as a result of an unseasonably cool spring. Banking conditions were mixed; residential mortgage demand increased, commercial lending varied, and competition for business was sharp. Residential real estate prices strengthened. Commercial real estate construction also improved, with positive reports across the District. Heavy rainfall and fluctuating temperatures delayed spring plantings, but forage crops were developing well. In the energy sector, demand continued to shift from coal to natural gas. Labor markets were uneven, although many employers plan to increase hiring in the months ahead. Reports on prices and wages were mixed.\nManufacturing\nFifth District manufacturing activity softened since our last report, although there were scattered reports of improvement. A machinery producer said that his company was struggling to hit the break even mark again this month and that the volume of new orders was down considerably. Impacts of sequestration and tax changes were noted by several firms. A manufacturer of automobile convertible tops reported that the uncertainty of tax issues had slowed investment at his firm. Moreover, a producer of defense equipment cited government sequestration and orders being canceled or delayed as major concerns facing his company. In contrast, a lumber producer mentioned that, because of the improvement in the housing market, his company had earned a profit in the first four months of this year, and a flooring manufacturer also reported improving business. Price growth in raw materials slowed in recent weeks and finished goods prices grew at a somewhat quicker pace.\nPorts\nShipments increased at District ports, especially for container exports. Specialty chemicals were particularly strong, and one contact noted that pharmaceutical manufacturers were changing from air to ocean transport as rising fuel costs drive up air freight rates. Both auto exports and imports were robust. Furniture and flooring imports were up overall, and imports of auto parts remained solid. Port administrators commented that more manufacturers were evaluating plans for moving product through the ports as they plan to shift production to this country. Some port officials are considering how to better accommodate large container ships coming to the East Coast via the Suez Canal. Those ships have nearly double the container capacity of ships that could pass through the Panama Canal. However, one port contact expressed concern that the current truck driver shortage could slow container shipping.\nRetail\nRetail sales varied by category but were flat overall since our last report. Several contacts told us the unusually cool spring weather held down sales. Retailers commented that their labor costs were rising as a result of the healthcare legislation, leading them to change employees' hours. The manager at a discount chain store in the Tidewater region of Virginia noted that her store was \"struggling\" to make sales goals. In contrast, a central Virginia retail contact observed \"less of a roller coaster\" in retail sales than a year ago, noting stability and even strength in categories related to home building and home sales, such as furnishings and decorative accessories. Auto dealers reported that availability of used cars improved since our last report. Auto sales remained generally strong for both domestic and imports. Surveyed contacts indicated that retail price increases slowed in recent weeks.\nServices\nWe received reports of renewed vigor at non-retail services firms. Architectural and technology services were among the firms noting increased revenues. A financial services contact commented that his clients were \"feeling good\" as asset values rose and real estate improved, leading them to free up and move cash. Although healthcare organizations reported stable demand, executives in some areas remarked on financial pressure from the decline in their Medicare and Medicaid reimbursement under the Affordable Care Act. Prices at non-retail services firms edged up slightly faster.\nReports from the tourism industry were mixed. Resorts in Virginia and North Carolina had good growth in bookings, and business was up for full-service conference space. However, unseasonably cool weather reduced weekend stays at a West Virginia resort and lessened weekend traffic on the Outer Banks of North Carolina. A contact in Washington, D.C. said visitor traffic remained consistent, but that some summer activities could be affected by reductions in security staffing under the federal budget cuts. Hoteliers anticipated a solid finish to the summer months, and most had raised rates slightly.\nFinance\nReports on banking conditions varied since our last assessment. Demand increased for residential mortgages. Refinancing was strong in North Carolina, whereas lending in Virginia went primarily to new home purchases. Across the District, the limited increase in commercial mortgage activity was generally confined to refinancing existing loans from other institutions. Nevertheless, a bank official in North Carolina noted a pick up in demand from home builders, and said that his bank was reconsidering whether their credit standards were too tight given the improving economy. The demand for commercial and industrial loans was weak, according to lenders in South Carolina and West Virginia, due to customers' high cash balances and low confidence. However, bankers in North Carolina and Virginia saw an uptick in activity. Several lenders commented that competitors continued to offer very low rates that \"made no sense\" in an attempt to take away business.\nReal Estate\nResidential real estate activity strengthened in recent weeks. A contact in Hampton Roads, Virginia reported that contracts were up twenty-two percent over a year ago and that inventories were low. She added that buyers were looking for owner-occupied homes in good condition and noted that multiple offers were driving up prices. Similarly, a Realtor in the Washington, D.C. area described the market as \"accelerating,\" noting that decreasing inventory had led to multiple offers and higher selling prices. A Richmond Realtor mentioned that new construction demand had increased, which had pushed up the prices of building lots. A homebuilder in South Carolina reported an increase in lot shortages. His company raised prices on single family homes this year to offset supplier price increases.\nCommercial real estate and construction markets tightened slightly in recent weeks. A commercial Realtor in Charleston, South Carolina said that activity had improved and that he expects nonresidential construction to increase significantly in the next twelve to eighteen months. He also stated that the region is on the precipice of strong growth but will be limited by infrastructure. A source in Richmond expected further improvement in commercial real estate activity during the next year, noting a rise in construction in the Richmond and Hampton Roads regions. According to a contact in West Virginia, more hotels have come online and retail space was absorbed at a faster pace. Leasing there has risen to pre-recession levels, according to one report. With vacancies declining and increased demand for space in many areas, commercial lessors have stopped granting concessions. There is strong demand in the Baltimore corridor for multi-family rentals and purchases, with occupancy rates at 95 percent. Another source said that the Washington, D.C. market was growing with a concentration in rentals, but that there was little speculative building.\nAgriculture and Natural Resources\nFluctuating temperatures coupled with heavy rainfall tempered plant growth and delayed spring plantings throughout the District. Despite wet conditions, forage crops were having a great spring, and pastures and hayfields were in good condition.\nAssessments of energy activity were mixed in this reporting period. The coal industry remained depressed and businesses that supplied the industry were negatively impacted. A source in West Virginia said that reduced coal production led to a decline in diesel fuel sales as more heavy equipment was idled. He indicated that natural gas had displaced coal in power plants due to the low price of natural gas and concerns regarding environmental regulatory changes. He noted that some of the decline in domestic coal demand was offset by increased thermal coal exports to Europe.\nLabor Markets\nLabor activity was uneven, although contacts were upbeat about additional hiring in the months ahead. A manufacturer in North Carolina laid off employees because of fewer federal orders. However, an auto dealer in the Washington, D.C. area noted that he had to hire more sales people, and a flooring manufacturer said he added an additional large crew at one of his plants. A national trucking firm executive remarked that implementation of new federal restrictions on driver hours of service will exacerbate the shortage of drivers for long-haul trucking. Further, a temp agency in Maryland saw somewhat stronger demand for workers in most industries. Contacts in the tourism industry indicated that seasonal hiring was about on par with a year ago, and permanent jobs were plentiful in locations along the outer banks of North Carolina. Looking ahead, firms in several categories expected to increase hiring. For example, a lumber firm expected to hire more workers later this year, and a West Virginia manufacturer planned to add jobs early next year as a result of reshoring. According to our latest surveys, manufacturing employment edged down and average wage growth slowed. Retail employment declined, but wage increases were more prevalent. Hiring flattened at non-retail services providers, while average wages rose.\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 5, 2013\nEconomic activity in the Second District has continued to expand at a moderate pace since the last report. Price pressures have abated somewhat among manufacturers, though they remain more widespread in the service sector; contacts continue to report that selling prices are steady to up modestly. Labor market conditions continue to improve, and businesses increasingly report difficulty finding well-qualified workers. Retailers report that sales were tepid in April but picked up in early May, and new automobile sales have remained strong. Tourism activity has been mixed but generally robust. Commercial and residential real estate markets have strengthened further since the last report. Finally, credit conditions improved across the board, with bankers reporting increased loan demand, widespread narrowing in loan spreads, and declining delinquency rates across all loan categories.\nConsumer Spending\nRetailers report that sales were generally soft in April but strong in early May. One major retail chain reports that same-store sales were somewhat below plan in April--partly due to cool weather--but picked up in early May; another indicates that sales have been running somewhat ahead of plan in both months. Both retailers indicate that their New York City stores performed relatively strongly. Two malls in upstate New York report that business was sluggish in April, partly due to cool weather, but has been brisk in the first half of May; a number of new stores are scheduled to open in the weeks ahead. Inventories remain at desired levels, prices are characterized as steady, and no unusual discounting is reported.\nAuto dealers in the Buffalo and Rochester areas report that new vehicle sales were robust in April and early May, running well ahead of comparable 2012 levels. On the other hand, sales of used automobiles softened further and are down from a year earlier; this is partly attributed to better deals on new vehicles. Wholesale and retail credit conditions for auto purchases remain in good shape.\nTourism activity has been mixed but generally fairly robust since the last report. Manhattan hotels report that business was steady at a strong level in April and picked up in early May; occupancy rates have been roughly on par with a year ago, with room rates up 2 to 4 percent. Bookings for Memorial Day weekend are described as very strong. Albany area hotels indicate a pickup in business in April, with occupancy and room rates rising for the first time since last summer. On the other hand, overall attendance at Broadway theaters remains tepid, running 10-20 percent below a year ago in April and the first three weeks of May; this mainly reflects a reduction in the number of shows running. Finally, consumer confidence in the region has been mixed: The Conference Board's April survey of residents of the Middle Atlantic states (NY, NJ, Pa) shows confidence surging to its highest level in more than a year; however, Siena College's survey of New York State residents shows consumer sentiment little changed in April, at its lowest level since then end of 2011.\nConstruction and Real Estate\nResidential real estate markets in the District have strengthened further since the last report. New York City's home sales and rental markets have shown further signs of tightening--on both the sales and rental sides. Both apartment sales prices and transaction volume continue to run well ahead of a year ago in Manhattan and especially in prime areas of Brooklyn, reflecting a low inventory of available units. The rental market also remains tight: rents continue to rise at a roughly 6-7 percent annual rate in Manhattan and at a somewhat faster pace in Brooklyn; the Queens rental market is also seeing a pickup. Long Island, where the housing market had been generally flat until recently, has seen a recent sharp pickup in pending home sales and a drop in the inventory of homes for sale. Northern New Jersey continues to see modest, steady improvement in its housing market. With a relatively low inventory of new homes, prices are rising gradually; however, a sizable overhang of distressed properties is reported to be restraining price appreciation. A real estate contact in western New York reports increasingly strong market conditions: inventories have fallen, bidding wars have become increasingly common, and home prices have been rising.\nCommercial real estate markets across the District have also shown signs of improvement thus far in the second quarter. Manhattan's office market has been particularly robust: vacancy rates are little changed, despite a sizable block of new development coming onto the market; asking rents are up roughly 5 percent over the past year. Elsewhere in the region, office markets are mostly steady to stronger: vacancy rates fell in Long Island, northern New Jersey, Rochester and Albany and were little changed in the Long Island and Buffalo markets. One exception is the Westchester/Fairfield county market, where vacancy rates have risen to a ten-year high, and office rents have been declining. The market for industrial space has been steady to stronger: vacancy rates have declined modestly in the Long Island and Westchester/Fairfield markets and held relatively steady in northern New Jersey and across upstate New York.\nOther Business Activity\nManufacturing contacts again report steady business activity in recent weeks, while their optimism about the near-term outlook has waned somewhat. In contrast, contacts in other sectors generally report some pickup in business activity and employment; they also express increased optimism about the business outlook, and a growing number of them plan to add workers and increase capital spending. Price pressures are mostly reported to be steady and moderate in the manufacturing sector but more widespread among service-sector businesses; still, relatively few service-sector contacts say they are increasing their selling prices.\nThe labor market continues to improve gradually but steadily. A growing proportion of business contacts say they are adding workers, except in the manufacturing sector, where employment is reported to be little changed. Two major employment agencies report that hiring activity has been fairly robust, particularly for information technology workers. There is also reported to be fairly strong demand in fields such as auditing and compliance. Large financial firms, typically a major source of jobs in New York City, are reported to be hiring only sporadically. While the temp business remains strong, a growing number of firms are hiring full-time workers. Although qualified job candidates are said to be increasingly hard to find, most employers are still said to be holding the line on compensation, though some are becoming more negotiable.\nFinancial Developments\nSmall- to medium-sized banks report an increase in demand for all types of loans except for commercial & industrial loans, where demand was unchanged. Bankers report little change in demand for refinancing, on balance. Contacts report that credit standards are unchanged across all loan categories. Bankers continue to indicate narrowing in spreads of loan rates over costs of funds for all loan categories--most notably in commercial mortgages. Interest rates on deposits continue to decline, on balance. Finally, bankers report fairly widespread decreases in delinquency rates for all loan categories.\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 17, 2013\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of late February through early April. Price increases for most final goods and services were limited, and upward wage pressures were minimal overall. Sales of many retail items rose, and most business and consumer services gained further. District manufacturing activity appeared to increase on net. Production activity and sales grew for agricultural producers. Demand for both homes and commercial real estate properties continued to expand on balance. Contacts from financial institutions reported increased loan demand.\nPrices and Wages\nPrice increases for most final goods and services were limited. Reports were mixed for construction materials, with prices for some products such as cement, logs, and lumber edging up further; meanwhile, prices for some other metal and wood products were mostly flat. Contacts from retail grocery and restaurant chain establishments reported largely constant food prices as the prices of some of the underlying commodities have stabilized. Health-care price increases were limited, and fees for legal services held steady.\nContacts reported that wage gains were contained across most occupations, industries, and regions in the District. Restrained hiring plans and ready worker availability have held down increases in wages and compensation for most sectors and regions. A shortage of trained engineers continues to prompt vigorous employer competition and significant compensation gains for this group across a number of industries. In a few areas experiencing significant rebounds in housing market activity, wages of construction workers and experienced mortgage underwriters have risen. Contacts mentioned downward pressure on the wages for some low-skilled jobs and government employees. Most firms expect wage growth between 2% and 4% this year.\nRetail Trade and Services\nRetail sales rose on balance. New and used automobile sales remained at high levels. Among computer and electronic products, sales of personal computers remained weak relative to sales of mobile computing devices, including smart phones and tablets. Demand for some gaming products and apparel picked up, with e-commerce sales growth for these items outpacing sales growth at traditional retail stores. Retail grocers reported soft sales, experiencing intensifying competition from discount and online retailers. Demand was steady for retail pet products.\nDemand for most business and consumer services gained. Contacts expect more robust growth this year for various technology services, such as cloud computing and data processing, compared with modest gains at the end of last year. Food service providers reported strong sales on net, with some discount chains faring particularly well. Activity in the District's travel and tourism sector advanced, as visitor counts, expenditures, and occupancy rates climbed in Hawaii; however, reports indicated weaker activity in Southern California in recent weeks. Contacts in the health-care industry described plans to freeze hiring and scale back capital expenditures in response to the federal spending cuts.\nManufacturing\nDistrict manufacturing activity appeared to step up during the reporting period of late February through early April. Contrary to downbeat expectations from earlier in the year arising from product release challenges, production activity for commercial aircraft and parts continued to grow robustly. Manufacturers in defense-related subsectors noted furloughs, layoffs, and plant closures at some production facilities. Reports indicated that inventories of semiconductors fell at the end of last year but remain roughly in line with current demand. Pharmaceutical goods producers reported modest gains. Wood product manufacturers stated that demand grew further, fueled both by recent rebounds in domestic residential construction activity and demand from China. Demand for steel products used primarily in transportation infrastructure and nonresidential construction projects increased, although overall capacity utilization for steelmakers remained at a relatively low level.\nAgriculture and Resource-related Industries\nAgricultural producers noted increased sales and production activity. Demand for most crop and livestock products grew further. Agricultural producers faced mostly stable or somewhat lower petroleum-based fuel and natural gas costs. Supplies of most raw materials were adequate. However, some contacts communicated concerns that volatile weather conditions and limited water availability in parts of the District could pass through to lower seasonal hiring and reduced agricultural output in coming months. Reports indicated that electricity and natural gas sales remained strong for both households and businesses, and natural gas inventories declined a bit further.\nReal Estate and Construction\nActivity in residential and commercial real estate markets continued to gain momentum, with notable gains in selected locales. Home sales climbed further in most regions, and low inventory levels coupled with healthy demand supported stable or increasing prices. Reports indicated that the pace of residential housing permit issuance increased significantly in many regions throughout the District. Rental activity for both single-family and multifamily homes was strong, based on low vacancy rates and stable rental rates. Construction of multifamily residential projects expanded further. Commercial real estate development and leasing activity increased, particularly in major metropolitan areas across the District, fueled in large part by sustained growth in the technology sector.\nFinancial Institutions\nContacts from financial institutions reported that loan demand improved. Ramped-up mortgage and automobile lending continued to spur growth in overall loan demand. Banking contacts again highlighted ample liquidity and generally stiff competition among lenders for well-qualified business borrowers. Contacts also pointed to a recent buildup of privately held technology companies poised for public offerings. Despite the clear potential for action, the pace of initial public offerings and new venture capital deals in the District's Internet and digital media subsectors has been relatively slow. By contrast, private equity financing has shown steady growth in recent months. Reports indicated modest improvement in credit quality for both business and consumer loans.\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 17, 2013\nAggregate business activity in the Third District has maintained the modest pace of growth that was evident during the previous Beige Book period. In particular, general services, staffing, tourism, and commercial real estate leasing continued to expand at modest rates. General retail activity and residential construction appear to have decelerated somewhat, to a modest rate of growth. Sales of new and used autos maintained a moderate rate of growth as did residential real estate sales. Transportation services accelerated to a moderate pace of growth this period. The manufacturing sector reported slight increases in overall demand--a pickup since last period. Loan growth at Third District banks softened--growing little, while credit quality continued to improve. Resorts in the Pocono Mountains maintained good activity, as they shifted from their winter to spring season. Casino revenues continued to decline. General price levels, as well as wages and home prices, were reported to have increased slightly overall--similar to the last Beige Book period.\nThe overall outlook for modest growth remains the same as those views expressed in the last Beige Book. While some uncertainty remains as sequestration unfolds, contacts express greater confidence in the underlying strength of the economy. However, many contacts continue to hold off on their plans to expand capacity and hire more staff.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported that orders and shipments have risen slightly. The makers of food products, lumber and wood products, fabricated metals, industrial machinery, electronic equipment, and instruments have reported gains since the last Beige Book. The makers of primary metals reported lower activity. Contacts have attributed the greatest gains to ongoing auto-related demand and growing demand from housing-related sectors; the greatest uncertainty was attached to military-related sectors.\nThird District manufacturers remained optimistic that business conditions will improve over the next six months; their optimism is expressed broadly across nearly all sectors. A contact from a lumber and wood products firm reported the best growth prospects in five years due to a firming housing market; another wood products firm was hiring to expand capacity to meet growing demand. However, firms overall have somewhat lowered their expectations of future hiring and their plans for capital spending since the last Beige Book.\nRetail\nThird District retailers reported modest growth overall in February and March. After a falloff in sales (year over year) at many malls in February, contacts report that March sales were stronger and that an early Easter should boost the month's final results. During March, stores had increased their promotions to move spring apparel to make way for the arrival of the summer lineup; meanwhile, lingering cold weather had shoppers still searching for appropriate winter wear. In contrast, shoppers enjoyed warmer overall temperatures last year, including one 80-degree day during March to splurge on spring clothes.\nAlthough February ended with softer sales, auto dealers have continued to report a moderate pace of overall sales growth since the last Beige Book. Growth in sales has been as strong as last year despite worse weather, which has created up-and-down weekly sales patterns. A late March snowstorm and an early calendar-year appearance for Passover and Easter may have dampened sales in the final week of March. Dealers sustained a positive outlook but maintained lean inventories. Contacts reported that nearly half of the dealers plan to add staff, especially for sales and service. Most of the remaining dealers expect no change in staff levels.\nFinance\nOverall, loan growth among Third District financial firms has softened somewhat since the previous Beige Book \u00e2\u20ac\u201c growing little if at all. Contacts suggested the lull might be partially explained by the relative dearth of big deals in the wake of the fourth quarter frenzy, plus more immediate concerns for the pending sequestration impacts. Mortgage refinancings as a percent of total mortgages fell at many firms (often from as much as 90 percent to 75 percent). Total loans secured by any real estate fell slightly during the period. Most bank contacts report little change in credit standards and slow, steady gains in quality; many continue to report aggressive behavior from some of their bank and nonbank competitors. Financial institutions remain optimistic about future growth; however, the horizon for this growth appears farther away.\nReal Estate and Construction\nHomebuilders reported that contract activity was near plan for February and March. Modest year-over-year growth rates were slower than last period; however, more new homes were rising from the ground in the first quarter of 2013 than in any year since 2008. Compared with historical patterns, current new construction tends to be smaller, more affordable, more rental, and more urban. Builders are prepared to hire if current trends continue but are reporting that good labor is increasingly scarce. Residential brokers reported little change in the moderate pace of sales; however, year-over-year growth in February was modest compared with last year when weather was unseasonably warm. The existing inventory of homes continues to fall, and bank contacts reported that investor loans used to convert residential properties to rentals are increasing.\nNonresidential real estate contacts reported little change overall--maintaining modest growth in overall leasing activity and slight growth in construction. A drop-off in the recently high level of contract values being bid for construction of public utilities projects was partially offset by bids for residential construction (including a $200 million high-rise apartment and a university dorm project). Many contracts for repair work from Hurricane Sandy have yet to go to bid. Investors appear to have increased development activity in Delaware's shore communities in expectation of attracting more tourists from New York and New Jersey. Overall, contacts are more optimistic, citing increased inquiries, more commitments to decisions, rather than deferrals, and more deals to approve.\nServices\nThird District service-sector firms have maintained a modest pace of growth overall since the last Beige Book. Resorts in the Poconos were still enjoying an extended ski season, as their golf season was getting underway. Moderate growth through their winter season was boosted by early spring holiday weekends. Expectations that the positive trend will continue were buoyed by strong bookings for Memorial Day. Strong, early bookings for summer were also reported by the operators of Delaware shore hotels, who report getting more inquiries from New Jersey and New York residents this year. However, casino revenues for February fell by double digits in Atlantic City and by nearly eight percent throughout Pennsylvania from the prior-year levels.\nIn other sectors, staffing firms reported small increases in billable hours over the past month and project the trend to continue for three to six weeks based on their flow of work orders. Activity at logistics and transport firms grew moderately. However, firms with defense-related work and other entities dependent on federal money (e.g., higher education) are now anticipating somewhat lower levels of employment and activity for the remainder of this year. Overall, service-sector firms remain generally optimistic about future growth.\nPrices and Wages\nOverall, price levels continued to increase slightly, similar to the previous Beige Book. Manufacturing firms reported only modest cost pressures and a slight decline in prices received--essentially unchanged from last period. Auto dealers reported no changes in pricing. Homebuilders continued to note higher prices, especially for lumber and labor costs. Higher-end homebuilders reported some ability to make price increases stick. Real estate contacts continued to report that low-end house prices are firm or rising slightly, while high-end home prices are still falling in most markets. Outside of homebuilders, contacts continued to report that wages rose only slightly, if at all. Contacts continued to relay a wide range of costs and strategies to provide medical insurance benefits for their employees; their decision processes remain fraught with confusion and uncertainty.\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 17, 2013\nThe economy of the Eighth District has expanded at a moderate pace since our previous report. Recent reports of planned activity in manufacturing have been positive, while recent reports of planned activity in the service sector have been mixed. Residential real estate market conditions have continued to improve throughout most of the District, and commercial and industrial real estate market conditions have also improved in many areas of the District. Total lending at a sample of small and midsized District banks remained largely unchanged from mid-December 2012 to mid-March 2013.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our previous report. Several manufacturing firms reported significant plans to add workers, expand operations, or open new facilities in the Eighth District, while a smaller number of manufacturers reported plans to lay off workers. Firms in printing, food, housewares, automobile parts, jewelry, metal, lumber products, and beverage manufacturing plan to hire new employees and expand operations in the near future. In contrast, a firm that manufactures aircraft parts announced plans to lay off workers in the District.\nReports of planned activity in the District's service sector have been mixed since our previous report. Firms in social and legal services reported plans for new hiring and expansion in the District. In contrast, firms in religious, information technology, business support, healthcare distribution, data processing, print and publishing, and transportation services reported plans to lay-off employees. Reports from retail contacts showed increases in sales and new store openings. Sales reports from auto dealers have generally been positive, and a number of contacts in the District announced plans to open new dealership locations.\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, February 2013 year-to-date home sales were up 12 percent in Louisville, 14 percent in Little Rock, 4 percent in Memphis, and 11 percent in St. Louis. February 2013 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2012. Permits increased 16 percent in Memphis and 36 percent in St. Louis. In contrast, permits decreased 8 percent in Little Rock and remained unchanged in Louisville over the same period.\nCommercial and industrial real estate market conditions have continued to improve throughout most of the District. A contact in northeast Arkansas reported that commercial real estate activity was strong in the Jonesboro and Paragould area but remained flat in other areas. Contacts in Louisville noted that vacancy rates of commercial and industrial properties improved. A contact in central Arkansas reported an increase of commercial real estate activity in Little Rock, and a contact in St. Louis reported strong office leasing activity in the northwest and south portions of St. Louis County. Commercial and industrial construction activity is picking up throughout most of the District. Contacts in south central Kentucky continued to report that commercial real estate construction was strong in the downtown Bowling Green area, while contacts in Louisville reported that industrial real estate construction was strong in the Shepherdsville area. A contact in Arkansas also reported several ongoing commercial construction projects in southwest and west Little Rock.\nBanking and Finance\nTotal loans outstanding at a sample of small and midsized District banks were virtually unchanged from mid-December 2012 to mid-March 2013. Real estate lending, which accounts for 72.8 percent of total loans, increased 1.9 percent. Commercial and industrial loans, accounting for 15.1 percent of total loans, increased 3.9 percent. Loans to individuals, accounting for 4.7 percent of total loans were largely unchanged. All other loans, accounting for 7.3 percent of total loans, decreased 14.1 percent. During the same period, total deposits at these banks increased 4.3 percent.\nAgriculture and Natural Resources\nFarmers in the District's states expect to plant more sorghum and soybeans in 2013 than was planted in 2012; they also anticipate planting less corn, cotton, and rice. Additionally, Arkansas and Mississippi farmers expect to significantly increase corn acreage while reducing cotton and rice acreage. As of early April, over 90 percent of the District's winter wheat crop was rated in fair or better condition, and over 60 percent was rated as good to excellent. Year-to-date coal production in the District's states (excluding eastern Kentucky) at the end of February was 4.7 percent lower than the same period last year. Similarly, coal production for February was 5.7 percent lower than February 2012.\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 17, 2013\nThe District economy grew moderately overall in recent weeks, although activity varied by sector. Manufacturing production continued to expand but at a somewhat slower pace. Revenues at non-retail services firms steadied at moderate growth, and tourism strengthened. Retail sales contracted, with the notable exception of robust light vehicle sales. Lending remained stable, with a slight uptick in demand for residential mortgages. The residential real estate sector generally strengthened, and commercial real estate and construction markets improved. Cold, wet weather hindered spring plantings by farmers, while oil and natural gas production maintained a moderate pace during the past six weeks. Labor markets were mixed since our last report. Manufacturers' input and finished goods prices moved up at a slightly slower rate, and wage increases also slowed. The pace of price change slowed at services firms, while wage increases in that sector were more widespread. Retail prices rose more slowly, and average retail wages declined.\nManufacturing\nFifth District manufacturing production expanded at a somewhat slower pace since our last report. A textile maker reported that his business was slow with the exception of automotive products. He expected a pickup in non-automotive business during the next few months, however. A producer of electrical components told us that business was poor in the U.S. but good in Europe and Latin America. Additionally, a textile manufacturer indicated that while sales levels had improved, his outlook remained cautious. Moreover, a dental equipment producer noted that work volumes had increased earlier this year, but that the market recently softened. On the other hand, a manufacturer of technical foam products commented that sales through the first quarter of 2013 had been solid and he expected a strong year. According to our latest survey, prices grew at a slightly slower rate for both raw materials and finished goods.\nPorts\nWe received a variety of reports on District port activity. A port executive commented that European-bound vessels were leaving the port lighter than in the past, which he attributed to weaker economies there. In particular, exports of construction and agricultural equipment were down since the start of 2013. In a smaller District port, container shipments matched year-ago levels, while exports of lumber and plywood recently picked up, and corn and grain exports from the Midwest were up over last year's low, drought-related levels. A contact in West Virginia remarked on port bottlenecks of coal exports. Container traffic increased at larger District ports, with continued strength in trade of auto parts. Drivers of import growth in recent weeks were consumer housing goods such as furniture and flooring. The inland port in Greer, South Carolina remained on target to officially open in the third quarter of 2013; that port is expected to shift cargo from trucks to railroads.\nRetail\nRetail sales fell in recent weeks in most categories, and shopper traffic was down. In Virginia Beach, a store manager at a chain discount store commented that persistent cold weather softened overall sales, particularly sales of seasonal items. In contrast, a few surveyed retailers and wholesalers in construction-related lines indicated that revenues rose over the reporting period. Also, auto sales remained constant at high levels. Consumer confidence, improved stability in middle-class home values, and low interest rates underpinned strong sales and good performance on auto financing. Contacts in the industry noted that used car prices remained relatively high, narrowing the spread relative to new car prices. Survey respondents indicated that overall, retail price increases were less prevalent since our last report.\nServices\nActivity at services firms remained steady at a moderate pace. Seasonal businesses such as tax services and landscaping reported higher revenues, while most other services providers noted little change. Prices at services firms rose at a slower pace, according to our latest survey.\nTourism generally increased over the past month, although most areas reported delayed spring weather. Cold weather in the nation's capital moved the Cherry Blossom Festival's peak bloom time into April. A contact on the outer banks of North Carolina commented that despite cool weather, Easter and spring break brought plenty of tourists. In addition, an upscale resort in western North Carolina had higher bookings. A contact in Charleston, South Carolina noted that the addition of a national airline is expected to strengthen the local hospitality industry. Several hoteliers and rental agents across North Carolina expected to be able to raise transient rates by three to six percent this year, but they anticipated a decline in government-rate bookings as a result of sequestration.\nFinance\nLoan demand remained relatively stable since our last assessment. Although most bankers reported a slight uptick in demand for residential mortgages, they noted that demand for both commercial mortgages and other business loans flattened. An exception was a banker in North Carolina who cited a modest increase in business loan demand driven by the need to replace assets. In addition, no significant changes in delinquencies or credit quality were reported, apart from improvement reported by an Eastern Shore banker and a West Virginia contact. Bankers indicated that competition continued to intensify, compressing already-tight margins. A few lenders said that their competitors were lowering collateral requirements and fixing interest rates for a longer period, just to close deals. Contacts also reported a decrease in customers' willingness to take on debt. For example, a Virginia banker observed that prospective homebuyers now request a specific monthly payment and no longer inquire about the maximum amount for which they could qualify.\nReal Estate\nResidential real estate activity generally strengthened in this reporting period. A contact in North Carolina stated that residential real estate was booming and inventories were low. A Realtor in the Washington, D.C. area reported an increase in purchases for renovation and resale. He stated that inventory was down thirty-five percent from last year, and some developers were offering all cash, non-contingent contracts for well above list price. Similarly, a Realtor in the metro-Richmond area said foot traffic rose, which he attributed to the limited supply of homes, pent up demand, and low interest rates. A contact in Charlotte reported that low inventories of residential building materials had put building permits on hold. Similarly, a source in Hampton Roads, Virginia reported that sequestration had put potential buyers on the sidelines.\nCommercial real estate and construction markets improved since our last report. A Richmond Realtor reported a steady increase in leasing activity. A source in Charlotte cited a rise in land and retail investment transactions and more hospitality-related renovations. Most contacts described a tight supply of Class A office space, with positive absorption and declining vacancy rates. Several Realtors said that discounts could still be found for Class B or C space. A representative of a large construction firm in Baltimore reported that activity was very strong, especially for healthcare buildings and data centers, and the outlook was \"extremely positive.\" A contact in the Washington, D.C. area also reported several large projects under construction.\nAgriculture and Natural Resources\nCold temperatures and wet weather delayed land preparation and hindered spring plantings in the agricultural sector. Hay supplies were running low in some regions, resulting in higher demand for supplemental feeding. However, a contact on the Eastern Shore of Maryland stated that poultry production and agriculture were doing well, grain and land prices were good, and the overall outlook was positive.\nConventional oil and natural gas production maintained a moderate pace and the rig count in West Virginia was little changed since our last report. Coal production declined. A source in West Virginia attributed the drop to displacement of coal by natural gas, although coal exports had partially offset lower domestic demand.\nLabor Markets\nAssessments of labor market activity were mixed since our last report. On the one hand, manufacturing firms in the Carolinas reported temporary layoffs due to softness in orders, and contacts in sectors from real estate to wholesale trade to manufacturing said that they were reducing staff or not expanding due to the Affordable Care Act. On the other hand, a Maryland firm planned to add 200 to 250 engineers as a result of the recent pick-up in construction, and a lumber firm increased its average employee work week. Moreover, contacts from a number of temp agencies cited stronger demand for workers, resulting in part from uncertainty about federal fiscal policies. The highest demand was for information technology workers; short supply pushed up their wages. Demand for telecommunication workers picked up, as carriers upgraded systems. Additionally, demand for automobile industry workers strengthened. According to our latest surveys, average wages at non-retail services firms rose more quickly, while manufacturing wages rose at a slower pace in recent weeks and retail wages declined.\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 17, 2013\nEconomic growth in the Second District has picked up somewhat since the last report. Business contacts continue to report moderate input price pressures but most report their selling prices remain steady. There has been fairly broad-based strengthening in labor market conditions. Retailers report that sales have generally been strong and ahead of plan in March, and auto sales have remained fairly robust. Tourism activity has generally been strong in recent weeks, though Broadway theaters have been in a bit of a slump. Commercial and especially residential real estate markets have strengthened since the last report. Finally, bankers report widespread increases in loan demand, continued narrowing in loan spreads, and further modest declines in delinquency rates.\nConsumer Spending\nRetailers report that sales were generally brisk in March. One major chain reports that same-store sales were ahead of plan--especially in and around New York City--and up modestly from March 2012 levels. A contact in upstate New York also reports that mall sales were brisk in March and up from a year ago, following a tepid performance in February; some of the recent strength is attributed to Canadian shoppers. Inventories are reported to be in good shape, prices are characterized as steady, and no unusual discounting is reported.\nAuto dealers in the Buffalo and Rochester areas report that new vehicle sales have remained fairly strong since the last report. February sales were roughly on par with comparable 2012 levels, despite an exceptionally strong performance a year ago; March appears to be shaping up as a solid month as well. Used vehicle sales are reported to have softened a bit, but this is largely attributed to attractive deals in the new car market. Wholesale and retail credit conditions for auto purchases are reported to be in good shape.\nTourism activity has been mostly robust since the last report. Manhattan hotels report continued brisk business in February and March: revenue per room was up nearly 15 percent, driven by a combination of high and rising occupancy rates and escalating room rates. Hotels in the outer boroughs continue to see fairly strong business, partly reflecting ongoing demand from Sandy recovery workers, and also from displaced residents. On the other hand, Broadway theaters report some weakening in both attendance and revenues since mid-February; they have been running below comparable 2012 levels by roughly 8 percent and 4 percent, respectively. Finally, consumer confidence in the region has ebbed somewhat. The Conference Board's survey of residents of the Middle Atlantic states (NY, NJ, Pa) shows confidence retreating in March after rising in February, and Siena College's survey of New York State residents shows a similar pattern.\nConstruction and Real Estate\nResidential real estate markets in the District have shown increasingly widespread signs of improvement in recent weeks. New York City apartment rents, which had flattened out in the final months of 2012, have accelerated in early 2013 and are reported to be up 6-7 percent from a year ago in Manhattan and by somewhat more in Brooklyn. With respect to the city's co-op and condo market, a major appraisal firm reports that sales volume has strengthened, while the inventory of apartments for sale is down sharply to one of the lowest levels on record. Most of the new development is at the upper end of the market, while low inventories across the rest of the spectrum have begun to drive up selling prices across New York City, as well as in Westchester County and Long Island. Multiple offers (bidding wars), though hardly the norm, are becoming more frequent across the region. Prime areas of Brooklyn, where market conditions are particularly strong, are reported to be seeing a good deal of commercial-to-residential conversion. Similarly, an expert on northern New Jersey's housing market reports continued improvement in market conditions: the volume of distressed properties there has been shrinking, with noticeably fewer homes moving into delinquency or foreclosure recently. Still, prices have moved up only modestly, held back by a slow foreclosure process. Buffalo-area Realtors also report strong market fundamentals--declining inventories and fairly rapid price appreciation.\nCommercial real estate markets across the District have also shown signs of improvement in the first quarter. Office vacancy rates continued to decline across Manhattan, and asking rents rose--particularly in the Midtown South area--while vacancy rates edged down and asking rents were little changed in Long Island and northern New Jersey. Office vacancy rates in New York City and Long Island are currently at their lowest levels in a number of years. In contrast, office vacancy rates remain near multi-year highs in northern New Jersey, as well as in Westchester and Fairfield counties; one New Jersey contact describes new construction activity there as \"moribund\". In New York City, though, commercial construction activity has been more robust, particularly in Lower Manhattan, reflecting ongoing work on the World Trade Center complex and a new major transit hub and complex. Industrial markets have been mixed: vacancy rates are down and rents up fairly sharply on Long Island, whereas both are little changed at sluggish levels in northern New Jersey, and in Westchester and Fairfield counties.\nOther Business Activity\nContacts in both manufacturing and other sectors report steady business activity in recent weeks, while they remain broadly optimistic about prospects for 2013. In general, price pressures are reported to be steady and moderate in the manufacturing sector but more widespread among service-sector businesses; a small but growing number of service-sector contacts say they are increasing their selling prices.\nThere are growing signs of improvement in the job market. In general, more business contacts indicate that they plan to increase than reduce staff in the months ahead. A major employment agency reports that demand for temps remains strong, and that firms are also hiring more full-time workers, as well as transitioning more temps to full-time positions. Qualified job candidates are increasingly hard to find, and more job-seekers are now getting multiple job offers. An employment agency contact reports increased hiring activity from a broad cross-section of industries, including financial services and publishing, which had been sluggish. Another contact in the employment services industry notes particularly strong demand for IT workers. While starting salary offers remain fairly stable in general, employers are reportedly often willing to pay top dollar for tech workers with specialized skills.\nFinancial Developments\nSmall- to medium-sized banks report an increase in demand for commercial loans and mortgages but little change in demand for consumer loans and residential mortgages. Bankers report an uptick in demand for refinancing. Credit standards are reported to be unchanged across all loan categories. Respondents indicate a decrease in spreads of loan rates over costs of funds for all loan categories--particularly for consumer loans, where roughly one in four bankers reports lower spreads and no respondent reports higher spreads. Respondents also indicate continued decreases in average deposit rates. Finally, bankers report continued modest declines in delinquency rates on all categories of loans.\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 17, 2013\nThe Eleventh District economy expanded at a slightly faster pace over the past six weeks than during the previous reporting period, when growth was moderate. Many manufacturing firms noted that activity increased since the last report. In the nonfinancial services sector, legal and accounting demand increased, although staffing firms reported sluggish demand. Retail sales and auto sales were up. Robust housing demand led to price gains, and commercial real estate activity remained strong. Lenders noted moderate growth in loan demand, and activity in the energy sector remained at high levels. Drought conditions remained prevalent in the agricultural sector. Reporting firms said prices remained stable overall, and there were limited reports of wage pressure. Employment levels were steady to up.\nPrices\nMost responding firms said prices were stable, although housing contacts said home prices increased at a fast pace, and cotton prices increased according to agriculture contacts. Staffing firms noted no change in rates, and accounting firms said rates were flat to slightly up. Food producers said selling prices were up since January but do not expect more increases going forward. One airline said ticket prices were up slightly. Retail prices and auto prices were steady. Financial services contacts said loan pricing was flat to down. Oil prices fell slightly, as the price of WTI averaged under $94 per barrel over the past six weeks. A late winter reduced natural gas inventories and pushed prices above $3.65. Gasoline and diesel prices increased since the last report.\nLabor Market\nEmployment held steady or increased at most responding firms. Food manufacturers and airlines said employment had increased, and reports of scattered hiring came from some accounting and finance firms, retailers, auto dealers and transportation manufacturers. Several contacts noted difficulty finding qualified people to fill open positions, particularly in banking, auto sales and manufacturing. Staffing firms said the supply of labor was tight in the Houston energy sector.\nWage pressures remained largely subdued, although wage increases for experienced or top-performing workers were reported in accounting, legal and financial services. Increased labor costs were also noted in energy services.\nManufacturing\nConstruction-related manufacturers said demand was flat to up slightly. A lumber contact noted a seasonal increase in demand for the first time in several years. A cement producer said demand remained strong, particularly for residential construction projects. Expectations among construction-related producers are for increases in demand, and contacts believe 2013 will be stronger than 2012. Fabricated metals producers reported a broad-based increase in demand over the reporting period. Demand reports from primary metals manufacturers were mixed and below year-ago levels.\nReports on high tech orders were mixed across customer groups. Semiconductor producers reported stronger demand from industrial users, such as automotive, but continued weak demand from communication device and personal computer manufacturers. Most contacts expect moderate improvement over the next three to six months.\nDemand for paper products fell over the reporting period; contacts remained cautious in their outlooks but expect to see an increase in May or June. Food contacts noted demand was much better than anticipated and was up from the last report and from a year ago. Respondents were making significant capital expenditures in anticipation of further increases in activity.\nTransportation manufacturers noted a pickup in demand. Sales of recreational vehicles increased after experiencing a seasonal slump during the last reporting period. Demand for aviation equipment continued to rise due to a recent large project. Transportation manufacturing contacts expect 2013 to be about the same or better than 2012.\nPetrochemicals producers said Gulf Coast chemical production was stronger than a year ago. Contacts noted refinery operating rates and margins were up over the reporting period, partly due to normal seasonal trends.\nRetail Sales\nRetail sales were up since the previous report and from a year ago, according to contacts. Texas continued to perform well, and according to one national retailer the rate of sales growth in Texas outperformed the nation during the reporting period. Prices remained stable since the last report. Some contacts added employees in line with expanding operations. Outlooks for the quarter ranged from cautiously positive to good, and contacts expect steady growth for the remainder of the year.\nAutomobile sales were strong and picked up since the last report, partly due to seasonality. Inventories varied by manufacturer, but all contacts noted inventories were slightly lower than desired. Selling prices held steady, as the market remained very competitive. Head count was up slightly from a year ago, and hours worked were flat over the reporting period. Outlooks for the second quarter and the rest of the year were good. Uncertainty and increasing expenses are challenges that dealerships continue to face.\nNonfinancial Services\nStaffing firms said demand was flat or down since the last report. Responding placement firms noted activity in most sectors was sluggish, with the exception of energy-related activity in Houston and overall demand for residential construction workers. Outlooks were mixed, but better than earlier in the year. Accounting firms noted continued strong demand for their services. Demand for energy, audit, insurance, consulting work and transactions was robust, while demand for tax services remained flat. Outlooks were optimistic. Legal firms said growth in demand for their services was weaker than expected, with the exception of strong real-estate related activity. Outlooks were optimistic, with contacts expecting a pickup in activity over the next three months.\nReports from transportation service firms were positive. Railroad contacts said volumes picked up since the last report. Petroleum shipments continued to be strong, and contacts noted healthy volumes of some construction-related products, including lumber and wood and crushed stone. Intermodal cargo volumes increased slightly, and shipping companies said small parcel shipments grew strongly, propelled by retail trade. Air cargo volumes were flat during the reporting period as increases in domestic shipments were offset by declines in international shipments.\nAirline contacts said passenger demand increased slightly since the last report, in part due to spring-break related travel. Contacts expect demand to strengthen in the summer months and the outlook is for slight improvement in 2013 over 2012.\nConstruction and Real Estate\nTexas home prices rose rapidly due to strong demand and very low inventories. Some builders were still finding financing difficult. Outlooks for the single-family housing sector were positive, but price gains are expected to slow later in the year as building activity picks up. Contacts said apartment demand remains strong, in part, thanks to strong job growth and migration. Commercial real estate contacts reported that gains in occupancy and rents may be slowing property sales as owning has become more profitable. Most contacts noted banks were more aggressive with lending, and Texas office and warehouse markets were improving.\nFinancial Services\nFinancial institutions reported broad-based growth in loan demand. Consumer lending improved, with solid growth in mortgage and automobile lending activity. Commercial lending grew at a moderate pace, and energy-related activity remained strong in Houston, Austin, San Antonio and the Eagle Ford area. Commercial real estate and home equity lending activity has started to bounce back from low levels, noted contacts. Non-performing loans continued to decline. Loan pricing remained very competitive. Deposits and deposit rates remained mostly unchanged. Outlooks were optimistic, and contacts expect growth in loan demand and deposits to continue in the near term.\nEnergy\nEnergy activity was slightly improved, and respondents at energy-related service firms seemed more confident that the number of active drilling rigs may have bottomed out. Margins for services, particularly pressure pumping, remained tight, and contacts reported little change in pricing pressures otherwise. Contacts said drilling activity was flat over the reporting period and continue to expect improvement in the second half of the year, particularly in the Gulf of Mexico.\nAgriculture\nDrought conditions worsened slightly across the District over the reporting period. Nearly half of the Texas wheat crop was in poor or very poor condition, and spring crops were largely being planted into very dry soil. Texas feedlots continued to run negative margins, due in part to feed costs remaining elevated. Cotton was a bright spot, with continued strong demand and rising prices.\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 17, 2013\nSixth District business contacts reported that economic activity continued to advance at a modest pace from mid-February through March. Reports across sectors were generally positive and expectations for the coming months remained optimistic.\nRetail reports were mixed with some retailers citing improved sales and others feeling the pinch from a constrained consumer. Hospitality contacts reported healthy activity in both leisure and business travel. Homebuilders and brokers experienced further improvements in sales and prices of new and existing homes, and inventories continued to decline on a year-over-year basis. Commercial contractors noted a strong year to date as construction levels improved from late last year. Overall, manufacturing activity remained positive as new orders and production increased. Loan demand remained steady according to bankers. Payrolls continued to grow at a tepid pace as firms remained reluctant in hiring due to uncertainty over fiscal policy and healthcare reform. Prices remained stable and most firms continued to report having relatively little pricing power.\nConsumer Spending and Tourism\nDistrict merchants reported mixed results from mid-February through March. Several contacts indicated improvements in profit margins and sales over the last three months, while others noted that they experienced the result of consumers taking a hit with the expiration of the payroll tax cut, increased fuel prices, a delay in income tax refunds, and increased health insurance premiums. Yet, even with these challenges, most retailers remained reasonably upbeat. District automotive contacts cited favorable sales for the same time period.\nTravel and tourism activity remained robust and continued to exceed expectations, especially in the leisure segment. Although government and business bookings decreased due to location restrictions and/or budgetary constraints, overall demand remained healthy. Concerns that gas prices could dampen summer travel continued; however, hospitality contacts anticipate activity to still exceed 2012 levels. International visitation for leisure and convention travel continued to be a strong contributor to growth despite the strength of the dollar.\nReal Estate and Construction\nAccording to District brokers, housing markets across the region continued to improve. Recent sales growth was described as strong on a year-over-year basis. Existing home inventories continued to contract and brokers noted that this was restraining sales. Furthermore, many reported receiving multiple offers on properties, particularly at the low-end of the market. Most indicated that home prices rose modestly compared with a year earlier. Appreciation was strongest among Florida contacts. Overall, the outlook for existing home sales growth over the next several months remained positive.\nSimilar to our last report, homebuilders reported that recent new home sales were ahead of year earlier levels, and they noted improving levels of buyer traffic across the region. Just over half said that new home inventories were below the year-ago level. The portion of builders characterizing home prices as up relative to a year ago also rose compared to our previous report. Reports also cited that new home construction was ahead of last year's level. Contacts remarked that access to construction financing had improved somewhat from late last year, but the majority continued to report that the number of actual loans made was still short of demand. The outlook for construction activity and new home sales over the next several months remained positive with most anticipating levels to be slightly ahead on a year-over-year basis.\nDistrict commercial real estate contacts indicated that the first quarter of this year had started off solid compared with the end of last year. Commercial brokers reported that net absorption was positive. Contacts also noted growing optimism as businesses in the office and industrial sector began to position themselves for growth over the next 12 to 18 months. However, the demand for retail space remained soft across most of the region. Contacts remarked that investor interest had spread to secondary and tertiary markets, particularly in the apartment sector where demand had been especially strong. Commercial contractors cited that construction improved from late last year and backlogs were up as well. Activity was dominated by build-to-suit projects. Most contacts expect District commercial real estate markets to improve further this year.\nManufacturing and Transportation\nRegional manufacturers reported that activity expanded for the third consecutive month in March. Increases in new orders, production, employment, and finished inventory contributed to the highest level of manufacturing activity since May 2012. Contacts noted profit margins slightly improved from mid-February through March. However, they do not expect production to be as high in the coming months as they had in our previous report.\nDistrict trucking contacts reported a slowdown in volume, citing reduced imports of retail goods from west coast ports, along with poor weather conditions. Still, volumes were ahead of year earlier levels. Strong movement of housing-related materials was cited as the housing recovery continued. Railroad companies described activity as flat to slightly down. Chemicals and oil and gas showed the strongest growth, while coal reflected some softening, particularly in export of thermal coal. Intermodal growth remained solid and the movement of forest products also improved. Domestic air freight traffic was up slightly, and international tonnage grew compared to the same period last year, marked by increases in Asian volumes and exports to Europe and Latin America, specifically Brazil.\nBanking and Finance\nDriven by historically low rates, consumers continued refinancing mortgage loans and businesses continued restructuring debt. Competition remained intense for high quality loan applicants and community bankers noted that large regional and national banking organizations were more willing to offer lower fixed-rate, longer-termed loans to attract these customers. Many community banking contacts indicated that their institution had exited the mortgage lending business altogether because of increased regulations. Some stated that commercial real estate loan demand had increased, particularly for branded hotel construction, healthcare, and multi-family projects. Banks also cited more willingness to lend to small businesses; however, the overall demand for loans and credit line usage continued to remain low. Credit spreads remained tight and some bankers reported downward pressure on loan pricing.\nEmployment and Prices\nSince our last report, payroll growth continued to increase at a lackluster pace across the District, though contacts continued to report that uncertainty over fiscal policy and healthcare reform were contributing to reluctance in hiring. In Florida and Georgia, the two states in the District with the largest concentrations of employment, unemployment rates declined slightly since the previous report, while unemployment rates have fluctuated in the four other states due to changes in the size of those states' labor force.\nInput costs remained mostly stable. Increases in prices for fuel and construction materials were viewed by most firms as transitory. Year-ahead unit cost expectations were 1.9 percent in February and March, roughly unchanged since the beginning of the year, according to the Atlanta Fed's Business Inflation Expectations Survey. Most businesses noted very little pricing power. Exceptions were transportation contacts who were able to successfully cover cost increases using fuel surcharges, and retailers, whose profit margins improved as sales levels ticked up somewhat over the reporting period.\nNatural Resources and Agriculture\nThe energy industry remained an especially bright spot in the region. In particular, projects to increase the Gulf Coast's liquefied natural gas (LNG) export capacity--through investment in new LNG export facilities at ports and new transportation infrastructure, like pipeline and LNG tanks--were strong drivers of capital and labor demand.\nDrought conditions improved significantly in Georgia, southeastern Alabama, and the Florida panhandle. Since the last report, monthly soybean and corn prices rose moderately, while broiler prices reached record highs. Cotton prices continued to be below year-ago levels, but rose modestly since the last report. Driven by increasing global demand and low interest rates, contacts reported continued investment in new, more efficient equipment reducing both labor and fuel costs.\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 17, 2013\nPrepared at the Federal Reserve Bank of Dallas based on information collected on or before April 5, 2013. 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 overall economic activity expanded at a moderate pace during the reporting period from late February to early April. Activity in the Cleveland, Richmond, St. Louis, Minneapolis, and Kansas City Districts was characterized as growing at a moderate pace, while the Boston, Philadelphia, Atlanta, Chicago, and San Francisco Districts noted modest growth. The New York and Dallas Districts indicated that the pace of expansion accelerated slightly since the previous Beige Book.\nMost Districts noted increases in manufacturing activity since the previous report. Particular strength was seen in industries tied to residential construction and automobiles, while several Districts reported uncertainty or weakness in defense-related sectors. Consumer spending grew modestly, and firms in some Districts cited higher gasoline prices, expiration of the payroll tax cut, and winter weather as factors restraining sales growth. Retailers in several Districts expect continued sales growth in the near term. Overall vehicle sales remained strong or increased, but sales of used automobiles declined in some Districts. Travel and tourism expanded across most reporting Districts, boosted by both business and leisure travel.\nDemand for nonfinancial services increased at a modest pace, and several Districts noted growth in freight and transportation services. Most Districts said residential and commercial real estate improved markedly since the last report. Home prices were rising in many areas of the country. Loan demand was steady to slightly up in most Districts. Reports on agricultural conditions were mixed, as drought or cold weather adversely impacted some Districts while others reported a strong agricultural sector. Oil and natural gas activity remained robust over the reporting period, with contacts in the Cleveland, Kansas City, and Dallas Districts expecting a rise in activity in coming months, while coal production continued to decline.\nEmployment conditions remained unchanged or improved somewhat, and reports of hiring were most prevalent in the manufacturing, residential construction, information technology, and professional services sectors. Wage pressures were generally contained, although several Districts cited upward pressures in occupations experiencing labor shortages, such as information technology, construction, and engineering. Aside from reports of increases in home prices and residential construction materials, price pressures remained mostly subdued across Districts.\nOutlooks among respondents remained optimistic across sectors and Districts, with growth mostly expected to continue at the same or a slightly improved pace. Some uncertainty remained, primarily regarding fiscal policy and health care reform.\nManufacturing\nManufacturing activity held steady or increased in most Districts since the previous Beige Book. The pace of growth picked up in the Cleveland, Atlanta, Minneapolis, Dallas, and San Francisco Districts, while the Richmond and Chicago Districts noted that the pace of growth in production was slower than earlier this year. Contacts in the Boston District reported mixed conditions, and manufacturing activity held steady in the New York District. Manufacturing conditions in the Kansas City District continued to soften, driven by weaker durable goods production, although factory managers project a rebound in coming months. Firms in the New York, Philadelphia, and Dallas Districts were broadly optimistic about prospects for 2013, while cautious optimism was expressed by manufacturers in the Cleveland District, and mixed outlooks were expressed in the Boston District. Contacts in the Atlanta District do not expect future production to be as high as previously projected.\nStrength in residential construction spurred manufacturing increases in several Districts. There were widespread reports of growth in demand for wood products; a contact in the Philadelphia District noted the best growth prospects in five years, a sawmill in Montana restarted production after idling for more than four years, and a Dallas District lumber firm noted a seasonal demand increase for the first time in several years. The auto industry remained a source of strength for several Districts, including Philadelphia, Cleveland, Chicago, St. Louis, and Minneapolis. Gains were reported by food manufacturers in the Philadelphia and Dallas Districts, and food contacts in the St. Louis and Dallas Districts plan to expand operations or make significant capital expenditures. In the Cleveland District, suppliers to the shale gas industry cited strong activity, and increased activity in natural-gas related industries was seen in the Chicago District. Electronic equipment and instruments manufacturers in the Philadelphia District and high tech firms in the Kansas City District noted gains over the reporting period, while reports on high tech orders in the Dallas District were mixed across customer groups, and semiconductor firms in the Boston District said sales continued to languish.\nNumerous Districts reported uncertainty or weakness in military or defense-related sectors. San Francisco District defense-related manufactures noted furloughs, layoffs, and plant closures at some production facilities, and military customers in the Chicago District were taking measures to lower costs in anticipation of tighter future defense budgets. Lower activity was indicated by makers of primary metals in the Philadelphia District, and Chicago District specialty metal manufacturers noted declines in new orders. Demand for steel was relatively flat in the Cleveland and Chicago Districts, while firms in the San Francisco District saw an increase in demand for steel products used primarily in transportation infrastructure and nonresidential construction projects. Reports from fabricated metals producers were mixed across Districts, with increases noted in the Philadelphia and Dallas Districts while weaker production was noted in the Kansas City District.\nConsumer Spending and Tourism\nMost Districts reported increases in retail spending. Firms in the New York, Philadelphia, Cleveland, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Districts noted sales increased at a modest to moderate pace. Most retailers in the Boston District said demand was slower than expected. Sales activity was mixed according to the Atlanta District's report, and retail spending declined in the Richmond and Chicago Districts. Demand for apparel rose in the Boston, Cleveland, Kansas City, and San Francisco Districts, and sales of furniture and appliances in the Chicago District were buoyed by improvements in the housing market. Sales of electronics rose in the Cleveland District, and the San Francisco District report indicated strong demand for mobile computing devices. Contacts in some Districts cited higher gasoline prices, expiration of the payroll tax cut, and winter weather as factors restraining sales growth. Looking ahead, retailers in several Districts expect modest sales growth in the near term. In particular, the St. Louis District reported new store openings, and some retailers in the Dallas District said they have added employees in line with expanding operations.\nOverall, automobile sales remained strong or increased moderately since the last report. The exception was a slight decline in sales of used vehicles in the New York and Cleveland Districts. A number of contacts in the St. Louis District reported plans to open new dealership locations, and dealers in the Chicago District were building inventories for the spring selling season. Used vehicle prices remained high. Outlooks were mostly positive, and contacts in the Cleveland, Chicago, Minneapolis, Kansas City, and Dallas Districts expect sales to increase in coming months. However, some auto dealers in the Cleveland District expressed concern about the potential negative impact of fiscal policy on consumer spending.\nReports from most Districts pointed to continued strength in travel and tourism, bolstered by both the business and leisure segments. Business travel remained robust in the Boston, Atlanta, and Minneapolis Districts, and foreign visitors continued to boost convention travel according to the Atlanta District. The Minneapolis District noted that winter tourism activity was stronger than last year, and spring-break related travel bolstered tourism in the Richmond District. Restaurants in the Minneapolis and Kansas City Districts noted increased sales. Bookings were strong at some resorts in the Philadelphia and Richmond Districts, and hotels in Manhattan, Hawaii, and the Kansas City District noted solid gains in occupancy rates. In contrast, business at restaurants and museums in the Boston District softened in part due to unfavorable weather conditions. Attendance and revenues were slightly lower at Broadway theaters, casino revenues fell in the Philadelphia District, and tourism activity weakened in Southern California during the reporting period.\nNonfinancial Services\nDemand for nonfinancial services expanded at a modest pace since the previous report. The Kansas City and San Francisco Districts noted solid growth in information technology services, and contacts expect demand to remain robust through year-end. The Boston District reported strong demand for healthcare consulting services partly due to changes resulting from the Affordable Care Act, while healthcare firms in the San Francisco District indicated plans to freeze hiring and scale back capital expenditures in response to federal spending cuts. Defense-related and other firms dependent on the federal government in the Philadelphia District said they expect a decline in activity for the remainder of the year.\nActivity expanded for professional and business services, such as accounting, advertising, marketing, consulting, and legal services. Consulting services remained strong in the Boston District, and firms in the Dallas District noted strength in accounting services. Advertising and marketing firms in the Boston District said an uptick in growth for their services was buoyed by stronger financial positions of clients. The St. Louis District noted plans for hiring and expansion in social and legal services, while the Dallas District report indicated weaker-than-expected growth in demand for legal services.\nTransportation service activity increased since the previous report. Air travel improved in the Dallas District, in part due to spring-break related activity. Intermodal cargo volumes moved higher in the Atlanta and Dallas Districts, and activity at logistics and transport firms in the Philadelphia District grew at a moderate rate. Trucking traffic picked up in the Kansas City District, and trucking cargo volumes were above year ago levels according to Atlanta's report. Railroad contacts in the Dallas District said shipments grew, particularly for petroleum and construction-related products, and freight transportation volumes were higher than expected in the Cleveland District. According to Richmond's report, container traffic increased at larger ports in the District because of continued strength in shipments of auto parts. Air freight volumes rose in the Atlanta District, and small parcel shipments grew strongly in the Dallas District. However, railroad shipments were flat to slightly down in the Atlanta District, and a contact in the Richmond District said that European-bound vessels were leaving the port lighter than in the past, particularly due to a decline in construction and agricultural equipment exports.\nReal Estate and Construction\nResidential real estate activity continued to improve in most Districts, and some Districts, including Cleveland, Richmond, Chicago, Minneapolis, Kansas City, Dallas, and San Francisco, noted increased momentum since the last report. The New York District, in particular, noted especially strong improvement in residential real estate\u00e2\u20ac\u201dboth in for-sale housing and apartment markets.\nHome sales continued to rise in most Districts. Although homebuyer demand was high in the Boston District, low home inventories were restraining sales, keeping growth modest. Home sales were reportedly strong in both the Atlanta and Dallas Districts. The Richmond District noted low inventories were pushing up contracts to well above listing prices, and the Boston and New York Districts said multiple bids on properties have become more common. Tight inventories and strong sales led to rising home prices in many Districts, including Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco. Within the New York District, condo sales volumes strengthened and low inventories have begun to drive up selling prices in New York City and surrounding areas, while New Jersey home prices were rising modestly and inventories were shrinking with a marked reduction in the number of distressed properties. Contacts in the Boston District also noted a decline in the stock of distressed properties.\nNew home construction continued to pick up in most Districts, although the Richmond District said that a low supply of residential building materials had stalled construction. Only the Philadelphia District noted that residential construction decelerated somewhat, although home sales were still growing moderately. Multifamily construction increased in several Districts including Boston, Chicago, and San Francisco. The New York District noted apartment rents accelerated in early 2013, due to stronger demand coupled with historically low inventories. The Cleveland, Dallas, and San Francisco Districts said apartment demand remained strong.\nCommercial real estate and construction activity improved in most Districts. Office vacancy rates declined in the Boston District and contacts said the construction of mixed-use projects was picking up. The New York District reported that office vacancy rates continued to decline and rents rose in Manhattan. The Philadelphia District commented that there was not much change in nonresidential activity during the reporting period, but that contracts for repair work from Hurricane Sandy have yet to be approved. Contacts in the Richmond District cited a tight supply of class A office space and said there were several large projects under construction in the Washington D.C. area. Commercial construction saw widespread improvement with the New York, Atlanta, St. Louis, Minneapolis, and Kansas City Districts noting increases. Both commercial real estate development and leasing activity increased across the San Francisco District, mostly fueled by growth in the technology industry. Several Districts, including Boston, Richmond, Atlanta, and Kansas City said commercial property investment sales activity increased during the reporting period.\nContacts in the Philadelphia and Kansas City Districts were somewhat optimistic in their outlooks for the commercial real estate and construction markets in general, but contacts in the Cleveland District were cautious about near-term construction activity. Dallas District contacts said office and warehouse markets were improving, and Atlanta District respondents noted growing optimism for the office and industrial sectors.\nBanking and Finance\nLoan demand was steady to slightly up at most District Banks that commented on lending. The Philadelphia District, however, said loan volumes softened somewhat since the previous report. The New York District noted widespread increases in loan demand, particularly for commercial loans and residential mortgages, and the Cleveland District said business and consumer loan demand picked up since the last report. The Dallas District saw broad-based improvement in loan demand as energy-related lending remained strong and commercial real estate and home equity lending bounced up from low levels. The San Francisco District said increased growth in automobile and mortgage loans spurred overall improvements in loan demand. Several Districts, including Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Dallas, and San Francisco, said loan pricing was very competitive.\nReports on mortgage lending were mostly favorable. Stronger refinancing activity was cited by the New York and Atlanta Districts. The Cleveland and Kansas City Districts noted a shift from mortgage refinancing to new purchases, and the New York, Richmond, Dallas, and San Francisco Districts reported an uptick in residential mortgage loans.\nMost District banks said credit conditions remained favorable, with improved credit quality for business and consumer loans.\nAgriculture and Natural Resources\nAgricultural conditions were mixed across Districts, largely due to varying weather patterns. Drought persisted in the Kansas City District and worsened slightly in the Dallas District, straining the respective winter wheat crops and causing continued losses in the livestock sector. However, drought conditions improved significantly in much of the Atlanta District, and the winter wheat crop in the St. Louis District was largely in good condition. Cold weather delayed field preparation for spring planting in the Richmond and Chicago Districts. The Minneapolis District's agricultural sector remained strong, and producers in the San Francisco District noted increased production as well as higher demand. Farmers in the Chicago, St. Louis, and Minneapolis Districts plan to increase soybean acreage this year but were mixed in their plans for corn and other grain acreage. Contacts in the Chicago District noted that corn and soybean prices dropped over the reporting period based on expectations of a larger crop this year and current stocks not being as tight as anticipated.\nOil and natural gas production generally held steady at moderate to high levels since the last report. Drilling activity was stable over the reporting period, but contacts in the Kansas City and Dallas Districts expect a rise in coming months. Output in some wet gas regions of the Cleveland District is expected to increase later in the year as new gas processing units come online. The energy sector was a bright spot in the Atlanta District, as projects to increase the Gulf Coast's liquefied natural gas (LNG) export capacity drove capital and labor demand. Across the country, coal production continued to decline, with lower output reported by the Cleveland, Richmond, St. Louis, and Kansas City Districts.\nEmployment, Wages, and Prices\nLabor market conditions remained unchanged or improved slightly, and reports of hiring were more widespread in the manufacturing, residential construction, information technology, and professional services sectors. Several Districts noted robust demand for workers tied to the residential construction sector, including Philadelphia, Cleveland, Dallas, and San Francisco. In particular, a lumber and wood products firm in the Philadelphia District said the firming housing market had resulted in the best growth prospects in five years. Demand for information technology professionals and engineers was strong in the New York, Richmond, Minneapolis, Kansas City, and San Francisco Districts. Staffing firms in the Cleveland and Chicago Districts noted an increase in orders from the manufacturing sector, and several manufacturers in the St. Louis and Kansas City Districts said they planned on expanding their payrolls. Reports from the New York and Richmond Districts indicated strong demand for temporary workers. The Minneapolis District noted a tightening labor market, and along with the Dallas District cited continued challenges in attracting and retaining workers in areas close to oil-drilling regions. The Chicago District cited a stronger job market for new college graduates and more competition among employers to fill intern positions. Contacts in several Districts faced difficulties finding highly trained or skilled workers, especially in the information technology and engineering fields. In contrast, hiring activity was limited in the Boston and Cleveland Districts, demand for staffing services softened in the Dallas District, and some Districts, including Richmond and Atlanta, reported restrained hiring due to uncertainty over fiscal policy or healthcare reform.\nOverall upward wage pressures continued to be fairly modest. There were a few exceptions, however. Several Districts reported wage pressures in sectors experiencing labor shortages, such as information technology, construction, and engineering. The Kansas City District noted wage increases for commercial truck drivers, and the Richmond District reported widespread wage increases in the service sector. Rising healthcare costs were a concern among contacts in a few Districts, including Philadelphia, Cleveland, and Chicago.\nThe majority of Districts said overall price pressures remained minimal during the reporting period. Several Districts, including Boston, Philadelphia, Cleveland, Minneapolis, Kansas City, and San Francisco, said prices for some construction materials rose since the last report, but there were few reports of pass-through.\nKansas City District contacts said price increases for raw materials used in manufacturing led to higher selling prices in some instances and retail prices edged up. New York District respondents noted some increased selling prices in the service sector, and the Atlanta District reported that contacts in the transportation sector were able to cover cost increases with fuel surcharges. The Atlanta and Dallas Districts said that cotton prices rose since the last report.\nContacts in the Richmond District noted input and finished goods prices rose at a slower pace since the last report, and Chicago District contacts said commodity prices were down 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\nApril 17, 2013\nEconomic activity in the First District continues to expand modestly according to business contacts, although conditions are somewhat mixed across individual firms. Retailers generally cite slower than expected sales, and tourism has softened, partly on account of unseasonal weather. Over half of responding First District manufacturers report demand improvements in the first quarter; the rest are less upbeat. Most consulting and advertising firms say business is strong. Reports from the commercial real estate sector are more positive in this round than previously, with leasing activity improving in some markets. In the residential sector, limited inventory is said to be constraining home sales in the region, but median home prices are rising modestly. Contacts say hiring reflects demand growth, so few firms are adding substantially to headcounts except in the consulting sector. Price pressures are minimal. Most respondents expect current trends to continue, yielding modest to moderate growth in the second quarter and the second half of the year.\nRetail and Tourism\nRetailers contacted for this round cite mixed results for first quarter 2013. One reports that year-over-year comp store sales were up 2.5 percent to 2.6 percent, while others report slower than expected sales. Some contacts attribute their slowdowns partly to the prolonged winter weather, noting that while this winter has been unseasonably cold in some regions, winter 2012 was unusually mild. Demand remains strong for clothing, shoes, and home furnishings. Inventories are in good shape, and any price increases are moderate. Contacts continue to expect that 2013 sales increases will be in the modest single digits.\nThe tourism business softened in February and March compared with a year earlier; some of this slowdown is also attributed to weather-related factors, especially for restaurants and museums. January through March is seasonally the slowest period for leisure travel. Tourist activity from Europe dropped about 5 percent this quarter compared to a year ago. Corporate business travel and entertaining remain strong.\nManufacturing and Related Services\nConversations with a dozen manufacturing contacts paint a mixed picture. More than half report that demand for their products improved in the first quarter versus the previous quarter or a year earlier. The two firms reporting the strongest sales growth were in the health care sector--a drug company and a medical device manufacturer--and both reported spectacular growth. At the other end of the spectrum, two firms in the semiconductor business report that sales continue to languish. One, a maker of analog devices, acknowledged that the semiconductor business is cyclical, but said that the duration of the current slowdown is unlike anything he had encountered in his years in the industry.\nHiring patterns largely mirror sales growth, with four firms reporting substantial hiring, three citing stability, and five firms reporting staff reductions. The two health care-related firms led the pack, increasing staff at annualized rates of 15 percent to 18 percent. For the medical device manufacturer, the hiring was largely support personnel such as sales, marketing, and back office.\nWeakness in demand is not yet translating into lower capital expenditures, with only one firm reporting a reduction. Half the firms noted increases in spending and the rest reported no change. One of firms engaged in substantial capital spending relative to sales is the analog semiconductor firm reporting continued weakness in sales; the firm's managers indicate they remain confident that the long-term growth patterns in the industry will justify their investment.\nLooking forward, only one-third of manufacturing respondents were negative about the outlook. Most of the rest were optimistic or \"cautiously optimistic.\"\nSelected Business Services\nConsulting and advertising contacts in the First District report a generally strong first quarter and were positive about their firms' recent performance and near-term outlook. Marketing and advertising contacts note an uptick in growth due to clients in stronger financial positions and with more money to spend. Several contacts report robust demand for health care consulting services as the industry adapts to massive changes attributable in part to the Affordable Care Act. Economic consulting remains strong because of high levels of complex high-stakes litigation; management and strategy consulting contacts cite improved business conditions as clients have become more optimistic and seem to believe that it is time to invest for future growth. The only contact to report a bad quarter works mostly with the federal government and has been heavily affected by fiscal contraction.\nContacts generally report cost increases around 2 percent and most firms either raised their rates between zero and 5 percent, or plan to do so later in the year. Several firms have done no hiring because of strong recent hiring or a desire to wait until stronger demand seems more certain. Other firms report stronger hiring, particularly related to health care consulting, in order to deal with increasing demand.\nMost contacts expect growth to remain strong or to pick up through the rest of 2013. One exception is a government contractor who is too uncertain about future fiscal policy to offer a forecast. Other respondents seem minimally concerned about fiscal issues, the European debt crisis, and the state of the macro economy, a change from the recent past. One contact specifically notes that client businesses seem to have become comfortable with the level of uncertainty in the economy and are deciding to move forward with investment and business expansion rather than wait for more clarity; several other contacts' reports are consistent with this characterization.\nCommercial Real Estate\nReports from commercial real estate contacts in the First District contain much good news. Boston contacts uniformly remark that the office leasing market has firmed up in recent months and that the vacancy rate is down significantly from one year ago. Activity is particularly strong in the seaport district, but financial district towers are also seeing absorption of long-vacant space. Investment sales activity in greater Boston remains brisk, especially for multifamily structures. Planned construction projects in Boston picked up considerably, with a focus on mixed-use projects, and should lead to job gains for the sector moving forward. In Hartford, the state government purchased a large downtown office tower, absorbing a large block of Class A space, boosting business sentiment and, it is speculated, helping put upward pressure on rents. In Portland, the retail property market saw healthy leasing activity and investment sales activity picked up modestly. In Providence, progress continues on some large office leasing deals (despite not yet leading to completions), investment sales activity continues to rise, and business sentiment is seen as increasingly optimistic. On the downside, Hartford saw stagnant office leasing and virtually no construction activity, while Portland's office vacancy rate remains stubbornly high at 12 percent. Small-scale commercial real estate loan demand remains well below last year's pace, according to one regional lender. Construction materials costs are on the rise, putting pressure on profit margins at small firms in particular.\nIn Portland, property fundamentals are expected to remain flat despite forecasts of healthy transaction volume and a possible increase in hiring by some large firms. In Hartford, the outlook remains cautiously optimistic. In Providence, upside risks to absorption and rents remain, while the federal sequester poses a threat to the state's defense industry. In Boston, one contact expects improvement in fundamentals to remain slow while another expects absorption to accelerate if employment growth continues at its current pace. Boston is expected to remain a magnet for investors owing to its strength in the health and education sectors. However, Boston contacts continue to express concern over property valuations that appear high in relation to income-growth potential.\nResidential Real Estate\nStrong consecutive months of year-over-year growth in single-family homes sales halted in February, with some New England states experiencing marginal increases and most observing a decline. According to contacts, buyer demand remains strong, but dwindling inventory levels have hampered growth in sales. Meanwhile, median sale prices across the region rose from a year ago. Contacts attribute the price rise to the declining stock of distressed properties compared to a year ago as well as to the general decline in inventory reducing supply relative to demand. Particularly in urban areas throughout New England, decreasing inventory levels have placed upward pressure on prices. In the Greater Boston area, contacts report that multiple bids on properties have become more common as inventory continues to dwindle.\nContacts express concern that low inventory levels in the next several months could discourage buyers and continue to be a significant factor limiting the growth of sales. On the other hand, inventory levels may rise with the beginning of the busy spring season. In addition, rising prices will eventually lure into the market sellers who have been waiting for the value of their homes to pick up before listing them.\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 17, 2013\nThe Ninth District economy grew moderately. Increased activity was noted in consumer spending, tourism, professional services and manufacturing. Construction and real estate grew at a fast pace, the energy and agriculture sectors were steady at high levels, while mining slowed. Labor markets tightened somewhat, and wage increases were moderate. Overall price increases were modest.\nConsumer Spending and Tourism\nConsumer spending increased moderately. March sales at a Minneapolis-St. Paul area restaurant chain were up about 6 percent from a year ago; demand for catering services was very strong. Sales activity at a Montana mall was level from a year earlier, but warmer weather was helping boost traffic over the past few weeks. Meanwhile, same-store sales at a Minneapolis area mall were down slightly, while cold, wintry weather during March reduced traffic levels. A Minnesota auto dealer noted a solid start to 2013, and is cautiously optimistic for a very good year. Truck sales were strong at dealerships in eastern North Dakota.\nThe winter tourism season finished stronger than last year. Ample snow cover and cold temperatures kept winter tourism active during March in northern Minnesota and Wisconsin. A travel agency in Minnesota noted that leisure travel to warm-weather destinations was softer than last year as airfare was up from a year ago; however, bookings to Europe were higher.\nConstruction and Real Estate\nCommercial construction activity continued to increase at a very fast pace since the last report. The value of March commercial permits in Billings, Mont., increased over 900 percent from last year. In Sioux Falls, S.D., March permits were $14 million, up from nearly zero a year ago. A contact at a Fargo, N.D., real estate company noted that \"the medical field is building like crazy.\" Residential construction increased rapidly from a year ago. The value of March residential building permits in Billings nearly doubled from last year, and the value of March permits in Sioux Falls was up over 63 percent from a year ago. In the Minneapolis-St. Paul area, March residential permits were up 21 percent compared with March 2012.\nActivity in commercial real estate markets increased since the last report. A Minneapolis-St. Paul area commercial real estate broker noted increased strength in the office and industrial markets. Minneapolis-St. Paul office vacancy rates during the first quarter of 2013 were down 1.9 percentage points from a year ago to 17.7 percent. A Fargo broker noted that recent activity has increased a \"fair\" amount and that office vacancy is at 4.8 percent and warehouse vacancy is at 1.6 percent. Residential real estate market activity increased at a strong pace. Recent home sales were up 12 percent from the same period a year ago in the Minneapolis-St. Paul area; the inventory of homes for sale was down 30 percent, and median sale prices rose 16 percent. In the Sioux Falls area, March home sales were up 5 percent, inventory was down 18 percent and the median sale price increased 6 percent relative to a year earlier.\nServices\nActivity at professional business services firms increased at a moderate pace since the last report. A home inspector noted an increase in business due to more homeowners who were considering selling. A Minnesota travel agency noted an increase in business travel compared with a year ago. A Minnesota freight trade group expects volumes and rates to increase this year. A financial institution noted a significant increase in demand for loans.\nManufacturing\nThe District manufacturing sector continued to grow since the last report. A March survey of purchasing managers by Creighton University (Omaha, Neb.) found that manufacturing activity increased in Minnesota and the Dakotas. A Minnesota architectural glass producer announced a $30 million expansion at a plant. A transportation vehicle maker in Minnesota was expanding its facilities. A sawmill in Montana restarted production after sitting idle for more than four years. Meanwhile, a paper mill in Minnesota cut production.\nEnergy and Mining\nActivity in the energy sector was steady at high levels, while mining slowed. Late-March oil and gas exploration decreased slightly in Montana and North Dakota from the last report, but production remained near record levels. A $2.2 billion modernization of Minnesota's electrical grid is under way, with an estimated $1 billion to be spent this year. A diesel refinery broke ground in North Dakota, and a separate $400 million refinery that will break ground this year was also announced. A copper-nickel mining development in the Upper Peninsula halted construction in response to \"economic headwinds\" and volatility in metals markets. An iron ore mine in the Upper Peninsula idled at the end of March.\nAgriculture\nThe District agricultural sector remained in strong condition heading into the planting season, though persistent drought remained a threat. Early indications of planting intentions suggest District farmers plan to increase corn, soybean and hay acreage this year, with a reduction in wheat acres. An agricultural cooperative announced $50 million in investments in the District, including a grain terminal in North Dakota and a fertilizer depot in Minnesota. Prices received by farmers increased in March from a year earlier for wheat, corn, soybeans, hay, chicken, milk and eggs; prices decreased for cattle, hogs, turkeys and dry beans.\nEmployment, Wages, and Prices\nLabor markets tightened somewhat. A company recently announced plans to add 300 information technology consultant jobs in South Dakota and North Dakota. A retailer recently announced plans to build a distribution center in Minnesota that would create 300 jobs. Businesses in eastern Montana noted continued challenges attracting and retaining quality workers due to competition from the nearby oil-drilling region. A record number of companies participated in a job fair in eastern South Dakota, reflecting the relatively high availability of jobs in the area. However, a Minnesota food company laid off 125 workers.\nOverall wage increases were moderate. According to a recent St. Cloud (Minn.) Area Quarterly Business Report, 48 percent of respondents expect to increase compensation over the next six months, while 49 percent expect no change. In last year's survey, 42 percent expected to increase compensation, while 54 percent expected no change. A contract agreement was recently reached with a union representing janitors in Minnesota that would improve wages and health care coverage.\nOverall price increases were modest. Minnesota gasoline prices decreased about 20 cents per gallon from late February to early April. Some metals prices also decreased since the last report. Meanwhile, bank directors noted increases in health care insurance costs. Prices for framing lumber have increased steadily over the past couple months.\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 17, 2013\nEconomic activity in the Seventh District expanded at a modest pace in March. In general, contacts remained cautiously optimistic about the economic outlook. Growth in consumer spending edged lower, while growth in business spending picked up. Manufacturing production growth slowed. Residential construction continued to rise at a moderate pace, and nonresidential construction increased slightly. Credit conditions remained favorable. Cost pressures were largely unchanged, and wage pressures remained moderate. Prices for corn, soybeans, milk, and hogs fell, while cattle prices were little changed on net.\nConsumer Spending\nGrowth in consumer spending edged lower in March. Retailers reported higher inventory levels in part because lingering winter weather delayed the introduction of spring-related merchandise sitting in their warehouses. Some contacts indicated that the end of the payroll tax credit was having an increasingly negative effect on retail sales. Nonetheless, sales during the Easter holiday were largely in-line with expectations. Home improvement and clothing stores reported lower sales than during the previous reporting period, but discount stores noted an increase in sales of apparel. Sales of furniture and appliances also rose, buoyed by the recent upswing in the housing market. In contrast, auto sales leveled off. Dealers are still optimistic that sales will rise further year than last year, and are building inventory for the spring selling season. Used vehicle prices remained elevated, boosting trade-in values. In addition, dealers noted that customers' credit profiles continue to improve, allowing more of them to qualify for auto loans.\nBusiness Spending\nGrowth in business spending picked up in March. Inventory levels increased slightly, and spending on equipment and software and on structures picked up. However, a number of manufacturing contacts reiterated that they plan to make capital expenditures this year only as necessary, delaying investments because of uncertainty surrounding the economic outlook. Labor market conditions improved slightly. Hiring continued to increase. Contacts indicated that there is still strong demand for talent in skilled professional and manufacturing jobs, and that shortages of qualified candidates remain in many of these occupations. In addition, a staffing firm reported an increase in demand for its services from the manufacturing sector. Other signs of improving labor demand also were reported, such as greater competition among employers to fill internships this year and a stronger job market for new college graduates.\nConstruction and Real Estate\nConstruction and real estate activity increased in March. Demand for residential construction rose, reflecting both continued strength in multifamily construction and an improving single-family housing market. The gains have helped buoy confidence among homebuilders. Development of single-family homes in urban areas picked up some after years of limited activity. More generally, home prices have increased for both new and existing homes, with inventories of homes for sale shrinking. Growth in nonresidential construction, particularly for smaller retail stores and in the industrial sector, continued to be moderate. Commercial real estate conditions also continued to improve, with rents increasing and vacancy rates decreasing.\nManufacturing\nGrowth in manufacturing production slowed in March. Several contacts speculated that the uncertainty surrounding sequestration had affected their customer's orders. However, they had yet to see much evidence of this in their shipments. That said, a contact did note that his military customers were actively seeking to squeeze out any potential inefficiencies in their supply chain in an effort to lower their costs in anticipation of tighter future defense budgets. Demand for steel was flat, and steel service center inventories were slightly above desirable levels. Specialty metal manufacturers reported declines in new orders, although backlogs remained elevated. Activity in the energy sector was mixed, with natural gas-related industries reporting stronger activity but the coal industry remaining weaker. Demand for heavy equipment was also mixed. Mining activity, particularly for coal, continued to decline. However, contacts indicated that construction equipment distributors and rental companies remain optimistic, pointing to the ongoing recovery in the housing market as a potential source of strength in the second half of the year. Demand for heavy and medium-duty trucks remained firm; and the auto industry continued to be a source of strength. Manufacturers of building materials and consumer products also noted an increase in demand with the exception of lawn and garden equipment.\nBanking and Finance\nCredit conditions remained favorable over the reporting period. Credit spreads and financial market volatility continued to be low. Banking contacts reported moderate growth in business lending, especially to small businesses and for the purposes of expanding and upgrading of facilities. Real estate lending also reportedly picked up. Increased competition for borrowers was noted to be putting downward pressure on pricing and loosening commercial and industrial loan standards. Consumer borrowing also rose modestly, with a further increase in auto lending reported over the reporting period. Several financial contacts noted that the recent rise in equity and home prices appear to be boosting consumer confidence and spending. That said, a financial services industry contact indicated that consumer borrowing had been lower than anticipated given recent increases in consumer spending.\nPrices and Costs\nCost pressures were roughly unchanged, on balance, in March. Commodity prices were down slightly, and energy prices remained elevated. Scrap metal prices continued to decline, and a contact in the industry speculated that weaker demand from China was largely to blame. Contacts did note some upward price pressure on raw materials such as chemicals, lumber, and concrete as well as on transportation costs, but said that pass-through to downstream prices was limited. Retailers reported mostly modest wholesale price increases. Wage pressures remained moderate, although several contacts indicated increasing concern over the rising cost of healthcare. Other cost pressures that were mentioned included higher property taxes and regulatory costs.\nAgriculture\nCold weather delayed field work during the reporting period, but there was little concern expressed by contacts that planting would be seriously delayed. Corn and soybean prices dropped based on expectations of a larger crop this year and current stocks that are not as tight as anticipated. Contacts indicated that the number of soybean acres should be higher than the prior year in the District, while corn acres should be lower. Farmers seemed to increase their levels of crop insurance relative to last year. Milk prices moved lower during the reporting period, but remained above the levels of a year ago. Hog prices fell and were under year-ago levels. Cattle prices moved sideways during the reporting period, but were below the levels of a year ago. Some livestock producers were reportedly taking advantage of low long-term interest rates by refinancing and lengthening the maturity of their debt.\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 17, 2013\nBusiness activity in the Fourth District expanded at a moderate pace during the past six weeks. Manufacturing orders and production were mostly higher. The momentum seen in residential construction since the beginning of the year, including multi family, has been maintained. Nonresidential construction activity increased slightly, but remains below levels seen in the second half of last year. Retail sales volume between mid-February and mid-March was higher relative to the lackluster post-holiday period, while new motor vehicle sales posted moderate gains on a year-over-year basis. Conventional and unconventional natural gas and oil production was stable, but a pickup is expected later in the year as additional gas processing units come on line. Output at coal mines trended lower. Freight transport volume exceeded projections made late last year. Demand for business and consumer credit was higher when compared to early in the first quarter.\nHiring was sluggish across industry sectors, although the pace has picked up among home builders since the start of the year. Staffing-firm representatives reported that the number of job openings and placements rose slightly, with vacancies found primarily in industrial production. Wage pressures were contained. Input prices were stable, apart from increases in construction materials.\nManufacturing\nReports from District factories indicated that new orders and production were mostly higher during the past six weeks. Companies seeing the most activity were suppliers to the residential construction, shale gas, and transportation industries. Manufacturers serving the defense and commercial building industries experienced some weakening in new orders. Exports to Pacific Rim countries improved, while exports to Europe diminished. Compared to a year ago, manufacturing activity was mixed. Steel producers and service centers reported that the pickup in shipping volume early in the first quarter has leveled off. Excess steel produced in China and Europe is now being imported into the United States in larger quantities. Auto production at District plants rose at a moderate pace during February on a month-over-month basis. Compared to a year ago, production numbers were little changed. Many manufacturing contacts remain cautiously optimistic about near-term growth prospects.\nCapacity utilization rates stood within their normal ranges. Steel producers reported reducing inventories during the past six weeks, while inventories at other factories held steady. Capital expenditures were on plan for the fiscal year. Most outlays are allocated for technology that will be used to enhance productivity. Little capacity expansion is planned. Raw material and finished goods prices were flat or trended lower. Many manufacturers noted that their ability to raise prices during 2013 is likely to be very limited. Manufacturing payrolls were stable and wage pressures are contained.\nReal Estate\nSales of new and existing single-family homes continued on an upward trend since our last report, and sales were higher than a year ago. Contracts were found mainly in the mid- to higher-price-point categories. Demand for multi-family housing remains strong. A developer of market-rate apartments described activity as very good. Another developer said that demand for affordable rental units is surging. While builders expressed confidence that the improvement in the housing market will persist in the upcoming months, they still see the appraisal process and the availability of financing as headwinds to more robust growth. Reports indicated that list prices of new homes increased by 1 to 2 percent this year, which was attributed to shrinking inventories and rising prices for building materials, especially lumber and drywall. Builders have cut back on discounting.\nNonresidential contractors saw a modest increase in activity, relative to the January/February time period. The number of inquiries is rising, but many builders are underbidding in an effort to keep their resources engaged. As a result, tight margins are being compressed even further. Project work is found mainly in manufacturing, large multifamily developments (affordable, market rate, and senior), and shale gas infrastructure. Our contacts are cautious about near-term activity. Many builders pointed to uncertainty in the market and clients who are unwilling to take risks at this time. In addition, the time-consuming process of financing a project is holding back some clients. Little change was reported in prices of building materials.\nGeneral contractors (residential and nonresidential) expect subcontractors will attempt to raise their rates and push through price increases for materials by the second half of this year. The potential rise was attributed to a dwindling number of subcontracting businesses and stronger demand. Residential builders are hiring at a moderate pace, especially field personnel. Nonresidential builders are looking to hire a few project managers and back-office employees. Concerns about difficulties in finding qualified workers and escalating healthcare benefit costs were widespread.\nConsumer Spending\nMost retailers reported that sales volume for the period from mid-February through mid-March was higher relative to the previous 30-day period. Rising volume was particularly evident in apparel and electronics. Store managers who experienced a downturn in sales cited higher gasoline prices and taxes as contributing factors. Second-quarter sales are expected to be up slightly, when compared to the same quarter last year. Vendor and shelf prices held steady. A food producer commented that agricultural commodity prices, though elevated, are fairly stable, and he anticipates little upward pressure on prices attributable to food during 2013. Capital expenditures were on plan for the fiscal year. One retail chain projected significantly higher capital investment this year, but much of it is allocated for remodeling older stores. No hiring is anticipated, except for staffing new stores.\nYear-to-date sales of new motor vehicles showed a moderate increase during February compared to the same time period a year ago. A few dealers noted that cold weather had curbed consumer enthusiasm. Buyers continue to prefer smaller, fuel-efficient cars and compact SUVs. Large pick-up trucks were big sellers in regions with significant shale gas activity. New-vehicle inventories were higher than most dealers would like. Our contacts are cautiously optimistic about sales prospects for the year, with most projecting 5 percent to 10 percent growth over 2012. However, some are concerned about fiscal policy decisions and the potentially negative impact they could have on the economy and consumer spending. Sales of used vehicles declined during February. Leasing is trending higher, which should help to replenish the used-vehicle inventory. Financing continues to loosen except for those buyers with low credit scores. Dealers are reluctant to add to their sales staff at this time.\nBanking\nDemand for business credit has picked up since our last report. Although requests originated from a broad range of sectors, commercial real estate and manufacturing stood out. Loan pricing remains under pressure. Reports on consumer credit also showed a small rise in demand, mainly for home-equity products and auto loans. Bankers noted a slight drop-off in residential mortgage activity; however, there was a definite shift in applications from refinancing to new purchase. Delinquency rates held steady or declined across consumer and commercial loan categories. No changes were made to loan-application standards. Aggregate core deposits grew; customers continue to transfer monies from non-liquid to liquid accounts. Bankers remain very concerned about shrinking net interest margins. In response, some are considering raising fees in all areas. On balance, there was little change in payrolls. Two bankers reported rising employment numbers due to acquisitions.\nEnergy\nCoal production continued to trend down across the District, with lower production projected for the near term. One producer commented that demand from electric utilities has risen slightly due to an extended period of cold weather and an uptick in natural gas prices. Spot prices for metallurgical and steam-coal are up somewhat. Output from conventional and unconventional oil and natural gas wells was steady during the past couple of months. In the wet gas regions of Ohio and West Virginia, output should begin to increase later in the year as newly constructed gas processing units come on line. Well-head prices for oil and gas rose slightly. Rig count in the District was stable during the first quarter. Capital expenditures were at targeted levels, with little change expected. Production equipment and material prices were flat across most categories. Oil and gas payrolls held steady, while coal operators reported additional layoffs.\nFreight Transportation\nFor the most part, our contacts reported that shipping volume was somewhat higher than expected for this time of year, although no product area stands out. Freight executives are more optimistic about growth prospects than earlier in the year, and some believe that their growth projections for 2013 may be too low. Diesel-fuel prices have started to trend down from high levels, which carriers passed through via surcharges. Costs associated with equipment and maintenance items were stable. Capital spending was generally down in the first quarter of this year relative to late last year. However, our contacts believe that spending will begin to pick up in the second quarter. One executive stated that he has an aggressive spending plan in place, which includes capacity and footprint expansion. Hiring is for replacement and capacity expansion. New hours-of-service regulations (federal) may prompt additional hiring, but it will put upward pressure on shipping prices. Wage pressures are contained.\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 17, 2013\nThe Tenth District economy expanded moderately in March, and expectations for future activity strengthened. District contacts reported stronger-than-expected consumer spending and anticipated additional gains this spring. Improvements in residential and commercial real estate market conditions exceeded typical seasonal trends with robust sales, higher prices and brisk construction activity. Although District manufacturing activity softened, factory managers projected a rebound in orders, production, and shipments. Bankersreported stable loan demand, improving loan quality, and stronger deposits. Persistent drought hindered winter crop development, while crop insurance payments lessened the demand for operating loans. District contacts expected oil drilling activity to strengthen as seasonal demand supports higher oil and gasoline prices. The prices of raw materials for manufacturing, construction and food services rose, with some pass-through to finished goods prices. Though more companies anticipated hiring additional workers in the coming months, wage pressures remained subdued except for specialized positions at transportation, high-tech, energy and construction firms.\nConsumer Spending\nConsumer spending was stronger than expected in March and was expected to strengthen further in the coming months. After falling during the last survey period, District retailers reported modest, but stronger-than-expected sales in March and positive expectations for future sales growth. Lower-priced items such as apparel and hardware sold well, while demand for higher-priced premium and custom goods remained weak. Some store owners noted that the payroll tax increase and cold weather during March limited sales growth. Auto sales bounced back in March, and most dealers were optimistic that sales would rise further during the next few months. Smaller cars and used vehicles continued to sell well, while dealers reported slower demand for larger cars, trucks and sport-utility vehicles. Tourism contacts reported a rise in visitor counts compared to the last survey and expected a seasonal increase in tourism spending with warmer weather. District hoteliers indicated that occupancy rates rose with a slight drop in average room rental rates. Restaurant owners reported solid sales and slightly higher average check amounts.\nReal Estate and Construction\nResidential real estate activity rose sharply in March, and commercial real estate activity strengthened. In addition to a seasonal rise in home sales during the spring, real estate agents commented that pent-up buyer demand, an improving economy and low interest rates were driving stronger sales. Low- and mid-priced homes in good condition continued to sell quickly, and some real estate contacts noted increased demand for investment properties. Brisk sales and lower home inventories spurred further home price increases. Residential mortgage lenders reported a jump in loan applications for home purchases, and some real estate contacts were concerned that appraisals were not reflecting current market conditions amid rapid price increases. Housing starts were up sharply from the previous survey, but some builders noted that a lack of available sub-contractors could constrain construction in the coming months. Sales at construction supply firms rose with increased building activity. Commercial real estate markets improved, and District contacts expected additional strength in coming months. New commercial construction edged up and was expected to gain momentum as vacancy rates trended down and rents moved higher. Commercial sales activity and real estate prices rose well above year-ago levels. Developers reported no change in access to credit.\nManufacturing and Other Business Activity\nAfter softening in March, District manufacturing activity was expected to rebound in the coming months, and sales at transportation and high-tech service firms improved during the survey period. District manufacturing activity remained slightly below year-ago levels driven by weaker durable goods production, particularly for machinery and fabricated metal products. In contrast, non-durable goods production rose modestly with an uptick in food and chemical processing. After falling during the last survey period, the volume of new orders and shipments stabilized in March and was expected to strengthen during the next six months. Export orders, however, remained weak. Looking ahead, more plant managers planned to add workers and increase work hours to handle an expected rise in production. Some District factories and transportation firms were also making capital investments. Trucking traffic picked up, but qualified drivers were still in short supply. Business activity at high-tech firms expanded further, and sales were expected to remain strong. Some high-tech companies reported difficulty finding software developers and experienced IT technicians.\nBanking\nIn the recent survey period, bankers generally reported stable loan demand, improving loan quality, and stronger deposits. Bankers reported steady demand for commercial and industrial loans, residential and commercial real estate loans, and consumer installment loans. Although residential real estate loan demand increased for purchases, bankers noted fewer loans for home refinancing. Bankers reported that interest rates trended lower on commercial and industrial loans. A majority of bankers reported improved loan quality compared to a year ago, and they expected further improvements during the next six months. Credit standards remained largely unchanged in all major loan categories, and respondents reported stronger deposit growth.\nAgriculture\nAgricultural growing conditions remained poor in most of the District. March precipitation provided little relief to persistent drought, and the winter wheat crop was still in fair to poor condition. Despite recent declines, crop prices remained elevated due to short crop supplies, and District farmers did not plan to significantly alter their current crop mix. Livestock operators continued to post losses with falling cattle and hog prices and high feed costs. Pork exports remained weak, but beef exports edged up, partly due to less restricted trade with Japan. Operating loan demand remained soft as crop insurance payments bolstered farm income. Farmland values rose further and were expected to stay elevated.\nEnergy\nIn the energy sector, District activity remained solid and was expected to strengthen slightly heading into summer. An upswing in oil prices and an anticipated seasonal rise in demand kept the number of active oil rigs in the District above year-ago levels. Even though colder than usual temperatures reduced natural gas inventories and boosted prices, the effect was expected to be temporary and the number of active natural gas rigs in the District dipped during March. Looking ahead, some District contacts were concerned that permitting delays could constrain oil and gas exploration. Wyoming's coal production remained well below year-ago levels as more electricity was being generated from natural gas. District ethanol production held steady, but profit margins improved recently due to lower corn prices.\nWages and Prices\nWage pressures remained relatively subdued during the survey period, raw materials prices climbed, and some finished goods prices rose. More firms indicated they would be adding staff in the coming months to handle an anticipated increase in business activity, but most were not planning to raise wages. However, some companies, particularly those recruiting workers with specialized skills such as engineers, software developers, and commercial truck drivers, were increasing salaries. The cost of raw materials for manufacturing remained elevated, and some firms were raising finished goods prices. Some construction supply companies reported passing along higher prices for building materials, particularly lumber, to customers. Retail prices edged up, and retailers expected prices to trend higher during the next few months. Restaurant owners planned further menu price increases due to rising food costs.\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 6, 2013\nEconomic activity in the Second District has continued to expand at a moderate pace since the last report. Business contacts report some pickup in input price pressures but relatively few say they are increasing their selling prices. The labor market has shown scattered signs of improvement: manufacturers report an upturn in hiring, and a major employment agency notes increasingly strong demand for temps. Retailers report that sales have generally been strong and ahead of plan in January and early February. Auto sales in upstate New York were also described as robust since the beginning of the year. Tourism activity has been mixed but generally strong thus far in 2013, with hotels getting an additional boost from displaced residents and recovery workers in the aftermath of Superstorm Sandy. Both residential and commercial real estate markets showed signs of improving since the last report. Finally, bankers report increased loan demand, no change in credit standards, further narrowing in loan spreads, and lower delinquency rates on commercial loans and mortgages.\nConsumer Spending\nRetailers report that sales were strong in January but mixed in early February. Contacts in upstate New York report that sales, as well as traffic, were strong in January but slowed somewhat during the first half of February, in part, because of bad weather in the early part of the month. Moreover, contacts report that the mix of sales activity has continued to shift from actual mall sales to Internet sales. One retail contact notes that deep discounting is becoming increasingly common\nAuto dealers in the Buffalo and Rochester areas report that new vehicle sales were exceptionally strong in January, running 20-30 percent ahead of a year earlier, and have shown continued strength in early February--a marked contrast from December, when sales were sluggish. Used vehicle sales have remained flat recently. Wholesale and retail credit conditions for auto purchases are reported to be in good shape, and one contact notes that lenders have become more aggressive.\nTourism activity has generally been robust since the last report. Manhattan hotels report that business was relatively brisk in January, with revenues up 10-15 percent from a year earlier, driven largely by substantially higher occupancy rates but also boosted by a 5 percent increase in room rates. Hotels in the outer boroughs have seen even more dramatic increases, upwards of 40 percent; much of this surge in activity is attributed to Sandy, as hotel rooms are being occupied by displaced residents, utility workers, insurance adjusters, and others who are helping with rebuilding and restoration. Broadway theaters report that attendance and revenues have been running below comparable 2012 levels in January and early December--mainly reflecting a 20-30 percent reduction in the number of shows. Finally, consumer confidence in the region was mixed in January. The Conference Board's survey of residents of the Middle Atlantic states (NY, NJ, Pa) shows confidence rebounding strongly in January, after slipping to a more than one-year low in December; however, Siena College's survey of New York State residents shows confidence slipping to a 5-month low in January, with declines spread evenly between upstate and the New York City area.\nConstruction and Real Estate\nResidential real estate markets in the District have shown signs of improvement in recent weeks. A major appraisal firm reports that New York City's co-op and condo market has remained surprisingly active in early 2013, following an exceptionally strong fourth quarter. Apartment sales are up strongly from a year ago, and tight inventories are starting to nudge up prices across the board. One contact notes that year-end inventory levels were the lowest he has seen in more than 12 years. The apartment rental market, however, has leveled off; after rising at a roughly 5-10 percent rate in 2012, rents on apartments in both Manhattan and the outer boroughs are estimated to be running just 1-2 percent ahead of a year ago in early 2013.\nAn expert on northern New Jersey's housing market reports a pickup in activity and an improvement in the general tone of the market, describing the current season as the best since 2007. Residential builders are reported to be increasingly optimistic--they anticipate a substantially better year than 2012 and are investing more heavily in new projects. Single-family construction is seen as picking up, as multi-family construction retains momentum. While there remains a large overhang of foreclosed and distressed properties, many of these are expected to be snapped up by investors. Realtors in the Buffalo area report continued favorable conditions in the housing market: prices have risen steadily at a moderate pace, inventory levels are fairly low, and sales activity has been steady.\nCommercial real estate markets across the District were mixed but generally firmer since the last report. Office vacancy rates declined across most of the District, though rents in most areas continued to run below year-ago levels. Manhattan's office market was particularly robust, with vacancy rates continuing to decline and asking rents up 4 percent from a year ago. In northern New Jersey and in the Buffalo, Albany and Syracuse metro areas, vacancy rates have declined since the start of the year, but rents continue to run 1-3 percent below early 2012 levels. However, office markets in Westchester and Fairfield counties have been increasingly slack, with vacancy rates climbing to new highs and rents slipping roughly 4 percent over the past year. Market conditions in metro Rochester have been essentially flat.\nIndustrial markets have shown some signs of firming. In northern New Jersey, Long Island, Westchester and Fairfield counties, industrial vacancy rates have been steady since the beginning of the year, while rents are running 2-4 percent ahead of comparable 2012 levels. Industrial vacancy rates across upstate New York have continued to decline, reaching their lowest levels in three years, while rents have also drifted down.\nOther Business Activity\nNon-manufacturing contacts report little change in business conditions overall, though they have grown increasingly optimistic about prospects for 2013. Contacts in the manufacturing sector report a pickup in activity since the start of the year and are increasingly optimistic about the near- term outlook. A trucking industry analyst reports that truck tonnage (shipments) strengthened substantially in both December and January, after adjusting for seasonal variation. In general, business contacts note some increase in input price pressures but relatively few say they are increasing their own selling prices.\nThere are scattered signs of improvement in the job market thus far in 2013. A growing number of manufacturing contacts report that they are increasing staffing levels and are increasingly inclined to do so in the near future as well. A major employment agency reports that demand for full-time workers has improved slowly but steadily; while potential employers note that strong job candidates are increasingly hard to find, most continue to hold the line on salaries. The market for temps (contract workers) is described as very strong, particularly for one-day assignments.\nFinancial Developments\nSmall- to medium-sized banks report steady demand for consumer loans but increased demand for all other categories of loans; demand for refinancing was unchanged. Bankers report that credit standards were unchanged across all loan categories. Respondents indicate a decrease in spreads of loan rates over costs of funds for all loan categories--particularly in residential mortgages, where 40 percent of bankers indicate lower spreads and none indicates higher spreads. Most also indicate a decrease in the average deposit rate. Finally, banks report decreased delinquency rates on commercial and industrial loans and especially on commercial mortgages but indicate no change for residential mortgages and consumer loans.\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 6, 2013\nEconomic 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. Retail sales over the past three months have increased compared with the same period a year ago. Reports on auto sales over the same period have been mixed. Residential real estate market conditions have continued to improve, and commercial and industrial real estate markets have also improved. Lending activity at a sample of large District banks indicated little change during the fourth quarter of 2012. Prices, wages, and employment levels over the past three months have stayed the same or increased for a majority of contacts across the District.\nConsumer Spending\nContacts reported that retail sales in the past three months were up, on average, relative to the same period last year. Fifty percent of contacts noted increases in sales, while 25 percent noted decreases and the rest saw no changes. Sixty-three percent of retailers reported that sales levels met their expectations, and the remaining retailers reported that sales fell short of expectations. About 69 percent of retailers noted that their inventories were at desired levels, while the remaining contacts reported that their inventory levels were too high. The sales outlook over the next three months was positive: 63 percent of retailers expect sales to increase over 2012 levels, while 19 percent expect sales to decrease.\nReports from car dealers about sales in the past three months were mixed. Twenty-eight percent of the car dealers surveyed saw increases in sales, while 36 percent saw decreases and 36 percent saw no changes. Thirty-six percent of car dealers reported an increase in used car sales relative to new car sales, and 36 percent of car dealers reported the opposite. Sixty percent of contacts reported increased sales of low-end vehicles relative to high-end vehicles. About 62 percent of respondents reported that their inventories were too high, while 8 percent reported that their inventories were too low. The sales outlook for the next three months was optimistic: 54 percent of the car dealers expect sales to increase over 2012 levels and none of the survey respondents expect sales to decrease.\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 and expand operations in the Eighth District, while fewer manufacturers reported plans to lay off workers or reduce operations. Firms in steel, automobile, appliance, furniture, automobile parts, plastics, wood products, lumber, beverage, and machinery manufacturing industries announced plans to hire new employees and expand operations in the near future. In contrast, firms that manufacture solar equipment, medical devices, food, and electric components announced plans to lay off workers.\nReports of planned activity in the District's service sector have also been positive since the previous report. Firms in logistics and transportation, marketing, casinos, education, and legal services announced new hiring or expansion plans in the District. In contrast, firms in healthcare services and information services announced plans to reduce employment.\nReal Estate and Construction\nHome sales continued to increase throughout most of the Eighth District on a year-over-year basis. Compared with the same period in 2012, January 2013 year-to-date home sales were up 19 percent in Louisville, 23 percent in Little Rock, 11 percent in Memphis, and 23 percent in St. Louis. Residential construction also increased in most of the District. Compared with the same period in 2012, January 2013 year-to-date single-family housing permits increased 19 percent in Louisville, 9 percent in Memphis, and 44 percent in St. Louis. In contrast, permits decreased 1 percent in Little Rock over the same period.\nCommercial and industrial real estate markets improved modestly throughout most of the District. Contacts in Louisville reported that office asking rents increased during the fourth quarter of 2012, while contacts in Little Rock noted that office vacancy rates decreased. A contact in St. Louis reported strong office leasing and industrial sales activity. A contact in Memphis reported stable commercial real estate conditions. Commercial and industrial construction activity continued to strengthen throughout most of the District. A contact in northeast Mississippi noted that commercial construction and renovation activity increased in the fourth quarter of 2012. Contacts in St. Louis noted a few commercial construction projects underway and plans for a speculative industrial building project. Contacts in Louisville reported several ongoing commercial construction projects in Bowling Green.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks found little change in overall lending activity during the fourth quarter of 2012. During this period, credit standards and demand for commercial and industrial loans remained largely unchanged. Credit standards for commercial real estate loans ranged from basically unchanged to eased somewhat, while demand ranged from unchanged to moderately stronger. Credit standards for prime residential mortgage loans remained generally unchanged, while demand ranged from moderately weaker to moderately stronger. Meanwhile, credit standards and demand for consumer loans remained largely unchanged.\nAgriculture and Natural Resources\nAnnual crop production in the District's states declined for most crops in 2012. The District's states produced less corn, cotton, soybeans, and wheat in 2012 compared with 2011; in contrast, the District's states produced more rice and sorghum. The effect of the decline in production on farm incomes was partially offset by higher prices in the District's states for corn, rice, sorghum, and soybeans. January coal production in the District's states (excluding eastern Kentucky) was down 3.6 percent relative to a year ago.\nPrices, Wages, and Employment\nSixty-one percent of contacts indicated that price levels over the past three months have stayed the same, while 25 percent indicated that prices have increased relative to the same period last year. Similarly, half of contacts noted that non-labor costs over the past three months have stayed the same, while 48 percent of contacts noted that non-labor costs have increased. Forty-three percent of contacts, in turn, noted that wages over the past three months have stayed the same, while 57 percent noted that wages have increased relative to the same period last year. Meanwhile, 54 percent of contacts reported that employment levels have remained the same over the past three months, while 35 percent reported that employment levels have increased, compared with the same period last year.\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 6, 2013\nOn balance, Sixth District business conditions appear to have improved modestly in January and early February and the outlook among most contacts remained generally optimistic across sectors.\nOverall, retailers cited mild sales growth at the beginning of the year. The District's tourism industry remained a bright spot with both domestic and international visitors contributing to its growth. Homebuilders and brokers noted home sales and prices were above year-ago levels for new and existing homes, while commercial real estate markets continued to witness slow but steady improvements in overall activity. Manufacturers reported increases in new orders and production. Reports from bankers suggested that loan demand remained constant, largely because of refinance activity. Hiring in District labor markets expanded at a modest pace and prices generally remained flat compared with late last year.\nConsumer Spending and Tourism\nDistrict merchants noted a slight negative effect on consumer spending from the resumption of the full Social Security tax. Reports also indicated that expectations of higher healthcare costs and gasoline prices have contributed to a modest decline in consumer confidence. However, reports showed that sales were up on a year-over-year basis at chain stores. Discounts continued to bolster consumer activity, and auto dealers continued to cite strong sales growth.\nHospitality contacts characterized travel and tourism activity as strong in January and early February. Hotel occupancy rates exceeded expectations and advanced bookings were above the year-earlier pace. International visitors provided a boost to the industry, with European visitors setting record-level activity in recent months. Domestic travel and tourism also remained healthy, despite concerns about rising gas prices. Occupancy rates have been projected to continue increasing with expectations of little cost pressure. Contacts remain optimistic and anticipate persistent growth for the next three to six months.\nReal Estate and Construction\nAccording to District brokers, sales growth moderated somewhat on a year-over-year basis but the majority reported that sales were ahead of year earlier levels. Existing home inventories continued to contract and several brokers reported that this was constraining sales. Many noted that properties were receiving multiple offers, particularly at the low-end of the market. Home prices were reported to be ahead of the year earlier level and spring home sales are expected to exceed the year earlier level, as well.\nThe optimism District homebuilders expressed in our last report continued. Builders reported that recent new home sales and construction activity were ahead of year earlier levels. The majority of builders continued to note that new home inventories were below the year-ago level. More builders than in our last report indicated that new home prices were above the year earlier level. Access to construction financing remained mostly tight but several brokers and builders stated that they were successful in obtaining financing. The outlook for construction activity and new home sales over the next several months was positive.\nContacts cited improvements in District commercial real estate markets but the recovery continued to unfold slowly. Multifamily projects dominated reports, although it was also noted that manufacturers were expanding their facilities. Commercial contractors reported that construction improved modestly from late last year. Commercial brokers indicated that demand improved as well. Rents stabilized by most accounts and tenants were seeking longer lease deals. Investors still have a strong interest in core markets, though there has been some indication that some have started to turn to secondary markets in the region.\nManufacturing and Transportation\nReports from businesses indicated that manufacturing in the region improved in January and early February. Contacts cited the highest activity level since last September. All components of the Southeast Purchasing Managers' Index experienced increases with new orders, production, and employment reflecting particular strength. The number of purchasing managers that expect production to be higher in the next three to six months increased compared with the end of last year.\nDistrict rail companies reported lower total carloads from a year earlier, but slight increases in intermodal traffic. Petroleum products and metallic ores were cited as strong, while grain, farm products, and iron and steel scrap were down notably. A District port contact noted strong increases in overall tonnage as well as auto and machinery units compared with a year earlier. This volume was boosted in part by growth in bulk and wheeled cargo, and year-over-year increases in container traffic were described as notable. Several District port contacts continued to report significant investment in infrastructure and equipment improvements.\nBanking and Finance\nBankers reported that mortgage loan demand was good, but continued to be largely driven by refinancing. However, some bankers expect the refinance market to ease up by mid-year as regulatory changes related to reselling mortgages on the secondary market becomes more stringent. Many indicated the willingness to lend, but some noted that competitors were offering loans at terms perceived as risky in the long run. Institutions were noted as having the capacity to handle increased loan volumes, but some continued to be conservative. Auto loan activity remained strong.\nEmployment and Prices\nSince the last report, employment growth for the District has been moderate. High-end retailers reported increased sales that have translated into mild increases in staffing levels. Real estate contacts said they have yet to experience gains that would warrant increasing their staffing levels significantly. Similarly, community bankers noted increased optimism on the real estate front, but are restricting employment levels because of uncertainty related to upcoming regulatory change. On balance, firms providing accounting and consulting services to healthcare providers reported much-increased demand because of regulatory changes, resulting in shortages of compliance specialists.\nInflation expectations among business contacts have been little changed over the past six months. However, costs relating to tax policy, regulation, and healthcare remained sources of uncertainty going into 2013. Firms responding to our Business Inflation Expectations survey reported that unit costs were up 1.7 percent in February over the past year, roughly unchanged from their assessment late last year. Looking forward, business expectations for inflation have been relatively stable. On average, firms expected unit costs to rise 1.9 percent over the next 12 months. Compared with the end of last year, service industry contacts noted that stronger sales were likely to put upward pressure on prices over the next year. Manufacturers indicated that they expect to improve margins in 2013, as sales improve and materials costs moderate somewhat.\nNatural Resources and Agriculture\nAs domestically produced oil has become increasingly available, Gulf Coast refiners reported declining dependence on imported crude for processing, and more refined product being exported. There was some concern that oil and petroleum product export capacity at Gulf of Mexico ports was becoming strained; however, contacts noted that planned investments at these ports were likely to increase export capacity going forward.\nRecent rains improved drought conditions in Alabama and Georgia, while Florida saw dry conditions expand over most of the state. Prices for corn, soybeans, beef, broilers, and eggs were higher than year-ago levels while the price for cotton was down. Contacts continued to report that groups with no agriculture experience were looking to buy farmland as they seek better investment returns.\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 6, 2013\nEconomic activity continues to expand in the First District, albeit slowly, according to business contacts. Most contacted retailers but only one-half of responding manufacturers report higher sales in the latest period than a year earlier; nonetheless, most manufacturers are upbeat about 2013. Contacted staffing services firms cite a pick-up in business, while several software and IT services firms say their results are below expectations although they maintain a positive outlook. Commercial real estate fundamentals are largely unchanged, with office leasing activity mixed. Most residential real estate markets across the region continue to show robust sales growth and modest price increases. Across sectors, vendor prices and selling prices are reported to be generally stable and headcount changes fairly modest, either up or down.\nRetail and Tourism\nRetailers contacted in this round report overall fiscal year 2012 sales increases mostly ranging from 1 percent to 3 percent from 2011, with one source reporting a 7 percent year-over-year rise; these firms completed their 2012 fiscal years either at the end of December or in February. For January 2013, comparable-store sales ranged from a 1 percent decrease to a 6 percent increase from January 2012. Demand continues to be strong for clothing, home furnishings, and furniture, although a few contacts cite some softening in February which they attribute to consumer uncertainty regarding job creation, budget deficits, and the possible sequestration, as well as weather-related issues that depressed store traffic in certain areas. One contact notes that their customers often use tax refunds to finance durable good purchases, and the American Taxpayer Relief Act of 2012 enacted on January 2, 2013 has caused some people to delay filing their returns. Respondents suggest it will be easier to discern underlying sales trends in another month or two. However, they continue to predict a low-growth economy and a somewhat wary consumer in 2013. Wholesale prices are reportedly holding steady.\nAs noted in the previous report, the tourism industry posted record highs in 2012 for hotel occupancy rates and revenues. Expectations for 2013 are that hotel occupancy will be flat or down about 1 percent compared to 2012, but that room revenues will be up about 6 percent. International travel is expected to increase by about 9 percent over 2012, fueled by continuing strong traffic from Europe and increased travel from Australia and South America, particularly from Argentina and Brazil. Increases in gas prices do not yet seem to be affecting regional travelers. Restaurants continue to have less robust results than hotels, with the average table check down compared to levels in 2009 to 2011.\nManufacturing and Related Services\nManufacturing firms in the First District continue to paint a picture of a slow recovery. Of the 12 firms responding this round, six report higher sales in the fourth quarter versus the same period a year earlier, two report flat sales and four report lower sales. In contrast to the mixed sales picture, 10 of the 12 firms say that their outlook for 2013 is positive. Part of the disconnect reflects the highly cyclical semiconductor industry, which accounts for two of the firms reporting both negative growth in the fourth quarter and positive expected growth in 2013. One firm in particular reports that sales were down by more than one-third in the fourth quarter but that orders are up almost 20 percent. Even some of our own contacts appear to be puzzled at the combination of poor sales results and optimism about growth for 2013; for example, one says his firm--at which January sales were down 6 percent year-on-year--wrote in planned sales growth of 4 percent to 8 percent in the second half \"without any specific reason\" except that \"everyone expects sales to strengthen.\" A contact in the home improvement goods industry notes that sales were strong in the fourth quarter but cautions that tool sales lag increases in housing starts by 6 to 9 months so it is too soon to tell if the increase is seasonal or cyclical. A contact that supplies material for filtration says the global picture is difficult to pin down because Chinese New Year and the seasonal Christmas shutdowns in Europe made year-on-year comparison particularly difficult in recent months. Finally, several respondents expressed uncertainty regarding China, with one saying that some of his Chinese customers reported dramatic reductions in sales, inconsistent with government statistics.\nEmployment growth seems to be following sales and not the outlook. Only four of our contacts report increased hiring in the fourth quarter or planned increases in hiring in 2013 and four report the opposite. A contact in the industrial distribution business says that sales growth was negative for much of the second half of last year but they held off staff reductions until now. Three contacts cite difficulty finding the right workers in everything from welding to life sciences.\nInvestment appeared similar to employment, with four firms reporting higher investment or higher planned investment. A manufacturer of fitness equipment says they are curtailing their investment plans because of slower expected growth in sales.\nSoftware and Information Technology Services\nNew England software and information technology services contacts generally report lackluster activity through February. Several contacts cite weaker-than-expected demand and delays in executing large license agreements, driven in part by economic uncertainty, particularly in Europe and Japan. By contrast, two contacts--whose firms have experienced robust growth since 2010--expanded accounts with a number of global insurance companies, bringing revenues in the fourth quarter to record highs. Many contacts continue to slow the pace at which they are hiring. Indeed, one contact shed approximately 150 jobs in the fourth quarter and has since instituted a \"soft hiring freeze\"; two other contacts now plan to maintain their current headcount through the end of 2013, following increases of over 5 percent in 2012. Selling prices and capital and technology spending have gone largely unchanged. The outlook among New England software and IT contacts is generally consistent with that of three months ago, with most expecting more robust growth in the second half of 2013.\nStaffing Services\nFirst District staffing contacts report that business continues to strengthen. Labor market activity since January is characterized as \"improved\" or \"encouraging\", with all but one contact registering a year- over-year increase in billable hours. The continued growth reportedly reflects increases in labor demand in the IT, industrial, and business services sectors partially offset by a softening of demand for office and clerical assistants and manufacturing personnel. The number of permanent and temporary-to-permanent placements continues to grow, with one contact reporting that permanent placements in their professional business, which includes IT and engineering, are up nearly 30 percent relative to a year ago. Labor supply has gone largely unchanged since May 2012. Contacts continue to have difficulty finding candidates with high-end skill sets such as mechanical and electrical engineers, software developers, and IT personnel; one respondent says this shortage of qualified labor is putting upward pressure on pay rates. Looking forward, staffing contacts are generally more upbeat than they were three months ago, with most expecting steady or accelerated growth in the second quarter.\nCommercial Real Estate\nContacts across the First District offer somewhat mixed reports concerning recent activity and the outlook, but note that fundamentals are largely unchanged since the last report. Leasing interest picked up slightly in Hartford in recent weeks but has not resulted in an increase in completed lease deals nor in significant absorption. In Boston, leasing inquiries remain steady. One Boston contact notes that tenants express little urgency to sign deals while another says that absorption increased slightly in recent weeks. In Providence, leasing activity picked up from last time and Class A downtown office vacancies fell to just under 9 percent from roughly 15 percent a year earlier. A Portland contact reports that leasing activity is stable and office rents unchanged since the last report, notwithstanding some newly announced plant closings in the region that will result in layoffs.\nInvestment sales reportedly picked up in both Hartford and Providence as some investors were priced out of primary markets such as Boston. Across the region, multifamily structures remain the favored investment class, but high quality office and industrial structures are also seeing healthy demand. More properties are coming up for sale in response to rising prices. Some contacts are concerned that the high sales prices for premier properties in Boston are increasingly out of line with fundamentals. A regional lender notes a significant decline in loan demand for commercial properties since December and cites as possible reasons a temporary decline in the bank's marketing efforts together with a general climate of economic uncertainty. Respondents raise concerns about overbuilding in Boston's apartment market and possibly also in its office sector. While current office construction in Boston is pre-leased rather than speculative, one contact notes that the intended tenants will nonetheless generate significant vacancies at their current locations in other parts of the city.\nThe outlook is largely unchanged in Portland and Boston, calling for a continuation of slow growth. Upside risks to absorption are cited for both Hartford and Providence, while contacts in both Boston and Hartford note downside macroeconomic risks as a threat to commercial real estate markets.\nResidential Real Estate\nAcross New England, strong year-over-year sales growth continued in December in both single- family home and condominium markets. Initial sales figures for January suggest similarly robust year- over-year growth. According to contacts, low interest rates, affordable prices and improving economic conditions are all helping to spur buyer activity. Some contacts note, however, that a small increase in interest rates might actually spur potential homebuyers to purchase more quickly. Overall, realtors say they are confident in the strength of buyer demand, but worry that declining inventory could damp sales growth. In Greater Boston, realtors report that multiple bids on properties have become increasingly common as inventory falls. Declining inventory levels are putting upward pressure on prices in much of the region although the median sale price in New Hampshire slipped notwithstanding fewer listings.\nIn the next several months, contacts anticipate continued year-over-year growth in sales and most express confidence that home values will continue to appreciate. Some contacts, however, say the strength of the improvements could be easily undermined if the economic recovery slows. Inventory levels are expected to rise in a few months with the onset of warmer weather, although several contacts worry about whether the supply will adequately sustain buyer interest.\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 6, 2013\nTwelfth District economic activity expanded at a modest pace during the reporting period of January through late-February. Price inflation was limited overall, and upward wage pressures were quite modest. Sales of retail items were up on balance, and most business and consumer services gained. District manufacturing activity ticked up. Production activity and sales were strong for agricultural producers. Housing demand trended up further, and commercial real estate activity expanded. Contacts from financial institutions reported small increases in overall loan demand and slight improvements in credit availability.\nWages and Prices\nPrice increases were limited for most items. Modest upward price pressure was reported for petroleum-related products such as gasoline, fertilizer, and plastics, and some technology products containing precious metal or rare earth components. Reports indicated that prices of some construction materials, including wood products, wallboard, drywall, and steel rebar edged up further, while roofing, cement, and aluminum prices dropped back slightly. Retail grocers reported relatively stable pricing overall, but weather-related factors boosted fresh produce prices in some regions. Hotel room rates increased in Las Vegas and Hawaii. Prices for professional services, such as legal and financial, were stable.\nContacts reported that wage gains were quite modest for most types of workers. Prolonged weakness in labor market conditions has restrained hiring plans, and ready worker availability in most sectors and regions has held down increases in wages and compensation. Some upward pressure was reported for workers in sectors and geographic areas with relatively low unemployment rates, including hospitality workers in popular tourist destinations. A shortage of trained engineers continues to prompt vigorous employer competition and significant compensation gains for this group across a number of industries. In a few areas experiencing large increases in construction activity, wages of construction labor have risen noticeably.\nRetail Trade and Services\nRetail sales grew modestly on balance. The recent pace of sales and the near-term sales outlook were reported as fragile by retailers selling to consumers at the lower end of the income distribution. New automobile sales remained solid, driven by demand to replace older vehicles and low financing rates. Sales remained somewhat soft for traditional retail grocers, who experienced intensifying competition from discount and online retailers. Demand for higher-end clothing has been stable. Contacts also reported expansion in the user base for Internet and digital media products through increased sales of devices and enhanced features on a number of existing platforms.\nDemand for most business and consumer services gained. Contacts pointed to solid sales of various technology services and greater demand for financial and accounting services. Food service providers reported strong sales on net. Activity in the District's tourism and travel sector advanced, with solid growth of visitor counts and occupancy rates reported in Hawaii; however, more modest gains were reported in Las Vegas and Southern California. Current demand for health-care services remained relatively weak, but contacts projected rising demand as additional components of the Affordable Care Act are implemented.\nManufacturing\nDistrict manufacturing activity appeared to tick up during the reporting period of January through late-February. Production activity for commercial aircraft and parts expanded, although contacts projected weaker demand for defense aircraft. Longer-term bookings for electronic components appeared to increase. Pharmaceutical goods producers experienced modest gains. Contacts indicated high levels of demand for a clean alternative to diesel fuel that is under development. Wood product manufacturers reported that demand grew further, fueled in large part by rebounds in residential construction activity. Demand for steel products used primarily in infrastructure and nonresidential construction projects grew somewhat. While overall steel capacity utilization remained at a historically low level, capacity utilization was stronger in the automotive steel products subsector.\nAgriculture and Resource-related Industries\nProduction activity and sales were strong for agricultural producers, and extraction activity of natural resources used for energy production expanded on net. Demand for most crop and livestock products grew further, and high grain prices contributed to elevated land prices. Agricultural producers faced higher petroleum-based fuel costs but lower natural gas costs. Natural gas inventories declined a bit. In some slower-growing regions, demand for new gas and electric hookups remains tepid. In parts of the District, warmer-than-average weather conditions led to reductions in overall energy usage. Raw materials were adequately available, although water availability beyond 2013 was a concern in some regions due to a dry winter.\nReal Estate and Construction\nDemand for housing strengthened, and commercial real estate activity expanded, driven by pockets of strength in several locales. Home sales climbed further in most regional markets, and continuing low inventory levels supported stable or increasing prices. Construction of multifamily residential projects continued to expand. Commercial real estate development and leasing activity increased, particularly in the San Francisco Bay Area and Seattle markets, fueled by sustained growth in the technology sector. Commercial rental rates increased in various parts of the District.\nFinancial Institutions\nContacts from financial institutions reported that loan demand was up somewhat, and overall credit availability has either improved or remained unchanged from the last quarter of 2012. Contacts expect loan demand to increase more rapidly after federal spending uncertainty is alleviated. Banking contacts continued to highlight ample liquidity and generally stiff competition among lenders to provide credit to well-qualified business loan applicants, with community banks facing increasing competition for small business and auto lending. Contacts reported increases in privately held technology companies poised for public offerings; despite the positive outlook, recent initial public offering, venture capital, and private equity activity was relatively slow in the District's Internet and digital media subsectors. Reports indicated that credit quality for both business and consumer loans has continued to improve slowly.\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 6, 2013\nThe economy in the Fourth District grew at a modest pace since our last report. Manufacturing orders and production were steady or rose slightly. The momentum seen in residential construction at the end of 2012, including multi-family, has carried over into 2013. Nonresidential construction showed some slowing. Retail purchases during January fell below year-ago levels, while motor vehicle sales posted solid gains on a year-over-year basis. Little change was seen in conventional oil and natural gas production, but shale gas activity expanded at a robust pace. Output at coal mines trended lower. Freight transport volume exceeded projections made late last year. And demand for business and consumer credit was flat.\nHiring was sluggish across industry sectors. Staffing-firm representatives reported that the number of job openings and placements picked up slightly since the beginning of the year. Vacancies were found primarily in the shale gas and motor vehicle industries and in professional business services. Wage pressures were contained. Input prices were stable, apart from increases in construction materials and some petroleum-based products.\nManufacturing\nReports from District factories indicated that new orders and production were steady or up slightly during the past six weeks. Companies seeing increases were largely suppliers to the energy, residential construction, and transportation industries. Defense contractors cited concerns about the potential downside effects of sequestration. Compared to a year ago, production activity was mixed. Steel producers and service centers described shipping volume as slightly higher since the start of 2013 relative to the previous quarter. Many manufacturing contacts are somewhat more optimistic about near-term growth prospects than they were late in the fourth quarter. 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 lower, especially for domestic makers.\nInventories are aligned with demand. Steel producers reported that capacity utilization rose slightly during the past few weeks; other factory contacts said that rates were within or slightly below their normal range. Capital expenditures were on plan for the fiscal year. Most outlays are for technology that will be used to enhance productivity. Raw material prices were flat or trended lower, except for increases in some petroleum-based products. Finished goods prices held steady. On balance, manufacturing payrolls were little changed. Wage pressures are contained, although rising health insurance premiums remain a challenge.\nReal Estate\nHome builders reported that the upturn in sales of new single-family homes continued into January, and that sales were significantly higher than a year-ago. Contracts were found mainly in the mid- to higher-price-point categories. Demand for multifamily housing remains strong, particularly in urban areas, and the turnover rate for apartments has been trending lower. While builders expressed confidence that the improvement in the housing market will persist in the upcoming months, they still see the appraisal process and the availability of financing as headwinds to more robust growth. List prices of new homes are increasing, which was attributed to shrinking inventories and rising construction costs. Builders have cut back on discounting.\nNonresidential contractors experienced some slowing in business activity, when compared to the fourth quarter of last year. Margins are still tight and inquiries were down slightly. Builders noted that stress on government budgets is choking the supply of projects, especially defense-related. One contractor stated that uncertainty has eased somewhat and the number of potential clients is growing. But transforming proposals into signed contracts remains challenging, which is due in part to difficulty in obtaining financing. Project work is found mainly in manufacturing, distribution, and large multifamily developments. Our contacts are cautious about near-term activity and expect slow to moderate growth, mainly from private- sector clients.\nResidential and nonresidential builders reported substantially higher prices for lumber (plywood and softwood), drywall, and to a lesser extent, concrete. General contractors are concerned about subcontractors raising their rates by the second half of this year. The potential increase was attributed to a dwindling number of subcontracting businesses and stronger demand. Residential builders are expanding payrolls at a modest pace, mainly field personnel, while nonresidential builders have stopped hiring due to uncertainty about future demand.\nConsumer Spending\nMany retailers we spoke with reported that January sales fell below year-ago levels. Higher taxes were cited as a potential contributing factor. Nonetheless, some of these contacts described January results as good or strong. We heard one report that high-end and lower-cost brands were doing better than products aimed at middle-income consumers. Increased volume was seen in apparel and firearms. Most of our contacts anticipate that transactions in the upcoming months will be above year-ago levels, in the low to mid-single digits. However, there is concern about the impact of rising gasoline prices on spending by lower-income households. Vendor and shelf prices held steady. Inventories rose slightly, but they were described as manageable. Capital expenditures were on plan for the fiscal year. No hiring is anticipated, except for staffing new stores.\nSales of new motor vehicles grew at a robust pace during January when compared to the same time period a year ago. Dealers credited milder-than-normal January weather and pent- up demand for the sales boost. Purchases of smaller, fuel-efficient cars, crossovers, and compact SUVs are doing well. New-vehicle inventories were higher than most dealers would like. Our contacts are cautiously optimistic about sales prospects during the next few months. Some commented that the upcoming regional auto shows typically have a positive impact on consumers' willingness to buy. Sales of used vehicles rose moderately during January. Leasing continued to trend higher, which should help to replenish the used-vehicle inventory. We heard two reports about further easing in financing new vehicles. A few dealers are considering increasing their sales staff if volume continues at the current pace. Dealers in the eastern part of the District are apprehensive about losing technicians to the shale gas industry, which may put upward pressure on wages.\nBanking\nDemand for business credit was little changed across sectors and product categories since our last report. A few large banks noted a slowdown in loan applications during January, while community bankers saw a rise in demand for commercial real estate loans. Reports on consumer credit also indicated little change in demand. Credit card balances were coming down, while activity in home-equity products and auto lending picked up. The residential mortgage market was characterized as strong; however, some of our contacts cited a decline in the number of applicants from a year ago. Delinquency rates held steady or declined across consumer and commercial loan categories. Aggregate core deposits grew, but there was a slight drop-off in business and public-sector deposits. Bankers remain very concerned about shrinking net interest margins. In response, they are considering broad-based cost-control initiatives, which include layoffs.\nEnergy\nCoal production declined across the District relative to 2012 levels, with the largest decreases seen in northern West Virginia and eastern Kentucky. The downward trend in production is expected to continue in the near term. Falling prices for metallurgical coal leveled off, while steam-coal prices were mixed. Conventional oil and natural gas production was steady during the past couple of months, with little change expected during the next quarter. In contrast, shale gas activity expanded at a robust pace. Well-head prices have stabilized. Capital spending in the conventional oil and gas industry is expected to remain low until drilling picks up in late spring or summer. One contact said that he will drill fewer wells this year due to credit restrictions. Coal producers have cut back on capital expenditures. Production equipment and material prices were flat across most categories. Shale gas producers expanded payrolls, while employment at conventional oil and gas firms was flat. We heard several reports of layoffs by coal operators. Many of our contacts pointed to rising health insurance premiums as a concern.\nFreight Transportation\nFor the most part, our contacts reported that shipping volume met or exceeded projections made late in 2012. Higher volume was attributed to stronger demand from the energy sector, rerouting of container traffic, and some residual effects of Hurricane Sandy. Freight executives were fairly positive in their outlook for 2013, but they were uncertain whether the boost in activity seen during a traditionally slow part of the shipping season is sustainable. Diesel fuel prices rose, which some carriers passed through via surcharges. Costs associated with equipment and maintenance items were stable. Reports on capital spending were mixed. Some freight haulers have increased budgets significantly for new equipment this year. Others are postponing equipment replacement until they are certain that the economy is on solid footing. Hiring is primarily for replacement. Wage pressures are surfacing due to difficulty in finding and keeping qualified drivers. There were a few reports about a potential driver shortage during the summer.\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 6, 2013\nDistrict economic activity grew moderately since our last report. Manufacturing strengthened somewhat in recent weeks. Tourism also picked up, while other non-retail services providers reported that activity grew at a slower pace. Retail sales rose, although auto sales slowed slightly from previous high levels. Lending activity increased marginally, with a slight uptick in demand for commercial and residential mortgages. Residential real estate activity grew at a modest pace, and commercial real estate and construction markets improved. The agricultural sector remained strong, while oil and natural gas production eased during the past six weeks. Labor markets were generally flat since our last report. Manufacturers' input prices rose at a slightly slower rate, while finished goods prices were little changed and the pace of wage growth held constant. Price growth at non-retail services firms picked up slightly in recent weeks, while wages in that sector advanced more quickly. Retail price increases slowed, and average retail wages rose more quickly since our last report.\nManufacturing\nFifth District manufacturing activity showed some signs of strengthening. A producer of lumber products reported that the month of January was the best in more than five years, and a furniture manufacturer said that there was a firmer tone at his company as measured by product quotation requests. A manufacturer of polyester film told us that overall demand had increased, but he could not yet raise prices and margins continued to be squeezed. He noted that customers were not making long-term commitments and they continued to worry the sustainability of the positive economic trend. A textile manufacturer noted that uncertainty around his government-related contracts could lead to layoffs, although his non-government business was strong. According to our latest survey, raw materials prices grew at a slightly slower pace, while finished goods prices were little changed.\nPorts\nDistrict port administrators reported strong container traffic in recent weeks. Exports of agricultural and chemical products coming from the Gulf states and the Midwest rose, and port administrators expected a general pick-up in activity in March. Automobile imports slowed in January and February after finishing 2012 on a high note. Exports have led imports so far this year, although exports of equipment for construction and agriculture slowed as last year's capital restocking abated. The Chinese New Year on February 10 resulted in only a few port of call cancellations because of plant and port shutdowns in China. After months of extensions, concerns about dockworker contract negotiations generally lessened since early February, although contracts have not yet been finalized.\nRetail\nRetail sales strengthened in recent weeks. Survey respondents in food sales, pharmaceuticals, and home and garden centers reported higher revenues in February. A building supply wholesaler commented, \"Things are on the mend.\" Sales of automobiles and light trucks remained strong, even as the pace slowed slightly from last year's robust levels, according to dealerships in several locations. An auto dealer in West Virginia described sales as \"plugging along.\" Growth in retail prices slowed since our last report.\nServices\nActivity in the service sector grew at a slower pace in this reporting period. Survey respondents at law firms, marketing firms, and nursing homes reported slower growth. In addition, executives we contacted at freight trucking firms reported little change in new demand in January and February, with increased business attributed to gaining a larger market share. Financial services firms also noted little change, although a broker at a Virginia firm remarked that his clients were feeling a bit more optimistic. Prices in the sector rose slightly faster.\nTourist activity picked up, however, according to a contact on the outer banks of North Carolina, with a strong Presidents' Day weekend and solid advance reservations for the summer. Further inland, a hotel and conference center manager noted stronger convention bookings. In West Virginia, winter weather helped boost activity at a mountain resort. Rates were generally flat.\nFinance\nLending activity increased marginally since our last report. Most bankers reported a slight uptick in demand for commercial and residential mortgages. Refinancing constituted a significant portion of this demand, primarily due to low interest rates. Officials from both a large commercial bank and a small community bank noted that the demand for refinancing also was driven by five year balloon payments coming due. In contrast, a North Carolina banker reported a slowdown in refinancing due to an increase in interest rates. Commercial loans rose modestly, although demand remained weak. Several bankers in West Virginia noted that there has been a reluctance to invest due to uncertainty about federal policies. A contact noted, \"the best customers are not borrowing and are very liquid.\" However, other District bankers were cautiously optimistic about the future and growth in their loan portfolios. In addition, lenders noted minor improvement in credit quality and delinquency rates. On the consumer side, demand for loans remained flat. Bankers remarked that competition was increasingly aggressive.\nReal Estate\nResidential real estate activity generally grew at a moderate pace since our last report. A contact in North Carolina stated that the housing recovery \"is real, although modest at this point.\" He cited firming sales of new and existing single-family homes, falling inventories, and recovering resale prices as signs of improvement. A Realtor in the Washington, D.C. area said that continuing low interest rates coupled with decreasing inventory had created a very competitive market, which often led to multiple offers. Similarly, a Realtor in the metro-Richmond area indicated that low interest rates continued to motivate home buyers, and that many areas around Richmond had less than two months of supply. In Charleston, South Carolina, a Realtor told us that the housing market had regained some stability and that in 2012, for the first time in five years, more than 10,000 homes were sold. In contrast, a contact in the Charlotte area mentioned that people were adding rooms to their homes, rather than buying and moving. He noted that in the past, homeowners chose renovation projects based on the expected effect on the market price. Now, he said, they build for themselves and stay put. In Maryland, a source reported slow recovery in the housing sector with fewer days on the market and added that housing prices had stabilized.\nCommercial real estate and construction markets improved somewhat since our last report. A developer in the Carolinas said that leasing activity continued at a reasonably healthy pace, while a Richmond Realtor stated that tenants were trying to hedge based on the economy. He noted that companies didn't want to commit to more than a five-year lease with the right to cancel at three years. Most contacts continued to describe the supply of Class A office space as tight, which they attributed to the absence of new construction. Several Realtors reported that rental rates had firmed in the market with property owners keeping rents firm and minimizing concessions. A source in Charleston, South Carolina cited heightened industrial sales due to attractive lending rates. He indicated that vacancy rates had declined and that a couple of build-to-suit projects had positive absorption.\nAgriculture and Natural Resources\nThe agricultural sector remained strong, while energy production declined slightly. Results of our most recent agricultural survey indicated that farmland values were above both the previous quarter and year-ago levels. In addition, most contacts noted that 2012 was one of the best years that farmers have ever had; they indicated that higher commodity prices had resulted in stronger cash positions. Several forestry contacts reported a pickup in lumber prices due to the uptick in the housing sector.\nAlthough conventional oil and natural gas production fell slightly since our last report, the rig count held steady in West Virginia. Coal production continued to fall, due to declining prices for natural gas and stricter environmental regulations. A manufacturer of equipment used in the coal extraction process pointed out that while the environment in the coal mining industry had been challenging, there is tremendous growth potential for coal producers in the global market, particularly in sales to China, India, and Germany. Another source stated that coal exports were up and that a coal operator who had never sold overseas before had thirty percent of sales in export markets for this year.\nLabor Markets\nLabor market activity was little changed since our last report. Hiring remained flat across most sectors, although there were some exceptions. Employers across the District continued to cite the Affordable Care Act and its unknown impacts as reasons for planned layoffs and reluctance to hire more staff. In contrast, expansion by a software developer in North Carolina will bring new jobs, and contacts in the service and manufacturing sectors reported a demand for engineers and skilled labor, although they also expressed some difficulty in finding such workers. An agent from Maryland reported increased demand for temp workers, particularly in the manufacturing sector. According to our latest survey, average retail wages rose quickly and average wages at non-retail services firms picked up moderately in recent weeks; hiring, however, was still soft. In the manufacturing sector, employment strengthened over the last month, while wage growth remained modest.\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 6, 2013\nEconomic activity in the Seventh District continued to expand at a slow pace in January and February. Many contacts expected that growth would be weak in the first half of 2013, partly because of uncertainty over federal fiscal policy, but that activity would rebound in the second half of the year. Growth in consumer and business spending slowed during the latest reporting period, but the pace of manufacturing production improved. Residential construction rose at a moderate pace while nonresidential construction remained weak. Credit conditions continued to improve gradually. Cost pressures increased some, while wage pressures remained moderate. Prices for corn, wheat, milk, hogs, and cattle moved lower, while soybean prices moved higher.\nConsumer spending\nConsumer spending increased at a slower rate in January and February. Retailers pointed to the negative impacts on household budgets from rising gas prices and the end of the payroll tax holiday as explanations for the slower pace of retail sales. Sales of clothing, furniture, and health and personal care items were weaker. However, gift card redemptions boosted sales of electronics, appliances, music, and sporting goods. Grocery stores also reported a slight increase in sales, while restaurant sales were flat. Auto sales were steady for much of the reporting period before increasing slightly over the last few weeks. Car and truck sales both improved, with all-wheel vehicles registering the largest gains. Severe winter weather conditions also led to an increase in service department activity. Looking ahead, retailers expressed concern that potential fiscal policy tightening would continue to have a negative impact on consumer sentiment and retail sales throughout the remainder of the first quarter.\nBusiness spending\nGrowth in business spending slowed in January and February. Inventory investment declined, and spending on equipment and structures was again limited. Several manufacturers noted that they plan to make capital expenditures this year only as necessary, delaying investments because of heightened uncertainty surrounding fiscal policy. Those non- manufacturing contacts that reported increased capital expenditures were primarily spending on additional vehicles and information technology. Labor market conditions were little changed. Hiring continued to increase slowly. Contacts indicated that there is still strong demand for talent in skilled professional and manufacturing jobs. However, several manufacturing contacts expressed plans to either invest in more productive capital equipment or adjust the hours of existing employees before hiring new workers this year. In addition, a staffing firm noted that demand for temporary employees had improved--largely based on an increase in demand from the manufacturing sector--but remained weaker in the District than for the rest of the nation.\nConstruction/real estate\nConstruction and real estate activity was again mixed in January and February. Demand for residential construction continued to increase slowly, buoyed by ongoing strength in multifamily construction. A contact noted that some builders are in the early stages of looking for new land to develop. Even so, many builders and lenders remain very cautious to re- enter the single-family market. Conditions in the residential real estate market improved slightly, with home prices edging higher and the inventory of unsold homes declining. Home sales reportedly picked up in wealthier communities, but sales continued to lag in low and moderate- income communities. Although there was some modest growth in nonresidential construction, the level of activity remains weak. Notably, while some new projects are slated to break ground, growth in commercial and office space is expected to remain below trend for some time. However, contacts did note that construction of private-practice facilities close to affiliated hospitals is an area of strength in this segment. Commercial real estate leasing activity was generally unchanged--rents held steady, while vacancy rates continued to come down slowly. In contrast, some manufacturers were reportedly leasing temporary space in order to accommodate increased demand.\nManufacturing\nGrowth in manufacturing production picked up in January and February. The auto industry remained a source of strength, with light vehicle sales expected to increase throughout the year. Specialty metal manufacturers reported increases in new orders and order backlogs; but many expressed concern about the increased volatility of their customers' orders, citing heightened uncertainty over the regulatory and fiscal environment. Inventories at steel service centers were noted to be below desirable levels. A steel producer stated that the steel market is currently moving sideways, but sees signs that activity will pick up later in the year. Manufacturers of household goods also reported a pick-up in demand as the housing market continued to improve. However, a manufacturer of building materials noted that demand had slowed some for their product since the end of last year. Demand for heavy equipment also weakened, with lower coal prices contributing to less mining activity. Furthermore, contacts indicated that heavy equipment dealers were working through an excess inventory of construction equipment. The recent weakness is expected to be temporary, with demand projected to rebound in the second half of the year.\nBanking/finance\nCredit conditions continued to ease over the reporting period. Credit spreads and financial market volatility remained low and asset quality continued to improve. While underlying risk free rates have risen since the last reporting period, competition among lenders and investor willingness to accept more risk prevented an increase in private borrowing rates. Banking contacts reported moderate growth in business and consumer loan demand, with pricing relatively unchanged but some loosening of loan standards. Residential real estate lending, in particular, continued to benefit from historically low interest rates. Contacts noted banks are keeping few very mortgage originations on their balance sheet and relying on interest rate swaps to hedge against a potential rise in interest rates.\nPrices/costs\nCost pressures were moderately higher in January and February. Contacts noted some upward pressure on raw materials prices, particularly for lumber, drywall, steel, aluminum, and copper. Several also cited rising energy and transportation costs, pointing to higher gasoline and natural gas prices. Retailers reported modest wholesale price increases for a number of products and larger price increases for meat, fresh produce, and leather. Pass-through to downstream prices, however, was limited. Wage pressures remained moderate. Costs for healthcare and other benefits continued to increase; some contacts noted that they were passing along the higher costs to employees. More generally, higher compensation costs were not being passed on to customers.\nAgriculture\nSnow and rain continued to boost topsoil moisture levels, although depleted subsurface moisture remained a concern for farmers. Between engineering work on the Mississippi River, higher water levels, and low export demand for grain, congestion eased for barge activity. Corn and soybean stocks at grain elevators were even tighter than last year, as many farmers continued to store a share of their crops on hand in anticipation of higher profits closer to harvest this year. Input costs for planting have not changed substantially over the winter. Corn, wheat, milk, hog, and cattle prices dipped during the reporting period, while soybean prices moved a little higher. The prices for corn and soybeans in February become the benchmarks for potential compensation from crop revenue insurance plans; these prices were high enough to guarantee that insured crop operations will cover their production costs this year. Lower feed costs aided the cash flows of livestock operations. Lower corn prices also led to higher ethanol production.\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 6, 2013\nThe Eleventh District economy expanded at a moderate pace over the past six weeks. Reports on manufacturing activity were mixed. Retail sales were flat to up slightly, while automobile dealers noted a seasonal slowdown in sales. In the nonfinancial services sector, legal and accounting demand increased, and reports from staffing firms were mixed. Rail and cargo firms said activity weakened, but demand was above year-earlier levels. Airlines said passenger demand was flat to up since the last report. Housing demand remained strong and commercial real estate activity improved. Lenders noted flat to moderate growth in loan demand, and activity in the energy sector remained at high levels. Prices remained stable overall, and there were limited reports of wage pressure. Employment levels were steady to up.\nPrices\nMost responding firms noted stable prices, although some transportation service contacts said costs were up due to higher fuel prices. High tech contacts noted downward pressure on prices, particularly for memory devices.\nOil prices increased since the last report. The price of WTI averaged over $95 per barrel over the past six weeks. Natural gas prices remained depressed, while gasoline and diesel prices increased.\nLabor Market\nEmployment held steady or increased at most firms. Accounting firms said the pace of hiring picked up temporarily as firms entered the busy tax season, but that long-term hiring remained moderate. Legal firms said employment increased, and some noted robust hiring activity for experienced corporate, energy and intellectual property lawyers. One respondent in the staffing industry noted a tight market for skilled workers.\nWage pressures remained mostly subdued, although a few firms noted slight upward pressure on compensation for skilled workers.\nManufacturing\nConstruction-related manufacturers' reports were mixed. Lumber producers noted slow seasonal demand, while sales of cement and related products continued to increase due to solid residential building activity. Outlooks were generally more optimistic than the last report. Demand for fabricated metals rose sharply over the reporting period due to an increase in new private projects. Overall, primary metals producers noted slow seasonal demand, but one contact said they had recently been awarded a large project which would keep them busy for the next three months.\nHigh tech manufacturers said sales were flat to slightly down. Contacts reported that demand for mobile devices softened and sales of personal computers remained weak, but sales of tablets and ultrabooks were growing. The outlook is for sales to remain flat over the next several months but then to pick up slightly during the second half of the year.\nDemand for paper products was stable during the reporting period, but contacts continued to be cautious in their outlooks due to uncertainty regarding fiscal issues. Demand for food products was better than expected, and the outlook was positive among food contacts.\nReports from transportation manufacturing contacts were mixed. Sales of recreational vehicles declined, partly as a result of seasonal trends, and outlooks remained uncertain. Demand for aviation equipment increased because of new work from one large project, but the outlook was somewhat cautious because of uncertainties regarding fiscal issues.\nPetrochemicals producers said Gulf Coast chemical production was up compared with last year across most product categories. Contacts said refinery operating rates declined and margins increased during the reporting period, partly due to normal seasonal patterns.\nRetail Sales\nRetail sales were flat to up slightly since the last report. According to two national retailers, Texas continued to outperform the nation, albeit by a small margin. Inventories were at desired levels. Outlooks were optimistic, with contacts expecting steady improvement through the first quarter and low- to mid-single digit increases in 2013 over 2012.\nAutomobile dealers noted a seasonal slowdown in sales, but demand is up slightly year-over-year. Inventories were at adequate levels, although dealerships have started to build up inventories for the spring selling season. Contacts were optimistic in their outlooks; they expect demand to pick-up in the first quarter and 2013 to be a good year.\nNonfinancial Services\nReports from staffing firms were mixed. One contact noted sharp declines in demand for services across the board, while another reported stellar demand that broke direct- hiring records. Outlooks were cautious. Some contacts noted concern that client companies are hiring the absolute minimum to get by due to uncertainty about the Affordable Care Act.\nDemand for accounting services picked up since the last report, driven by audit and tax activity. Contacts expect demand to remain strong for the next few months. Legal firms reported flat to modest growth in demand with strength coming from real estate and energy-related services and weakness coming from a lack of litigation work. Outlooks were mostly optimistic.\nSeveral transportation service firms said demand weakened since the last report, but overall outlooks were improved. Intermodal cargo and air cargo volumes edged down since the last report, but contacts said they were level or above those from a year ago. Railroad contacts said cargo volumes were down, with coal continuing to be a weak spot. Petroleum shipments were up strongly, however and increases in volumes of lumber and wood remained healthy. Shipping companies said small- parcel cargo volumes grew strongly, propelled by retail trade. Airline contacts noted passenger demand was flat to slightly up. One contact said business travelers remained price sensitive and continued to buy advance- purchase discount fares. Outlooks were mixed.\nConstruction and Real Estate\nContacts in the single-family housing sector said new and existing home demand remained strong since the last report. Realtors noted that extremely low inventories were leading to price increases. Apartment demand growth continues to ease from last year, but contacts remain optimistic, expecting occupancies to remain high despite new construction.\nDemand for commercial space remained moderate since the last report. Contacts said real estate investment activity continues to improve, and most remain optimistic in their outlooks.\nFinancial Services\nFinancial institutions reported mixed loan demand. Larger institutions noted flat loan demand, while community banks reported moderate loan growth. Consumer lending activity increased modestly, while real estate loan demand was limited. Energy activity in the Eagle Ford shale continued to drive lending activity in San Antonio, Houston and the surrounding areas. Loan pricing remained very competitive. Loan quality continued to improve, and borrowers were paying off their loans ahead of schedule. Deposits and deposit rates were flat to slightly down. Outlooks were unchanged, but there is some optimism among contacts that loan demand will increase slightly in the near term.\nEnergy\nActivity remained at high levels, and respondents at energy-related service firms noted that the number of active drilling rigs seems to have bottomed out. Margins for services particularly pressure pumping remained tight, but contacts reported slight easing in pricing pressures. Contacts said expectations for average drilling activity in 2013 are being revised up, with most of the improvement expected to occur in the second half of the year.\nAgriculture\nThe drought was the main concern over the reporting period. Feed costs remained high and cattle supplies were tight because of the drought, while beef prices and demand both declined seasonally. Cotton prices rallied since the last report, and cotton exports were up slightly. In contrast, corn and grain sorghum prices declined modestly over the reporting period. Grain exports were lower than expected.\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 6, 2013\nThe Tenth District economy showed modest improvement in January and early February. Retail sales slowed during the beginning of the year, but vehicle sales were improved compared to a year ago. Manufacturing activity was weak among durable goods manufacturers, but non-durable manufacturers saw a slight improvement in activity, and high-tech services activity rose. Residential real estate activity and prices increased, but commercial real estate markets were flat. Bankers reported modest growth in loan demand and improvements in loan quality. Drought continued in the District and agriculture conditions deteriorated further. District energy activity expanded during the survey period. Wage pressures continued to be weak, but there was some evidence of upward pressures on prices.\nConsumer Spending\nOverall, consumer spending was weaker in late January and February, but sales were expected to improve over the next three months. Retail sales decreased since the last survey period, and retailers expected flat growth during the next three months. Store owners noted that low priced items and clothing sold well during the survey period, but sales of high end items remained slow. Auto sales were unchanged compared to the last survey period but continued to be higher than a year ago. Inventories increased, but dealers were satisfied with the overall levels. Automobile sales expectations improved for the near term. Hotel occupancy rates and tourist activity were unchanged and neither expected a change in activity in the coming months. Restaurant sales were also flat. Sales growth in the future was expected to increase moderately, but was constrained by higher food costs.\nManufacturing and Other Business Activity\nDistrict manufacturing activity weakened since the last survey period. Production activity declined at most durable goods manufacturers, but some improvements were seen in the non-durable goods sector, especially by chemical producers. Employment and new orders for exports fell compared to the previous survey period. Factory managers continued to be moderately optimistic about future activity. Production, new orders, and shipments were all expected to grow over the next few months. Manufacturers also reported that they expected employment levels to increase, but contacts continued to be concerned about tax and regulatory policies. High-tech service firms reported an increase in activity and expected strong growth during the next three months. Some contacts reported difficulty finding skilled engineers and developers. Transportation services activity was flat compared to the previous survey period and a year ago. Expectations for future transportation activity and sales were very strong, and contacts reported difficulty finding qualified workers, especially over-the-road drivers.\nReal Estate and Construction\nResidential real estate showed brisk improvement since the last survey period, but commercial real estate activity was flat. Strong residential real estate sales continued to push prices higher and to decrease the stock of residential inventory. Real estate contacts noted that mid- to low- priced homes continued to be the strongest sellers, and that the high-end market remained slow. Expectations for future housing activity were high due to traditional increases during the spring and summer months. Contacts also cited continued low borrowing rates and improved overall confidence in the economy as reasons for optimism. Sales at construction supply firms were flat, but respondents indicated that future activity is expected to be robust. New home starts were unchanged during the survey period, but are expected to increase over the next three months. Commercial real estate sales, prices, rents and vacancy rates were all unchanged since the last survey period. However, new construction was much improved compared to a year ago and contacts expected new construction to continue to improve in the coming months.\nBanking\nBankers generally reported steady or modest loan demand, improving loan quality, and little change in total deposits in the recent survey period. Most bankers described their overall loan demand as the same as in the last survey, with a few bankers reporting moderately stronger demand. Respondents, on average, reported stable demand for commercial and industrial loans, residential real estate loans, and consumer installment loans, with some strengthening in demand for commercial real estate loans. Interest rates on commercial and industrial loans continued to show moderate declines. Most bankers reported improved loan quality compared to a year ago, and they also expected the outlook for loan quality to either improve or remain about the same over the next six months. Credit standards remained largely unchanged in all loan categories and respondents reported total deposits as experiencing little change since last month.\nAgriculture\nAgricultural growing conditions deteriorated further with persistent drought. Most of the winter wheat crop was in fair to poor condition with low soil moisture. While still higher than year-ago levels, crop prices edged down since the last survey period with softer export demand and slower ethanol production. Fed cattle prices held relatively steady, though feeder cattle prices rose as continued herd liquidations trimmed already low cow inventories. Robust demand from both farmers and nonfarm investors pushed farmland values to new highs, particularly for irrigated land due to water scarcity stemming from drought. District bankers reported collateral requirements held steady and ample funds were available for farm loans at historically low interest rates.\nEnergy\nIn the energy sector, activity in the district improved slightly during the survey period and contacts expected further moderate improvement in the coming months. The number of active drilling rigs for both oil and natural gas were flat during the beginning of 2013, but began to edge higher in February. Energy contacts expected oil prices to remain at current levels during the next three months as a result of balanced supply and demand conditions. Natural gas prices were expected to decrease slightly over the next three months due to weaker demand in the spring and healthy supplies in storage. Wyoming coal output continued to fall during January, which some contacts attributed to more demand shifting to natural gas, with gas prices remaining low.\nWages and Prices\nWage pressures continued to be weak during the survey period, but there was some upward pressure on prices. Firms continued to report changes in health care policy and fiscal uncertainty as reasons for delayed hiring. However, contacts in high-tech services, transportation services and auto dealerships noted they wished to hire, but are unable to find qualified skilled labor. Organizations that serve low- and moderate-income households also noted some improvement in job availability. Prices for raw materials at manufacturing firms continued to move higher, and more manufacturers plan to pass these costs through to finished goods prices over the next six months. Builders and construction supply firms both responded that input prices for construction have increased and that prices are expected to continue to rise over the next three months. Retail prices have also increased recently and retailers expect to raise prices further during the coming months. Increased food costs have pushed restaurant menu prices up recently and restaurant owners expect these costs to remain elevated. Transportation services contacts also reported an increase in input costs both in the current period and over 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 6, 2013\nPrepared at the Federal Reserve Bank of Kansas City and based on information collected on or before February 22, 2013. 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 generally expanded at a modest to moderate pace since the previous Beige Book. Five Districts reported that economic growth was moderate in January and early February, and five Districts reported that activity expanded at a modest pace. The Boston District said the economy continued to expand slowly, and the Chicago District reported that economic activity grew at a slow pace.\nMost Districts reported expansion in consumer spending, although retail sales slowed in several Districts. Automobile sales were strong or solid most Districts, and tourism strengthened in a number of Districts. The demand for services was generally positive across Districts, most notably for technology and logistics firms. Transportation services activity was mixed among Districts, although the majority of contacts were optimistic about future activity. Manufacturing modestly improved in most regions, with several Districts reporting strong demand from the auto, food, and residential construction industries. Residential real estate markets strengthened in nearly all Districts and home prices rose amid falling inventories across much of the country. Commercial real estate activity was mixed or improved slightly in most Districts, and financing for commercial development remained widely available. Overall loan demand was stable or slightly higher across nearly all Districts, and several bankers noted stiff competition for qualified borrowers. Agricultural conditions varied across the country, with some areas continuing to suffer from drought while others reported considerable precipitation and improved soil moisture levels. Districts reporting on energy activity indicated modest expansions in crude oil and natural gas exploration, while mining activity slowed.\nPrice pressures remained modest, with the exception of increases in prices for certain raw materials and slightly higher retail prices in several Districts. Even with some input costs rising, most District contacts did not plan to increase selling prices. The majority of Districts reported modest improvements in labor market conditions, although hiring plans were limited in several Districts. Wage pressures were mostly limited, but some contacts reported upward pressure for skilled positions in certain industries due to worker shortages.\nConsumer Spending and Tourism\nConsumer spending expanded in most Districts, but several Districts reported mixed or lower activity among non-auto retailers. Sales strengthened in the Philadelphia and Richmond Districts, and retail sales were higher than a year ago in the Boston, St. Louis, and Minneapolis Districts. San Francisco reported modest growth in sales, Dallas noted flat to slightly higher sales activity, and New York said retail sales were strong in January but slowed in February primarily due to weather. The Chicago District said consumer spending increased at a slower rate, while Cleveland and Atlanta noted mixed sales activity. Kansas City said retail sales decreased since the previous survey period and were expected to remain flat in the months ahead. Many District contacts commented on the expired payroll tax holiday and the Affordable Care Act as having restrained sales growth. Many Districts noted rising gasoline prices and fiscal policy as having a negative effect on consumer sales, and contacts in the Boston, New York, and Minneapolis Districts said severe weather depressed sales somewhat. Contacts in several Districts reported a shift in sales activity from local malls to the Internet and indicated deep discounting among retailers was becoming increasingly common. San Francisco noted somewhat soft sales for traditional retail grocers, whose competition has increased from discount and online retailers.\nMost Districts reporting on auto sales noted solid or strong increases in sales, with the exception of mixed activity in the St. Louis District and a seasonal slowdown in the Dallas District. Cleveland auto dealers credited milder-than-normal weather and pent-up demand for the robust sales growth. New automobile sales remained solid in the San Francisco District, driven by demand to replace older vehicles and low financing rates. Chicago and Minneapolis contacts reported an increase in activity for auto service departments due to inclement weather. Auto dealers in the Philadelphia District attributed the strong sales in New Jersey to the continued effect of Hurricane Sandy. The New York District reported wholesale and retail auto credit conditions as positive, with one contact noting increasingly aggressive lenders. Most Districts' contacts were cautiously optimistic about future auto sales.\nTourism remained solid or advanced further in most Districts, spurred by increased snowfall during the winter ski season. Travel was reported as robust in the New York District, particularly in Manhattan, as well as at hotels in the outer boroughs that are still occupied by displaced residents, utility workers, insurance adjusters, and others due to Hurricane Sandy. A ski resort in Minnesota reported that lift ticket sales and lodging were well ahead of last year, although not close to historical records. Boston and Atlanta noted a strong increase in international visitors, especially from Europe. Philadelphia said tourist activity was solid in the Poconos' ski resorts, but some revenues were lost when schools cancelled winter break to make up for missed days during Hurricane Sandy. Contacts in the Richmond District mentioned increased activity along the outer banks of North Carolina, and San Francisco reported solid growth of visitor counts and occupancy rates in Hawaii.\nNonfinancial Services\nNonfinancial services activity continued to grow at a modest pace since the previous Beige Book. St. Louis and San Francisco reported strong demand for technology, logistics, marketing and legal services. Logistics services were also an area of growth in the Philadelphia District, but growth was modest due to firms' concerns about possible federal spending cuts. High-tech services increased in the Kansas City District, but growth was lackluster in the Boston District due in part to weak demand from Europe and Japan. Staffing services firms in the Boston and New York Districts saw improved conditions, but activity was mixed in the Dallas District. Boston, New York, Philadelphia, and Kansas City services contacts continued to be optimistic about growth in the coming months and in the second half of 2013.\nTransportation services activity was mixed. Shipping volume in the Cleveland District met or exceeded expectations, with increases driven by the energy sector, rerouting of container traffic, and residual effects from Hurricane Sandy. Transportation activity also increased in the Atlanta District, and port contacts continued to invest in infrastructure and equipment improvements. Kansas City transportation services activity was flat compared to the previous survey period. Dallas reported weakened transportation demand, with decreases in intermodal cargo, air cargo, and coal shipments, but contacts noted that petroleum and petroleum-product shipments increased during the survey period. Trucking firms in the Cleveland and Kansas City Districts had trouble finding experienced drivers, and a Cleveland contact said there may be a driver shortage in the summer. Expectations for future transportation activity were generally positive in most Districts.\nManufacturing\nManufacturing conditions improved in nearly all Districts, but the increases were generally modest. Boston, New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis and San Francisco reported some increases in factory activity, but the majority noted that the pace of recovery was slow. Conditions were mixed in the Philadelphia and Dallas Districts, and manufacturing activity in the Kansas City District weakened. Contacts in the Cleveland, Richmond, Chicago, and Kansas City Districts cited concerns over government regulation and fiscal uncertainty as a reason for slow growth.\nAuto production increased in the Cleveland, Chicago, and St. Louis Districts, and a Minneapolis contact noted that production increased faster than expected, spurring plans to renovate their plant. Philadelphia and Dallas reported that food manufacturing activity also exceeded expectations during the current period. Manufacturing related to residential construction was a source of strength for many Districts, including wood product manufacturing in the St. Louis and San Francisco Districts; household goods manufacturing in the Chicago District; cement manufacturing in the Dallas District; and general housing construction product manufacturing in the Philadelphia, Cleveland, and Boston Districts. Primary and fabricated metal manufacturers in the Philadelphia District experienced a slowdown in activity, and a structural steel manufacturer in the Minneapolis District planned to close. Durable manufacturing was weak in the Kansas City District, but non-durables\u00e2\u20ac\u201cespecially chemical manufacturing\u00e2\u20ac\u201cimproved. Expectations for future factory activity were generally more optimistic compared with the previous survey. Contacts in the Boston, New York, Philadelphia, Cleveland, Atlanta, St. Louis, Kansas City, and Dallas Districts expected activity to improve over the next few months across a wide variety of industries.\nReal Estate and Construction\nResidential real estate activity continued to strengthen in most Districts, although the pace of growth varied. Contacts in the Boston, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Districts noted strong growth in home sales, while New York and Chicago reported slight improvements. A realtor in the Richmond District indicated that low interest rates continued to motivate home buyers, and potential buyers in the Philadelphia District expressed greater confidence, including entry-level purchasers who had been increasingly opting to rent since mid-summer. Contacts in the Cleveland and Atlanta Districts said sales were higher than a year ago. Home construction increased in most Districts, with the exception of the Kansas City District where it was reported as unchanged. Several Districts noted ongoing strength in multifamily construction, although contacts in the Atlanta and Cleveland Districts mentioned continued financing difficulties for builders. Home prices edged higher in the majority of Districts, with lower inventories generally cited as the primary cause. Richmond and Atlanta Realtors observed multiple offers on many homes. Philadelphia real estate contacts continued to report low-end home prices as firm or rising slightly, while high-end home prices were still falling. Inventories declined in nearly all Districts, with Realtors in several Districts concerned about the impact on future sales volume.\nOverall commercial real estate conditions were mixed or slightly improved in most Districts. Commercial real estate activity grew modestly in the Philadelphia, Richmond, Atlanta, and St. Louis Districts, and activity in the San Francisco District expanded. Boston and New York reported mixed activity, while the Kansas City and Dallas Districts noted few changes. Although some modest growth was reported in the Chicago District, the level of activity remained weak, and commercial contractors in the Cleveland District noted a slowing in activity, particularly for defense-related projects. Office vacancy rates declined across most of the New York District, and industrial vacancy rates in upstate New York posted their lowest levels in three years. Richmond contacts described the supply of Class A office space as tight, which they attributed to the absence of new construction. Commercial development and leasing activity increased in the San Francisco Bay and Seattle markets, fueled by sustained growth in the technology sector. Commercial construction improved by varying degrees in the Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City Districts. Respondents in the Boston District expressed concerns about overbuilding in Boston's apartment market and office sector, while Philadelphia contacts noted an increase in energy-related projects and repair work resulting from Hurricane Sandy. Cleveland, Atlanta, and Chicago reported high demand for manufacturing space, with some Chicago manufacturers leasing temporary space to accommodate increased demand. Credit for commercial development and transactions was widely available, although Boston noted a large decline in loan demand and contacts in the Cleveland District said financing difficulties continued.\nBanking and Finance\nLoan demand was steady or increased across all the Districts that reported. Residential real estate loan demand was strong in the Philadelphia, Cleveland, Richmond, Atlanta and Chicago Districts, mainly driven by refinances due to continued low interest rates. Demand for commercial real estate loans was also strong in the Cleveland, Richmond, and Kansas City Districts. Auto lending increased in the Cleveland and Atlanta Districts, and Philadelphia and Dallas cited growth in energy-related loan demand. San Francisco continued to report a slowdown in venture capital and private equity activity, but contacts noted an increase in the number of private technology companies moving toward an IPO.\nAsset quality improved at banks in the Philadelphia, Kansas City and San Francisco Districts. Philadelphia, Richmond, Atlanta and San Francisco lenders reported high competition for qualified borrowers. Borrowing standards were reported to have been loosened in some Districts. Atlanta contacts noted additional loan capacity, but continued to be cautious with loan activity. Cleveland bankers considered cost cutting measures, including layoffs, due to shrinking net interest margins. New York contacts indicated a decrease in loan spreads for all loan categories, particularly residential mortgages, and bankers in the Chicago District said that very few mortgage originations were being kept on their balance sheets and that interest rate swaps were being utilized to hedge against a potential rise in interest rates. Bankers were generally optimistic about future activity in the Philadelphia and Dallas Districts for the near term, but Atlanta bankers expected activity to ease toward the middle of the year.\nAgriculture and Natural Resources\nAgricultural conditions across the country varied with weather patterns. Persistent drought contributed to poor crop and pasture conditions in the Kansas City and Dallas Districts while recent precipitation improved soil moisture levels in the Atlanta and Chicago Districts. Richmond, St. Louis, and Minneapolis reported that elevated crop prices supported stronger farm incomes. Kansas City and Dallas indicated that drought-related herd reductions pushed cattle supplies to historical lows, and Chicago, Kansas City and Dallas reported weaker agricultural export activity. Richmond, Atlanta, Kansas City, and San Francisco noted additional farmland value gains due to robust demand from both farmers and nonfarm investors. Chicago reported that congestion issues in barge traffic eased on the Mississippi River.\nEnergy activity remained mixed with modest expansions in crude oil and natural gas exploration but slower mining activity. Drilling activity for crude oil and natural gas expanded further in the Cleveland, Minneapolis, and Kansas City Districts and was steady in the Richmond and Dallas Districts. Future drilling activity was expected to rise in the Cleveland, Kansas City, and Dallas Districts, and Atlanta noted capital spending at Gulf of Mexico ports was expected to increase export capacity for oil refineries. In contrast, coal production fell in the Cleveland, Richmond, St. Louis, and Kansas City Districts, and was expected to decline further with a shift in demand toward low-priced natural gas and stricter environmental regulations. Minneapolis reported a slowdown in metal mining activity, and some facilities planned to further reduce production later in the year. Ethanol production declined in the Minneapolis and Kansas City Districts but edged up in the Chicago District.\nEmployment, Wages, and Prices\nLabor market conditions generally improved, although several Districts reported restrained hiring. Many Districts reported a rise in temporary employees, while staffing contacts in the Boston District noted an increase in the placement of permanent and temporary-to- permanent workers. Auto dealers in the Cleveland and Kansas City Districts mentioned plans to hire more workers, and Dallas noted robust hiring activity for experienced corporate, energy, and intellectual property lawyers. Positions in the manufacturing industry increased in the New York, Richmond, and Chicago Districts, although several Chicago manufacturers expressed plans to either invest in more productive capital or adjust the hours of existing employees prior to hiring new workers. St. Louis noted weakness in healthcare services and information technology positions, and Cleveland reported reduced hiring plans from commercial builders and coal operators. Employers in several Districts cited the unknown effects of the Affordable Care Actas reasons for planned layoffs and reluctance to hire more staff. Wage pressures were minimal in most Districts, but contacts reported some upward pressure for several skilled positions as a result of higher demand. Some Districts indicated a shortage of skilled workers such as engineers, truck drivers, software developers, and technical jobs, and Atlanta noted a lack of compliance specialists due to heavier regulations in the healthcare industry.\nThe majority of Districts reported that price pressures remained modest, but some input costs continued to rise. Cleveland and San Francisco noted an increase in prices for petroleum- based products such as gasoline, fertilizer and certain plastics, and contacts in the Chicago, Minneapolis, and Dallas Districts commented on increased transportation and fuel costs. Builders in the Philadelphia, Cleveland, Chicago, Kansas City, and San Francisco Districts cited an increase in construction material costs, particularly for lumber, drywall, and steel. Retail prices were steady or slightly rising in most Districts, although Richmond noted some slowing since the last report. Chicago retailers reported modest wholesale price increases for a number of products, with larger increases for meat, fresh produce, and leather. Retail grocers in the San Francisco District reported relatively stable prices overall, but weather-related factors boosted fresh produce prices. Increased food costs pushed up restaurant menu prices in the Kansas City District, and restaurant owners expect these costs to remain elevated. Atlanta service industry contacts noted that stronger sales were likely to put upward pressure on prices over the next year. Plans to increase selling prices were limited among most District contacts.\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 6, 2013\nThe Ninth District economy showed signs of moderate growth. Increased activity was noted in consumer spending, tourism, professional services and manufacturing. Construction and real estate posted strong growth, while agricultural producers were in mostly strong condition. Activity in the energy sector was mixed, while mining slowed. Labor markets tightened modestly, and wage increases were moderate. Prices were generally stable with some exceptions noted.\nConsumer Spending and Tourism\nConsumer spending posted modest gains. Same-store sales at a Minnesota-based retailer increased 3 percent in January compared with a year ago. A Minnesota-based restaurant and bar chain reported 2 percent sales gains during January and early February compared with last year. A Minneapolis area mall manager noted that traffic was slower in January due to the cold weather, but winter apparel and jewelry sales have been strong. Store owners at a South Dakota mall noted that recent business appears to be doing well. An increase in inclement winter weather boosted business at auto body repair shops.\nImproved snow cover spurred winter tourism activity since the last report. Snowmobiling and cross country skiing picked up over the past few weeks in northwestern Wisconsin, according to an official; the last weekend in February brought up to 30,000 people to the region for the American Birkebeiner cross country ski race. A Minnesota ski resort reported that lift ticket sales and lodging were \"well ahead of last year, but not breaking any records.\"\nConstruction and Real Estate\nCommercial construction activity increased at a robust pace since the last report. A real estate forecasting firm expects 600,000 square feet of industrial construction in the Minneapolis-St. Paul area in 2013 compared with 200,000 square feet in 2012. Some of that construction is speculative. Residential construction increased rapidly from a year ago. The value of January residential building permits in Billings, Mont., more than doubled from last year, and the value of January permits in Sioux Falls, S.D., was up over 400 percent from a year ago, mainly due to apartment construction. In the Minneapolis- St. Paul area, January residential permits were up almost 70 percent compared with January 2012.\nCommercial real estate markets continued to strengthen. A major commercial real estate firm forecast that Minneapolis-St. Paul area office vacancy rates will drop to 15.5 percent by the end of 2013 compared with 17.6 percent at the end of 2012. The same firm forecast industrial vacancy rates to drop to 7.6 percent from 8.5 percent. Residential real estate market activity increased at a strong pace. Home sales in January were up 11 percent from the same period a year ago in the Minneapolis-St. Paul area; the inventory of homes for sale was down 32 percent, and median sale prices rose 14 percent. A Minnesota Realtor commented, \"Tight housing market with more buyers looking than sellers selling.\" In the Sioux Falls area, January home sales were up 88 percent, inventory was down 21 percent and the median sale price increased 4 percent relative to a year earlier. Sales of vacation homes in northern Wisconsin posted strong gains in January.\nServices\nActivity at professional business services firms increased at a modest pace since the last report. Several financial planners noted an increase in business due to clients gaining employment. Some architects noted an increase in bidding activity. A freight trucking company noted a recent slight uptick in traffic primarily due to increased e-commerce traffic. However, mortgage refinancing brokers reported a decrease in activity.\nManufacturing\nDistrict manufacturers saw modest growth since the last report. A January survey of purchasing managers by Creighton University (Omaha, Neb.) showed that manufacturing activity increased in Minnesota and the Dakotas. The rate of increase was slower in Minnesota from the previous month, due mostly to weaker nondurable goods production. A vehicle plant in North Dakota saw faster-than-expected production increases, and it plans to renovate its facilities. Another vehicle maker in Minnesota also reported increased sales, but weakened its outlook for the coming year slightly. However, a structural steel producer in Montana is closing.\nEnergy and Mining\nActivity in the energy sector was mixed, while mining slowed. Oil and gas exploration increased in North Dakota and decreased in Montana since the last report, while production remained at historically high levels. Developers are considering building a large oilfield waste facility in western North Dakota. A Minnesota electricity producer recently closed one coal-fired plant and converted another to natural gas to meet expected future pollution control rules; the utility has also built more wind turbines in North Dakota. Tight corn supplies put pressure on ethanol producers; two plants in Minnesota and one in North Dakota have idled in the last year. Two potential new fracking sandmines were proposed in southeastern Minnesota. Minnesota iron ore production in 2012 exceeded levels from the previous year. However, production at the end of the year came in lower than earlier months, and some facilities are planning to slow production in 2013.\nAgriculture\nAgricultural producers in the District remained in mostly strong condition. Despite the drought, the USDA reported that 2012 corn production broke records in Minnesota and North Dakota. South Dakota corn and soybean production were down from the previous year, but came in higher than earlier estimates. The Minnesota sugar beet and North Dakota soybean crops were the highest on record. Prices received by farmers in January increased from a year earlier for wheat, corn, soybeans, cattle, milk, eggs and poultry; prices for hogs, turkey and dry beans were below their year-earlier levels.\nEmployment, Wages and Prices\nLabor markets tightened modestly since the last report. Representatives from two technology companies in Minnesota described the labor market for high-tech workers as \"at full employment\" with fewer qualified applicants applying for open positions. A trucking broker recently announced plans to expand in Minnesota and add 500 more staff over the next several years. A regional airline announced plans to relocate its headquarters to Minnesota, which will bring a few hundred jobs to the state. In North Dakota, an insurance company recently announced that it expects to create 200 new jobs. In contrast, a home mortgage operation in Minnesota will close this spring, affecting over 200 employees. A medical device company recently announced plans to lay off a substantial number of workers in Minnesota. In Montana, the closure of two food distribution warehouses will lead to over 100 job losses.\nOverall wage increases remained moderate. According to a survey of business activity in the Fargo, N.D., area, 72 percent of respondents expect a slight to moderate increase in compensation, while 20 percent expect no change in compensation. Labor unrest was noted in Minnesota, where a union representing 6,000 janitors and security officers was poised to strike at the end of February in response to a lack of progress on contract negations.\nPrices were generally stable with some exceptions noted. Mid-February Minnesota gasoline prices were up almost 80 cents per gallon compared to mid-January. Contacts noted that some freight shipping costs recently increased.\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 6, 2013\nAggregate business activity in the Third District has maintained the modest pace of growth that was evident during the previous Beige Book period. In particular, general services and commercial real estate leasing continued to expand at modest rates. Activity in staffing services, transportation services, and residential construction appear to have accelerated somewhat to a modest rate of growth. Sales of new and used autos maintained a moderate rate of growth--joined by general retail sales that grew a bit faster than last period and by residential real estate sales that grew a bit slower. The manufacturing sector reversed course again, citing slight declines in overall demand. Lending volumes at Third District banks continued to grow slightly, and credit quality continued to improve. Ski resorts are enjoying a good season overall, while Atlantic City casino revenues continue to decline. General price levels, as well as wages and home prices, were reported to have increased slightly overall--similar to the last Beige Book period.\nThe overall outlook for modest growth remains the same as those views expressed in the last Beige Book. Ongoing uncertainty over fiscal issues has postponed many business decisions. Contacts reported a fundamental optimism in the economy and described new signs of emerging growth; however, the ongoing uncertainty over fiscal issues has been blamed for continued weak consumer confidence and reluctance of businesses to make needed investments in plant, equipment, and labor.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported that orders and shipments dipped slightly. Some of the current weakness was attributed to greater volatility in production swings associated with overall slow growth, a high level of uncertainty, and a reluctance to build inventories. As one contact said, \"Who can plan?\" Makers of food products, lumber and wood products, industrial machinery, electronic equipment, and instruments have reported gains since the last Beige Book. Lower activity was reported by the makers of primary metals and fabricated metal products. Contacts have attributed some growth to rising demand from sectors related to autos, housing, Marcellus shale, and other energy production.\nThird District manufacturers expressed slightly more optimism that business conditions will improve over the next six months and their optimism emerged more broadly across all sectors since the last Beige Book. Firms have also further raised their overall expectations of future hiring and their plans for capital spending since the last Beige Book.\nRetail\nThird District retailers reported a faster pace of sales in January than during the recent holiday period and cited continued gains in February for moderate growth overall. The stronger sales were evident throughout the region and across a variety of malls and outlet centers, regardless of the level of the stores' quality. Contacts cited a return of cold weather and heavy promotions as prompting double-digit apparel sales of winter wear. Three other factors cited as contributing to the stronger growth were that sales may have borrowed from the soft ending to the holiday season, gift cards were more prevalent, and the comparison period one year ago had weak sales. Reports on leasing activity noted that retail tenants are more confident and taking longer lease terms, leading to net positive absorption, greater occupancy rates, and more landlord pricing power.\nAuto dealers started the year as they finished last year--with a moderate pace of sales, continuing a run of steady growth that began a full year earlier. Sales in New Jersey are still stronger, a likely remnant of Hurricane Sandy's impact. While the outlook among dealers remained positive, dealers continued to maintain lean inventories and lean staffing levels. They report that more hiring will occur if the recovery is sustained after more of the fiscal uncertainties are resolved.\nFinance\nOverall, loan volumes have continued to grow at a slight pace across Third District financial firms since the previous Beige Book. Most loan categories have grown little or not at all, with somewhat more activity generated for small business lending and home mortgages, especially refinancings. Consumer lending is relatively flat. In areas with Marcellus shale gas, several banks have described customers paying down loans with royalty money and avoiding further debt by paying cash. Beyond the gas fields, energy projects are attracting substantial investment interest and loan opportunities for larger banks. The majority of bank indicates little change in credit standards and slow, steady gains in quality; however, a small, but growing number expressed concern about competitors' standards. Financial institutions are generally optimistic about future growth, although most expect mergers and acquisitions to reduce the number of small community banks over the next few years.\nReal Estate and Construction\nHomebuilders reported contract activity at or near plan for January with a pickup in traffic for February. Year-over-year growth rates were strong off of low levels and builders attributed part of their growth to capturing greater market share. Prospects have greater confidence and are more prepared to buy, including entry-level purchasers that had been increasingly opting to rent since mid-summer. Residential brokers reported moderate year-over-year sales growth in January for a second consecutive year; mild weather helped this year, although January 2012 was also noted for its extremely warm temperatures and lack of snow. As with new home construction, existing home sales are growing from a low base. Builders and brokers are optimistic for sustained growth through 2013. According to one broker, \"Better times are coming.\"\nNonresidential real estate contacts reported continued modest growth in overall leasing activity and continued slight growth in construction. Contacts report that construction and repair work have grown, prospect activity has gained momentum and resolve, and money has been flowing more freely for investments. Current activity and prospects are emerging from recently quiet sectors, including some land development projects and retail, in particular, large warehouse facilities for national retailers. Activity is heating up in energy-related projects, with some repair work resulting from Hurricane Sandy. Contacts were decidedly more upbeat about future prospects, stating that the trends \"feel sustainable.\"\nServices\nThird District service-sector firms have maintained a modest pace of growth since the last Beige Book, according to contacts in various sectors. Tourist activity has shifted to the Poconos' ski resorts, which are enjoying generous snowfalls and accommodating temperatures that already promise an extended season. However, contacts blame Hurricane Sandy for creating yet another economic casualty--the Poconos' peak ski week. Many school districts in New Jersey and New York canceled their winter break during the week of Presidents' Day to make up school days lost to the superstorm--causing many families to skip their traditional family ski vacation in the Poconos. Atlantic City casino revenues continued to struggle through January, prompting a recently-opened casino to file for bankruptcy protection while it continues to operate.\nIn other sectors, work orders for temporary help have grown busier and busier since the start of the year at an area staffing firm; a logistics firm reported strong overall growth. A large consumer-oriented firm cited a good start to the current year. Firms with defense-related work and entities dependent on federal money for operations, including higher education, expressed a wait-and-see attitude to the most recent fiscal uncertainty. Overall, service-sector firms expressed confidence in their expectations for growth in the near future.\nPrices and Wages\nOverall, price levels continued to increase slightly, similar to the previous Beige Book. Cost factors among manufacturing firms moderated a little, while the prices they received fell slightly. Tight auto inventories maintain a price environment that slightly favors auto dealers over their customers. Homebuilders continued to note higher prices for lumber, drywall, and other manufactured inputs. Some slight wage pressure is appearing for contractors, which may be related to increasing construction activity, but may also be due to repair crews being drawn to the Jersey Shore by short-term, higher wage contracts. Real estate contacts continued to report that low-end house prices are firm or rising slightly, while high-end home prices are still falling in most markets. Contacts from most sectors continued to report that wages rose only a little, if at all. Health insurance costs are mixed, ranging from very high increases to no change.\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 16, 2013\nEconomic activity in the First District continues to grow modestly, according to business contacts. Most retailers and the tourism industry cite year-over-year increases in demand. Aside from some firms with industry-specific or customer-specific issues, First District manufacturers also report growth in sales from a year ago. Similarly, consulting and advertising firms are ahead of a year earlier, although a couple of companies with fast growth over the last few years have recently seen business level off. Commercial real estate contacts are somewhat downbeat; office leasing is slow and demand for commercial real estate loans and pipelines for commercial construction activity are weaker than in recent reports. Residential real estate markets continue to recover, with both sales and prices in November above year-earlier levels. In all sectors, most respondents are holding their selling prices level. Contacts say their hiring depends on demand growth; as a result, most firms are doing little to no hiring, but some firms are expanding headcounts substantially. Notwithstanding ongoing concerns with uncertainty, contacts generally expect continued modest growth in 2013.\nRetail and Tourism\nOne contact reports a small single-digit year-over-year decrease in December sales while the others cite increases ranging from near zero to 7 percent. Demand remains strong for clothing, shoes, and furniture. Responding retail firms expect to hold their selling prices steady based on an absence of price increases at the wholesale level. These contacts anticipate that 2013 will be characterized by low single-digit growth in sales.\nThe tourism industry ended 2012:Q4 on a high note, establishing new records for hotel room occupancy rates and revenues. Strong domestic and international corporate business travel and international leisure travel account for much of this performance. Restaurants saw less spending on corporate entertaining and end-of-year holiday events. Advance hotel booking data indicate that the strong trend in business travel will continue, leading to an expectation that occupancy rates will hold level in 2013 compared to the high benchmark established in 2012.\nManufacturing and Related Services\nManufacturing in New England continues to expand at a modest pace according to First District contacts. Of 11 responding firms, seven report higher sales in the fourth quarter than in the same period a year earlier, although in some cases the gains are quite modest. Two contacts in the semiconductor industry continue to report a cyclical downturn in their business. A contact in aerospace says that sales of parts for new airplanes are extremely strong but depressed conditions in the aftermarket have spread from the United States to Europe. A contact in the chemical industry says that while sales in pounds fell, the pricing picture improved so much that sales in dollars are up. Sales of frozen fish continue to be weak. The \"fiscal cliff\" was an explicit problem for a computer firm that sells almost exclusively to Defense Department customers who are worried about sequestration.\nOnly five of the 11 respondents report significant hiring. Firms with rapidly growing sales are hiring, but firms in slow-growth industries are not. A biotech firm with 3,500 U.S. employees plans to add another 1,000 over the coming year, about half domestically. The computer supplier with customers dependent on defense spending cut its staffing by 10 percent to 15 percent over the period from June to September. A contact in the chemical industry reports both good and bad news about the labor market. On one hand, he says that for the first time since the crisis began, workers are voluntarily leaving to take new jobs. The bad news is that he is having great difficulty filling low-skill jobs. He says that drug test fails are much more common than in the past; in addition, a large number of workers quit almost immediately after taking the job. The contact speculates that both of these hiring problems may result from behaviors developed during extended periods of unemployment.\nAs with employment, capital spending is generally slow except for firms in growth industries, with four firms reporting increases and four reporting decreases in spending. One diversified manufacturer of parts for the aerospace and auto industries reports that business units within the firm failed to spend their planned capex allocations in 2012.\nThe outlook continues to be uncertain for most of our contacts. Only one firm, the defense supplier, cites the fiscal cliff as a serious problem and even they expect some resolution in the new year.\nSelected Business Services\nConsulting and advertising contacts in the First District report generally positive results for the fourth quarter. Several contacts report modest growth, while two contacts--whose firms have experienced rapid growth over the past two years--experienced a leveling off. Marketing and advertising contacts report a slight uptick during the fourth quarter and are confident that business conditions have finally stabilized after the recession, which hit them with a lag. Two contacts with exposure to health care note robust demand for services related to health-care IT implementation and drug-impacts research. At the same time, firms focused on the pharmaceutical industry have experienced slow growth, although one contact expects that pharmaceuticals will start to emerge from its rough spell in 2013. Economic consulting remains strong because of high levels of complex high-stakes litigation; management and strategy consulting contacts report flat business conditions as clients uncertain about fiscal policy and the macroeconomy remain reluctant to invest in consulting services.\nContacts report little to no cost increases and are keeping their prices relatively unchanged. One exception is an advertising firm where health insurance costs rose 12 percent in 2012. Some contacts report no hiring, consistent with a lack of demand growth, while others report net hiring in the low single digits. Plans for future hiring are modest, with contacts generally expecting zero to low single-digit workforce increases in 2013.\nMost contacts expect growth to pick up in 2013, with the exception of a government contractor, who is too uncertain about the future of fiscal policy to offer any forecast. No one expects another recession and overall they express a sense of cautious optimism.\nCommercial Real Estate\nAcross most of the First District, leasing activity in the final weeks of 2012 is described as very light, driven by a combination of seasonal factors and uncertainty stemming from fiscal cliff negotiations. However, a Portland contact notes an uptick in leasing activity in that city in December, especially in the warehouse sector, although office fundamentals remain flat amid slow employment growth. Boston's warehouse market improved as well, while the city's office vacancy rate remains high--also attributed to slow employment growth--and the trend toward office downsizing persists. In Hartford, the fate of large downtown properties that experienced foreclosure in 2012 remains uncertain; a key question is whether current owners will reinvest in the properties or resell them as is. Demand for commercial real estate loans in the region appears to be softening, while the pipeline of new construction projects in Boston has diminished significantly since the last report.\nMost contacts in the region are cautiously optimistic that commercial real estate fundamentals will improve in 2013. However, growth expectations remain very modest and some contacts note downside risks to growth from pending fiscal contraction and ongoing political uncertainty, even taking into account the recently-enacted federal tax deal.\nResidential Real Estate\nAcross the First District, contacts report strong year-over-year growth in sales for November in both single-family home and condominium markets. Similar to previous reports, contacts attribute continued growth in sales to low interest rates, affordable prices, and rising rents. Contacts say that buyers have become more confident about purchasing a home as economic conditions continue to improve. As buyer activity increased, inventory levels fell throughout the region. Contacts argue that declining inventory levels have now translated into higher prices in most areas. The median sale price of homes rose year-over-year across the First District, with some states experiencing significant increases.\nIn terms of outlooks for the coming year, contacts continue to feel positive about improvements in home values and strong sales. Significant year-over-year growth in sales is expected for the most of 2013, although a warm winter last year coupled with a potentially harsher winter this year may soften year-over-year growth in the coming months. In Massachusetts and the Greater Boston area, contacts express concern that dwindling inventory levels will discourage buyers and even potentially deter some sellers who would like to purchase a replacement home before listing their current one; at the same time, they express worry about prices appreciating too quickly, but say they are not concerned with ongoing moderate price appreciation. Notwithstanding these potential concerns, contacts across the region are generally very optimistic about the strength of the housing market in 2013.\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 16, 2013\nThe economy of the Eighth District has grown at a modest pace since our previous report. Recent reports of planned activity from service firms have been positive. In contrast, reports of planned activity from manufacturing firms have been negative on net. Residential real estate market conditions have continued to improve, and commercial and industrial real estate conditions have also improved in some areas. Total lending at a sample of small and mid-sized District banks decreased slightly from early September to mid-December. Agricultural conditions in the District have been mixed since our previous report.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been negative on net since our previous report. Several manufacturing firms reported plans to lay off workers and close plants in the Eighth District, while fewer manufacturing firms reported plans to hire new workers or expand operations. Firms in HVAC equipment, electric components, food, and automobile parts manufacturing reported plans to lay off workers. In contrast, firms that manufacture small arms and medical devices reported plans to hire new workers and expand operations.\nReports of planned activity in the District's service sector have been positive since our previous report. Firms in electric power generation, food services, business support services, and information services announced plans to hire new employees and construct new facilities. In contrast, firms in medical services and in financial services reported plans to lay off workers. Retail contacts in Louisville reported the opening of several new facilities, and an auto dealer group is expanding operations in the Memphis area. Retailers in Memphis reported increased sales on an annual basis, and auto dealers in Little Rock and Louisville also reported increased sales for the year.\nReal Estate and Construction\nHome sales increased throughout most of the Eighth District on a year-over-year basis. Compared with the same period in 2011, November 2012 year-to-date home sales were up 16 percent in Louisville, 5 percent in Little Rock, 13 percent in Memphis, and 19 percent in St. Louis. Residential construction increased in the majority of the District. November 2012 year-to-date single-family housing permits increased in the majority of the District's metropolitan areas compared with the same period in 2011. Permits increased 40 percent in Louisville, 26 percent in Little Rock, 30 percent in Memphis, and 25 percent in St. Louis.\nCommercial and industrial real estate market conditions have improved in some areas of the District. Contacts in the Memphis metropolitan area noted that commercial and industrial real estate activity remained stable. A contact in St. Louis noted that office space leasing activity improved in the downtown area, while a contact in Louisville noted strong suburban office space leasing activity. Commercial and industrial construction activity continued to improve throughout most of the District. Contacts in Louisville noted plans for speculative industrial construction in Jefferson County, Indiana, and several industrial construction projects in southern Indiana and in Bullitt County, Kentucky. A contact in Little Rock reported new commercial construction projects in southwest Little Rock. Contacts in Memphis reported a number of ongoing health care construction projects in the downtown area. A contact in St. Louis reported commercial construction plans in the Dogtown neighborhood and that an automobile assembly plant expansion is under construction in Wentzville.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks decreased 0.6 percent from early September to mid-December. Real estate lending, accounting for 72.4 percent of total loans, was little changed. Commercial and industrial loans, accounting for 15.7 percent of total loans, decreased 4.4 percent. Loans to individuals, accounting for 4.7 percent of total loans, were essentially unchanged. All other loans, accounting for 7.1 percent of total loans, increased 1.7 percent. During this period, total deposits at these banks decreased 0.6 percent.\nAgriculture and Natural Resources\nNovember year-to-date commercial red meat production across the District's states was 4.3 percent higher in 2012 than the same period in 2011. By contrast, November year-to-date poultry production as measured by the number of young chickens slaughtered was down 2.2 percent relative to 2011. The District's states ginned 6.4 percent less cotton from January 1 to December 15, 2012, compared with the same period in 2011. Year-to-date coal production in the District's states (excluding eastern Kentucky) at the end of November 2012 was 9.4 percent higher than the same period in 2011, while coal production for November 2012 was roughly on par with production for November 2011.\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 16, 2013\nPrepared at the Federal Reserve Bank of Philadelphia and based on information collected on or before January 4, 2013. 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, with all twelve Districts characterizing the pace of growth as either modest or moderate. Since the previous Beige Book, activity in the New York and Philadelphia Districts rebounded from the immediate impacts of Hurricane Sandy. Growth in the Boston, Richmond, and Atlanta Districts appears to have increased slightly, while the St. Louis District reports some slowing.\nAll twelve districts reported some growth in consumer spending. Overall, holiday sales were reported as being modestly higher than in 2011, though sales were below expectations for contacts in many of the Districts. Auto sales were reported as steady or stronger in ten Districts. Citing concerns that consumers will spend cautiously due to ongoing fiscal uncertainty, retail contacts and auto dealers reported a slightly dimmer, though positive, outlook for future sales. Tourism activity was reported to have increased across much of the nation due to strong business and international travel, early snowfall in some ski areas, and a rebound in areas disrupted by Hurricane Sandy.\nActivity among nonfinancial service sectors improved overall. Firms within the six Districts reporting on transportation services generally noted increased volumes. Manufacturing was mixed overall since the previous Beige Book; six Districts reported an expansion of activity and three reported a decrease. Among Districts reporting on their firms' near-term expectations, the manufacturing outlook remained generally optimistic; however, capital spending plans were less uniformly positive.\nSince the previous Beige Book, real estate activity has expanded or held steady in eleven Districts for existing home sales and leasing; eight Districts for residential construction; eleven Districts for nonresidential sales and leasing; and nine Districts for nonresidential construction. Overall loan demand was steady in five Districts, rose in four, and fell in one. Credit standards were largely unchanged, except in two Districts where there were some signs of loosening. Six Districts reported improving credit quality and/or falling delinquency rates.\nAlthough rain partially eased drought conditions for some agricultural regions in three Districts, reports of agricultural activity remained mixed. Districts reported that energy and mining sector activity was steady at high levels for most energy-related products but significantly weaker in coal production and coal-related investments.\nTrends in wages, prices, and employment conditions were relatively unchanged in the Federal Reserve Districts. Input price pressures were reported to be steady overall with mixed reports for specific commodity prices in various Districts. Employment conditions were also little changed since the last report. However, hiring plans were more cautious for firms doing business in Europe or in the defense sector. Wage pressures were stable in all twelve Districts, though several Districts cited greater pressures for firms that reported difficulties finding qualified workers with specific skills.\nConsumer Spending and Tourism\nSince the previous Beige Book, consumer spending increased to some degree in all twelve Districts. Across the nation, holiday sales grew modestly compared with last year but came in below expectations in the New York, Cleveland, Atlanta, Chicago, and San Francisco Districts. Boston reported continued strong demand for clothing, shoes, and furniture, and San Francisco reported robust online sales. A major retail chain in New York indicated that sales picked up in early January. Retail sales were flat in Richmond except for gains in food and auto sales. Expectations for future sales were positive but mild, particularly in Philadelphia, Kansas City, and Dallas where contacts cited the impact of fiscal cliff uncertainty on consumer spending.\nReports of auto sales were steady to stronger in ten Districts. Richmond, Atlanta, and San Francisco noted strong sales. New York and Dallas cited mixed sales that were generally positive, while auto sales in Kansas City slowed but remained higher than a year ago. Some dealers in the Chicago and Kansas City Districts reported high levels of inventory. Contacts in Philadelphia, Cleveland, Kansas City, and Dallas expect consumers to react to ongoing fiscal uncertainty, thus dimming a positive outlook for future sales. Chicago auto dealers were more upbeat, expecting stronger new car sales due to pent-up consumer demand, easing credit conditions, and rising used vehicle prices.\nTourism held steady or grew in all but one of eight reporting Districts. Coastal activity had fallen in the immediate aftermath of Hurricane Sandy throughout most of the New York and Philadelphia Districts but has rebounded in all but the hardest hit areas. Boston, Atlanta, and San Francisco reported strong tourism in their Districts, with Boston and Atlanta citing business and international travel as strong contributors. Winter tourism activity in the Minneapolis District was strong in areas with snow, while Richmond reported normal winter activity in its District.\nNonfinancial Services\nOverall, nonfinancial services have grown modestly since the previous Beige Book. Businesses in the New York and Philadelphia Districts recovered from the disruption of Hurricane Sandy. The Boston, Minneapolis, and San Francisco Districts reported positive growth among various service sectors, while the Richmond District reported stable to stronger demand for service firms. Boston reported strong demand for some health-care IT services and drug impact research, while San Francisco noted relatively weak demand for health-care services. Staffing firms in the Dallas District reported steady to slightly softened demand. Respondents remained optimistic about growth over the near-term in the Boston, New York, Philadelphia, Minneapolis, and Dallas Districts.\nTransportation services were generally positive among the six Districts that reported. Freight transport shipping volume improved in the Cleveland District due to rising demand from the retail sector and areas affected by Hurricane Sandy. Atlanta reported increases in trucking tonnage and total railroad carloads, but low river levels caused delays in Mississippi River traffic. Reports from transportation services in the Dallas District were mixed, and most firms expect weak growth in the near-term. Trucking firms in the Richmond District reported a flattening in revenues; however, the District's port activity was boosted by ships diverted by Hurricane Sandy.\nManufacturing\nReports of manufacturing activity were mixed overall, with six Districts growing since the last Beige Book, three Distracts contracting, and two Districts reporting little or no change. Firms in the Boston and Chicago Districts reported continued expansion of activity at modest and moderate rates of growth, respectively. Overall activity once again appeared to expand in the San Francisco District, although it was mixed across sectors.\u00c2\u00a0 Gains in the aerospace and chemical sectors contributed to growth in the Boston and San Francisco Districts, as well as in the Dallas District. Manufacturing in the Chicago District grew with contributions from the auto and housing-related sectors. Manufacturing continued to expand, but at a more modest pace, in the Richmond District. Several firms cited falling export demand, especially from Europe.\nIn contrast to slight declines in the past Beige Book, firms in the Philadelphia and Minneapolis Districts reported slightly increased manufacturing activity. As in other Districts, product flowing into supply channels for auto production and housing construction contributed to Philadelphia's gains. Prior trends continued as firms in the New York District experienced little or no growth, except for the revenues of firms in the New York City area that recovered after Hurricane Sandy disruptions. Reports continued to be mixed among sectors in the Dallas District.\u00c2\nManufacturing activity within the Cleveland and Atlanta Districts, and reported plans in the St. Louis District, declined somewhat--a trend reversal from the prior Beige Book. Contributing to the declines were steel and auto producers in Cleveland and makers of HVAC equipment, electric components, food, and automobile parts in St. Louis. Despite production gains in electrical equipment, appliances, and components, more pronounced contractions within the broad nondurable goods sector led to a continuation of declining activity in the Kansas City District.\nManufacturing firms' expectations of future activity were generally optimistic in the New York, Philadelphia, Atlanta, Minneapolis, and Kansas City Districts; the level of optimism has significantly increased in the Philadelphia and Atlanta Districts since the previous Beige Book. Contacts in the Chicago District expect vehicle production to expand in 2013, while reports of activity from manufacturers in the St. Louis District have been negative on net. Boston District firms reported that capital spending was slow, except for select growth sectors. Capital spending was on track in the Cleveland District and was slowly increasing in the Chicago District. Looking ahead, Philadelphia District firms have significantly increased their capital spending plans, while the outlook in the Minneapolis District was reported as flat. In the Cleveland District, more contacts plan to reduce outlays than expand capacity.\nReal Estate and Construction\nExisting residential real estate activity expanded in all Districts that reported; growth rates were described as moderate or strong in nine Districts. Contacts in the Boston District attributed their strong sales growth to low interest rates, affordable prices, and rising rents. All Districts reporting on price levels saw increases; New York and Chicago reported only very minor increases. The five Districts that reported on housing inventories all reported falling levels. New residential construction (including repairs) expanded in all but one District of those Districts that reported. Contacts in the Kansas City District reported that increased lumber and drywall costs limited construction, causing a slight decline this period. Hurricane Sandy disrupted construction activity initially in New York, but this has since led to increased work for subcontractors on repairs and reconstruction.\nThough a little weaker than residential real estate, reports on sales and leasing of nonresidential real estate are still mostly positive--described as modest on average. The Boston District reported a drop in leasing beyond normal seasonal trends; contacts cited fiscal cliff uncertainty as a factor. Minneapolis and Kansas City reported increased demand and tightening commercial real estate markets. Philadelphia, St. Louis, and Dallas all reported more modest increases in nonresidential real estate activity. Nonresidential construction is weaker than residential, with only slight to modest growth. The Boston District reported that demand for commercial real estate loans appears to be softening and that the pipeline for new construction projects has diminished significantly since the last report. Dallas reported that construction was expected to pick up in the commercial real estate sector in 2013.\nBanking and Finance\nOverall, loan demand was largely unchanged in the Philadelphia, Cleveland, Richmond, Kansas City, and San Francisco Districts, with most of these Districts reporting a continuation of slight to moderate growth in total volume. The New York, Atlanta, Chicago, and Dallas Districts reported stronger demand than previously, while the St. Louis District reported a slight decline. Some increased lending in Philadelphia, Chicago, and Dallas was driven by businesses taking out loans for special year-end purposes such as tax planning and dividend payments. Cleveland, Atlanta, Chicago, Dallas, and San Francisco all reported strong auto lending. Demand for residential mortgages improved in Cleveland, Atlanta, Chicago, Kansas City, Dallas, and San Francisco. Commercial real estate lending was cited as a particular bright spot by New York, Cleveland, Kansas City, and Dallas. However, lenders in San Francisco remained reluctant to lend to real estate investors outside of the multifamily residential sector. San Francisco also reported a slight slowdown in IPO, venture capital, and private equity activity in that District's technology sector.\nBanks in the New York, Philadelphia, Cleveland, Chicago, Kansas City, and San Francisco Districts reported improvements in asset quality. Lenders were described as competing aggressively for highly qualified borrowers in Philadelphia, Richmond, Atlanta, and San Francisco. In Atlanta, this stiff competition may be leading to loosening credit standards, as there was some indication that banks were more willing to increase their tolerance for risk. Chicago banks also reported some loosening of standards. On the other hand, lending standards remained largely unchanged in New York, Cleveland, and Kansas City.\nAgriculture and Natural Resources\nReports of agricultural activity were mixed, although rain and mild temperatures delivered some relief from drought conditions to parts of the Richmond, Atlanta, and Chicago Districts. Low water levels along the Mississippi River also hampered transport for some contacts in the Chicago and Kansas City Districts. Despite the drought, some contacts in these Districts reported that farm income remained high with adequate crop insurance and historically high prices. Producers in the Kansas City and Dallas Districts expect ongoing dry conditions to hurt the winter wheat crop.\nActivity in the energy sector had mixed reports. Production of oil and natural gas held steady at high--sometimes record--levels in the Cleveland, Richmond, Minneapolis, and Dallas Districts. San Francisco reported that activity expanded to historic levels. Contacts in the Cleveland District reported that shale gas activity grew at a robust pace. In contrast, coal production has declined in the Cleveland, Richmond, Chicago, St. Louis, and Kansas City Districts since the previous Beige Book. Firms in the Atlanta District continue to plan investments, ranging from reserve development to increased refining and petrochemical operations to new pipeline infrastructure.\nEmployment, Wages, and Prices\nLabor market conditions remained mostly unchanged in all Districts. The Boston, Richmond, Atlanta, Chicago, Kansas City, and San Francisco Districts all reported delayed hiring, often in defense manufacturing, due to fiscal cliff uncertainties. Companies in the Chicago District with trade or investment exposures to Europe reduced their hiring plans as well. Chicago reported that manufacturers are choosing to cut hours instead of reducing head count in expectation of production rebounds in 2013. Atlanta and Kansas City cited health-care policy changes and costs as another cause for minimal hiring. On the other hand, the New York, Atlanta, Minneapolis, and Dallas Districts saw the labor market firming modestly. Finally, contacts in several Districts reported difficulties finding qualified workers in some specialized fields, such as skilled manufacturing, energy, and IT.\nFor those Districts that reported, wage pressures have been stable since the previous Beige Book and were most frequently described as contained or subdued. The San Francisco District reported modest wage pressures that were held down by an abundance of workers. The Richmond, Chicago, and Minneapolis Districts characterized wage growth as moderate. Specifically, business contacts in the Minneapolis District expected to increase wages 2 to 3 percent in 2013, while oil drilling companies in North Dakota and Montana expected higher increases. Several Districts reported wage pressures in sectors experiencing labor shortages, such as energy and IT. The New York and Chicago Districts reported higher year-end bonuses ahead of anticipated tax increases in 2013.\nOverall, input price pressures appear to be stable. The Boston, Philadelphia, Cleveland, Richmond, Minneapolis, Dallas, and San Francisco Districts reported steady input prices, while Chicago reported decreasing raw materials prices. The New York, Atlanta, and Kansas City Districts characterized input prices as slightly increasing; price pressures in these Districts were passed through to consumers somewhat in the form of higher finished goods prices. However, Chicago noted that businesses were unable to fully pass on meat and milk price increases to consumers. The Philadelphia, Cleveland, Chicago, Kansas City, and San Francisco Districts all cited rising prices for construction-related materials. Specifically, a Philadelphia builder noted that over the past 90 days these rising prices added about 3 percent to the cost of a new home.\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 16, 2013\nDistrict economic activity generally grew at a modest pace in recent weeks. District manufacturing growth slowed, and retail sales flattened, with the exception of food and vehicle sales. Non-retail services providers reported stable to stronger demand, and tourism activity was at normal winter levels. Commercial and consumer lending varied by location, while the environment remained competitive. Residential real estate activity continued to improve; reports on commercial real estate activity, however, were mixed. Agricultural conditions remained favorable. Oil and natural gas production held steady at high levels during the past six weeks, but coal production fell. Labor market conditions weakened somewhat since our last report. Manufacturers' input prices were little changed, while finished goods prices rose at a slower rate, and the pace of wage growth remained moderate. Services providers' prices rose slightly faster and non-retail wage growth edged up. Retail price increases slowed, and wages fell.\nManufacturing\nDistrict manufacturing continued to expand, but at a more modest pace since our last report. A furniture manufacturer said that his business had improved through gains in market share and new product introductions, and that the improvement should continue in 2013. A spokesperson for the technology industry reported that 2012 was expected to be flat, but instead grew by ten to twelve percent. Another contact stated that, \"Manufacturing is hanging in there,\" noting that niche markets were doing best, but only if they were not dependent on international demand. A producer of lumber products commented that sales volumes and orders dropped, in part because of Hurricane Sandy's impact on their customer base in the northeast. An electrical components manufacturer reported that business was \"terrible,\" adding that his only sales were to replace ruined equipment from Hurricane Sandy, and that export orders to Europe had dropped off. According to our latest survey, raw materials prices were relatively flat, while finished goods prices rose at a slightly slower pace.\nPorts\nThe typical seasonal surge in import volumes shifted as a result of two major events. The first was the threat of an East Coast port strike that has loomed since the September 2012 expiration of the master contract between the International Longshoremen's Association and the U.S. Maritime Alliance. A number of shippers used alternative West Coast and Canadian ports ahead of the peak season to minimize disruptions to their businesses. Secondly, Hurricane Sandy caused diversions to Fifth District ports, boosting an already solid peak season. In addition, bulk fuel shipments that were diverted to the Northeast created \"a pinch in supply\" for companies located further south. Exports of resins for plastics, grains, forestry products and metal scrap were especially strong, with imports being led by beverages and retail goods. Both exports and imports of auto-related products were robust.\nRetail\nRetail sales flattened, with the exception of food and vehicle sales, according to most merchants contacted since our last report. Several blamed the lackluster sales on the federal government's failure to resolve its fiscal issues. Most retailers responding to a special poll indicated that they planned an equal amount of holiday discounting as a year ago. A West Virginia department store manager reported that sales were a little soft ahead of Christmas, while other retailers noted little change. In contrast, many grocers noted an uptick in revenues. Although big-ticket sales were weak overall, car sales rose by double-digit percentages in recent weeks. Federal fiscal indecision also pushed sales of heavy trucks, construction equipment, and buses at the end of 2012, ahead of the possible expiration of bonus depreciation. According to survey respondents, retail price growth slowed during the past month.\nServices\nServices firms reported stable to stronger demand since our last report. An executive at a national freight trucking firm indicated that revenues flattened in the District, while another trucking company reported that demand slowed slightly, although that company was able to improve its margins. Demand strengthened at telecommunications and engineering firms, and a contact in Washington, D.C. remarked that law firms see regulatory practice as a growth industry. During the week of Christmas and New Year's Day, the CDC reported that the flu had become widespread across the District. An executive at a North Carolina healthcare facility commented that the \"flu season hit early and hard,\" more than doubling the average number of cases for that time of year. Non-retail services prices rose slightly faster in recent weeks, according to survey respondents.\u00c2\nTourism activity was at normal winter levels in recent weeks, and rate changes were modest. In addition, a D.C. contact commented that restaurant bookings were brisk for holiday meals and events. An executive at a Virginia resort area said that his rentals were filled up for the week from Christmas through New Year's Day. A source on the outer banks of North Carolina reported somewhat less tourism activity, compared to a year ago because of lingering road problems caused by Hurricane Sandy.\nFinance\nDemand for both consumer and commercial loans varied across the District. A North Carolina lender noted that mortgages for new purchases of homes declined, in part because of economic uncertainty. However, a second North Carolina lender said new financing is outpacing refinancing at his bank. According to another North Carolina banker, the home mortgage business is improving and he indicated that refinancing has strengthened in his region; in addition, a number of lenders stated that the competition among lenders for refinancing business has been aggressive. Finally, a banking contact with several locations in the District reported that demand for consumer loans and mortgages had not changed much. Bankers in Maryland and West Virginia reported that foreclosures have slowed. A West Virginia banker said that while overall credit quality has been very good, residential mortgage delinquencies have crept up slightly, and that demand for commercial credit had been steady at a relative high rate in recent weeks. Another West Virginia banker remarked that his region's commercial and industrial loan demand had slowed because economic progress has been \"lumpy.\" A banker in North Carolina reported that loan demand from businesses had remained weak despite lower borrowing rates, owing in part to economic uncertainty.\nReal Estate\nResidential real estate activity continued to improve since our last report. A contact in South Carolina said that the real estate market was dynamic in the Charleston area and that demand and pricing were stronger than they had been in a long time. A Realtor in the Washington, D.C. area expects a strong market through early 2013, as the combination of record low inventory and low interest rates encourages new listings. A contact in West Virginia told us that home sales in his area have improved considerably and that prices were flat for the first time since the drop in values two years ago. Another source saw improvement in the \"move up\" market but little to no activity in the speculative market. He also remarked that the start-up market for housing remained flat and that the effect of student loans on credit scores was a cloud over the mortgage market.\nReports were mixed on commercial real estate and construction markets in the District. While a few contacts reported modest improvement in activity since our last report, others noted flat activity or modest declines. A developer in the Carolinas said that absorption rates in the office sector tightened in the downtown Charlotte area, but vacancies in suburban areas remained elevated. In contrast, a real estate representative in Virginia indicated that office park absorption rates in the Roanoke suburbs were good, with ninety percent occupancy rates, which he attributed to new medical facilities. However, he noted that vacancies in the downtown area were considerably higher. Most sources also mentioned tightening of available office space, especially among Class A properties, due to lack of new construction. A Charlotte Realtor stated that leasing rates in the industrial sector continued to decline this year and noted little new development in the retail sector. Moreover, several realtors reported that rental rates were soft, noting that it was a \"tenant's market.\" However, all contacts were in agreement that concessions were decreasing.\nAgriculture and Natural Resources\nAgricultural conditions remained favorable. Oil and natural gas production remained at high levels during the past six weeks. December was relatively mild across most of the District, with warmer than normal temperatures and significant precipitation. Small grain conditions improved with the added moisture, as did pastures and hayfields.\nAlthough conventional oil and natural gas production held steady at high levels, the rig count fell in West Virginia. Cushioning the fall, many companies continued to drill in order to get wells in place before permits expired. In contrast, coal production fell last year due to lower demand from domestic utilities and offshore customers, idling many mines. One coal producer attributed the depressed coal market to stricter regulations coupled with lower natural gas prices, as well as a weaker economy both in the United States and in Europe.\nLabor Markets\nConditions in labor markets weakened since our last report. There were several reports of soft demand for workers in part because businesses were reluctant to hire in the politically uncertain climate. Retail employment dropped sharply in recent weeks, and several service sector contacts indicated that hiring decisions were in a holding pattern. Exceptions were to fill vacated positions and to ease nursing shortages, and a Washington contact remarked that restaurants were paying bonuses to attract managers. Sources continued to report difficulty finding qualified workers to fill vacancies, particularly in advanced manufacturing. Two Virginia temporary employment agencies noted increased demand for high tech and highly skilled workers. According to an ad hoc poll, less than half of the retailers who made seasonal hires expected to offer those employees a permanent position after the holidays. Wage growth in manufacturing remained moderate, even among skilled workers, while average retail wages declined. In contrast, non-retail service sector wages continued to rise at a moderate pace.\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 16, 2013\nReports from Sixth District business contacts indicated that economic activity expanded moderately in late November and December, with most expecting continued modest growth in early 2013.\nDistrict merchants cited mildly positive holiday sales, while tourism contacts noted continued strength in both business and leisure travel. Residential real estate contacts experienced ongoing modest sales growth for both new and existing homes on a year-over-year basis, while commercial contacts described demand conditions as improving, especially in the multifamily segment of the market. Manufacturers, on the other hand, noted a decline in orders and production. Reports from bankers indicated that loan demand had strengthened, driven in large part by an increase in mortgage lending. Employment levels across the District expanded at a modest pace, while pricing pressures remained subdued.\nConsumer Spending and Tourism\nDistrict contacts reported cautious optimism following a robust start to the holiday season. While sales were better than expected over the Thanksgiving weekend, reports covering the entire holiday season showed that total sales, although above year-ago results, did not appear to meet expectations. Deep discounting was prevalent throughout the holiday season. Auto sales remained robust and truck sales were somewhat positive with sales of replacement vehicles driving the growth for that segment.\nTravel and tourism contacts continued to report strong activity. Hospitality contacts noted increases in visitation and spending in the final quarter of 2012. Lower gasoline prices boosted leisure travel. Business travel and attendance at major conventions also increased. International visitors continued to lift tourism activity and advance reservations of international travel have exceeded expectations. The outlook for 2013 remained positive with hospitality contacts projecting increases in occupancy rates and revenue per available room.\nReal Estate and Construction\nThe majority of District residential brokers reported that recent existing home sales were ahead of year earlier levels. Sales growth was strongest in Florida. Most brokers in the region again noted declining inventories and rising home prices. Buyer traffic remained ahead of the year-ago level by most accounts. For 2013, most anticipate home sales growth will continue to improve slowly.\nReports from District homebuilders were a bit more positive than in our last report. Builders reported that recent new home sales and construction activity were slightly ahead of year-earlier levels. The majority of builders continued to report that new home inventories were below the year-ago level and prices were up slightly. Buyer interest remained strong but several builders continued to note difficulty securing development and construction financing. Despite the challenges, the outlook for construction activity remained positive and builders anticipate new home sales in 2013 to exceed 2012 levels across many parts of the District.\nReports from District commercial contractors indicated that the pace of construction activity improved modestly from the third to fourth quarter and was ahead of the previous year's performance. Apartment development was particularly strong. The pipeline for commercial construction at the end of the fourth quarter was greater than the year-ago level by most accounts. Most said that commercial construction development financing remained scarce. However, the outlook for 2013 remained positive as most contacts expect commercial construction activity to be slightly ahead of 2012 levels. Commercial brokers indicated that most office, industrial, and retail markets in the District experienced modestly positive absorption rates. Overall, contacts continued to anticipate steady, but slow improvements in District commercial real estate markets during 2013.\nManufacturing and Transportation\nManufacturing contacts in the region reported that new orders and production contracted in December. Finished inventory levels also declined from the previous month. However, nearly half of manufacturing contacts expect production to be higher than current levels over the next three-to-six months, up from just under one-third in November.\nTrucking contacts reported a notable increase in tonnage in November, representing the first gain since July 2012, and offsetting a drop in October's readings. Reports suggested that Hurricane Sandy affected both months' readings. A large truck dealer reported it is expanding sales to include flatbed trailers in response to anticipated increased movement of construction materials as a result of improvements in the housing sector. Railroad contacts reported an increase in total carloads in November over year-ago levels with the largest increases occurring in chemicals and agricultural products while declines were noted in coal, metallic ores, and metals. Concerns grew over low river levels that have led to delays in Mississippi River barge traffic.\nBanking and Finance\nMany banking contacts indicated loan demand had increased and they've added lending specialists to deal with current and anticipated demand. Competition for quality borrowers remained fierce and there was some indication that banks were more willing to increase their tolerance for risk. Auto lending remained active and some depository institutions noted more loan growth in November and December. Low rates encouraged mortgage activity, and purchases accounted for a larger share of mortgage loans than in the recent past. Community banks reported spending a larger portion of their income on compliance and remained concerned about increasing regulatory pressures.\nEmployment and Prices\nSince the last report, payroll growth increased mildly across the District, though contacts said that uncertainty over fiscal policy and healthcare costs tempered hiring decisions. Aggregate gains in job growth across the District were fueled largely by strong job growth in Florida and Louisiana. Contacts in Florida's leisure and hospitality industry reported moderately improved hiring expectations, while the construction, retail, and energy sectors in Louisiana saw relatively healthy increases in employment in November and December.\nPricing pressures remained subdued, according to results from our December Business Inflation Expectations survey which indicated that unit costs were up 1.5 percent over the past 12 months, which is down from 1.7 percent in November. Margins improved somewhat in December, especially for retail contacts who reported being able to pass on slightly higher markups compared to the holiday season in 2011. Looking forward, year-ahead unit cost expectations of businesses were 1.9 percent in December, moderating from 2.1 percent the month before. Businesses continued to cite costs relating to tax policy, regulation, and healthcare as sources of uncertainty going into 2013.\nNatural Resources and Agriculture\nPlanned investments, ranging from reserve development to increased refining and petrochemical operations to new pipeline infrastructure, continued to take place in the energy sector. For example, preparation for development of a large gas-to-liquids (GTL) and ethane cracker complex in Louisiana was announced, which is expected to increase the region's production capacity for GTL diesel and ethylene. Separately, industry contacts maintained that higher margins for natural gas liquids and other associated products continued to warrant ongoing drilling in natural gas wells, despite low prices for natural gas. In the midst of an apparent surge in investment activity in the energy industry, District contacts continued to cite a shortage of specialized skilled labor as a significant hurdle facing expansion plans going forward.\nPrices for corn, soybeans, beef, and poultry remained above year-ago levels, while the price for cotton was lower than this time last year. Dry conditions persisted in much of the District, although late December rains helped many areas in the region.\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 16, 2013\nThe Ninth District economy grew moderately since the last report. Increased activity was noted in consumer spending, tourism, professional services, manufacturing and energy. Construction and real estate experienced continued strong recovery. Activity was steady in agriculture and slowed slightly in the mining sector. Labor markets tightened modestly. Wage increases were moderate. Overall price increases were subdued.\nConsumer Spending and Tourism\nOverall consumer spending was up slightly relative to a year ago. The holiday shopping season was somewhat stronger than last year, with bigger gains in North Dakota and Montana. Same-store sales at a Minnesota-based retailer were flat in December compared with a year ago. A Minneapolis area mall reported that holiday traffic was level from a year ago, but sales were up. Activity at a shopping center in South Dakota was relatively level from a year earlier. A North Dakota mall manager reported that December sales were about 10 percent higher than last year; jewelry sales were particularly strong. Retailers in the Great Falls, Mont., area generally reported a solid holiday season. According to the Minneapolis Fed's business outlook survey, 30 percent of respondents expect increases in consumer spending in their communities during 2013; 25 percent expect decreases. These results were similar to last year's survey.\nRecent new car and truck registrations in Minnesota were higher than a year ago. In Montana, vehicle sales remained steady during the past few months, according to a representative of an auto dealers association.\nWinter tourism activity was strong in areas with snow, but lackluster in dry areas. A Montana ski resort reported that visits were up and reservations were looking good for the rest of the winter. However, in the Upper Peninsula of Michigan, activity was soft due to marginal snow conditions. The winter tourism season got off to a slow start because of a lack of snow in western South Dakota; recent snowfall should help spur activity, according to an official.\nConstruction and Real Estate\nCommercial construction activity increased at a solid pace since the last report. The permitted value of new commercial construction in December was up 26 percent in Sioux Falls, S.D., and the value of November permits more than doubled in Billings, Mont. A major outlet mall is planned for the Minneapolis-St. Paul area. Residential construction increased considerably from a year ago. The value of November residential building permits in Billings was up 70 percent from last year, and the value of December permits in Sioux Falls was up 39 percent from a year ago. In the Minneapolis-St. Paul area, December residential permits were up 17 percent compared with December 2011.\nCommercial real estate markets continued to tighten. A major commercial real estate firm forecast that Minneapolis-St. Paul area office vacancy rates will dip to 17.7 percent at the end of 2012 compared with 19.1 percent at the end of 2011. The same firm forecast industrial vacancy rates to drop to 9.9 percent from 11.2 percent. Residential real estate market activity increased. Home sales in November were up 20 percent from the same period a year ago in the Minneapolis-St. Paul area; the inventory of homes for sale was down 29 percent, and median sale prices rose 17 percent. In the Sioux Falls area, November home sales were up 20 percent, inventory was down 14 percent and the median sale price increased 9 percent relative to a year earlier.\nServices\nActivity at professional business services firms grew since the last report. Services sector respondents to the business outlook poll expect sales volumes and capital investment at their firms to grow in 2013. An appraisal company noted that demand is increasing for its services, and the backlog continues to increase. Another appraiser noted, \"I am turning down more business than I am accepting.\"\nManufacturing\nDistrict manufacturing increased slightly since the last report. According to a December survey of purchasing managers by Creighton University (Omaha, Neb.), manufacturing activity increased in Minnesota and South Dakota after five consecutive months of decreases. Activity also increased in North Dakota, but at a slower pace than in recent months. The Minneapolis Fed's 2012 survey of manufacturers indicated that respondents on average expect orders, production, employment and profits at their operations to increase in the coming year. The outlook for capital investment was flat. A company announced that it is opening a 40,000-square-foot cereal ingredient processing facility in South Dakota.\nEnergy and Mining\nActivity in the energy sector continued to grow, while mining slowed. District oil production remained at record levels. An oil refinery in Minnesota announced plans for a $400 million upgrade in order to process more oil. Late-December oil and gas exploration activity decreased slightly in North Dakota and increased in Montana from the previous month. A railroad put on hold its plans to expand a coal-shipping line from Wyoming, citing a weaker outlook for domestic coal. Iron ore production remained strong in northern Minnesota; however, recent months were down from levels earlier in 2012. A large mining company announced that it will idle some of its production at operations in Minnesota and the Upper Peninsula in 2013, citing lower ore prices and reduced global demand. A mining company increased its estimate of deposits at a potential copper, nickel and precious metals mine in northern Minnesota.\nAgriculture\nAgriculture was steady at high levels. Crop prices came down somewhat recently but remain relatively high, a slight relief to livestock and dairy producers who have been hammered by high feed costs. The selloff of livestock herds continued. Sugarbeet producers in Minnesota and North Dakota saw a record crop in 2012, but prices were down. Prices received by farmers increased in December from a year earlier for corn, wheat, soybeans, chicken, dairy products and cattle. Prices for hogs, turkey, eggs and dry beans decreased. According to the Minneapolis Fed's third-quarter (October) survey of agricultural credit conditions, farmland prices continued their rapid rate of increase.\nEmployment, Wages, and Prices\nLabor markets tightened modestly since the last report.A manufacturer in Minnesota recently announced plans to open a new facility that would employ 400 new workers. Up to 300 employees are expected to eventually work at a call center in Minnesota. However, an iron ore plant idled 125 workers, and a high tech company laid off over 40 employees in Minnesota due to a slowing in demand. According to respondents to the business outlook poll, 28 percent expect to increase hiring during 2013, while 15 percent expect to decrease staff, similar to last year's poll.\nWage increases were moderate. According to the business outlook poll, 93 percent of respondents expect wages in 2013 to increase no more than 3 percent. Business contacts in South Dakota and Montana expected to generally increase wages between 2 percent and 3 percent in 2013 from a year earlier. However, wage increases in the oil-drilling areas of North Dakota and Montana are expected to be higher.\nOverall price increases were subdued. Minnesota gasoline prices at the end of December were down about 20 cents per gallon since the end of November and were about 10 cents per gallon less than a year ago. A Minnesota-based food maker said it expects ingredient cost inflation of up to 3 percent. Some metals prices increased since mid-November. According to the survey of manufacturers, 37 percent of respondents expect to increase selling prices in 2013, while 16 percent expect to decrease prices.\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 16, 2013\nTwelfth District economic activity expanded at a modest pace during the reporting period of mid-November through December. Upward price pressures were limited overall, and upward wage pressures were quite modest. Sales of retail items this holiday season were similar to or up slightly from last year, and most business and consumer services gained. District manufacturing activity was mixed across sectors but generally appeared to move up. Demand for agricultural products increased, and extraction activity rose for providers of energy resources. Housing demand trended up further, and conditions were largely stable for commercial real estate. Contacts from financial institutions reported that loan demand was unchanged or up somewhat, and credit quality improved.\nWages and Prices\nUpward price pressures were limited on balance during the reporting period. Price movements for energy items were mixed: retail gasoline prices fell, and electricity prices rose in some areas. Prices for some intermediate materials used in the construction sector, such as drywall and steel rebar, ticked up, while log and pulp prices remained flat. Prices of grapes and nuts increased, and higher prices for grains and corn due to the drought earlier in the year boosted prices of grocery dairy and meat items. A restaurant chain reported menu price increases in the 2 to 3 percent range.\nContacts in most sectors reported that upward wage pressures were modest. Limited hiring plans and ready worker availability in most sectors and regions have held down increases in wages and compensation. However, wages increased for some information technology workers who possess advanced skills and are in low supply. The market for technically trained workers for the petroleum industry remains tight. A few contacts expect wage hikes in 2013 in response to the expiration of multiyear, company-wide salary freezes. Health-care benefit cost increases are expected to accelerate and outpace wage increases.\nRetail Trade and Services\nRetail sales were on a par with or up slightly from last year's holiday season, but generally did not meet vendors' expectations. Online retailers experienced more robust sales growth than traditional brick-and-mortar retailers. Inventories generally were at or near desired levels given the pace of sales, although some retailers reported having an excess of winter apparel due to relatively mild weather conditions, while others ran short on certain consumer technology products. Contacts in the information technology sector indicated strong sales of newer hardware and games, but relatively weak sales of established goods as well as some Internet and digital media products. Both sales and margins were soft for grocers. New automobile sales remained solid, running well above levels from 12 months earlier, with year-end gains expected to be sizeable.\nDemand for most business and consumer services rose. Contacts pointed to solid sales of various technology services, due mostly to typical year-end business spending increases. Revenues continued to expand for food service providers. Tourism and travel activity in the District was robust, with strong growth of visitor counts and spending reported in both Hawaii and Southern California. However, demand for health-care services remained relatively weak, with some reports of consumers continuing to opt out of elective procedures and health-care providers having excess capacity.\nManufacturing\nDistrict manufacturing activity was mixed across sectors but expanded overall during the reporting period of mid-November through December. With healthy demand for fuel efficient planes and a sustained backlog of orders, production activity for commercial aircraft and parts has been running well above levels from last year. Demand continued to grow at a modest pace for pharmaceutical and wood product manufacturers. By contrast, capacity utilization remained relatively low for manufacturers of technology equipment, and defense manufacturers have been trimming payrolls due to expected federal spending reductions. While demand for scrap metal remained somewhat weak by historical standards, that for steel products used in automotive manufacturing and in infrastructure and nonresidential construction improved. Contacts indicated that production activity picked up at petroleum refineries.\nAgriculture and Resource-related Industries\nAgricultural output gained further, and extraction activity of natural resources used for energy production continued to expand. Demand for most crop and livestock products continued to advance and was met in part through more intensive use of capital equipment. Extraction activity expanded on balance for petroleum and natural gas, and natural gas inventories remained at historically high levels.\nReal Estate and Construction\nHousing demand in the District strengthened further, while demand for commercial real estate was largely stable. Both prices and sales transactions of homes climbed in most areas, stimulating continued growth in home construction activity. In some regional markets, activity ratcheted up for higher-priced homes. Construction activity for multifamily residential projects grew further, in response to rising rents and tight availability of lower-priced homes. Demand for nonresidential space was largely stable. However, contacts reported that in select geographic areas of the District, substantial growth of technology firms has boosted demand for office space.\nFinancial Institutions\nContacts from financial institutions reported that loan demand was unchanged or up somewhat. Business loan demand was characterized as moderate. Banking contacts continued to highlight ample liquidity and generally stiff competition among lenders to provide credit to well-qualified business loan applicants, with community banks facing increasing competition from larger national banks for small business lending. Although owner-occupied commercial real estate financing is readily available, banks in most regions remain reluctant to lend to real estate investors outside of the multifamily residential sector. Contacts noted a slight slowdown in IPO, venture capital, and private equity activity in the District's technology, Internet, and digital media subsectors. Consumer lending expanded further, primarily for automobile purchases and new or refinanced home mortgages. Reports indicated that credit quality for both business and consumer loans has continued to improve, albeit at a slow pace.\n"

Dallas

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"Beige Book Report: Dallas\nJanuary 16, 2013\nThe Eleventh District economy expanded at a modest pace over the past six weeks. Reports on manufacturing activity remained mixed. Real estate and construction activity continued to improve. Retailers said holiday shopping boosted sales, and automobile dealers reported that sales were above year-ago levels. Staffing, accounting and legal services firms noted steady demand, while reports from transportation service firms were mixed, but improved overall. Energy activity remained at high levels despite a decline in the rig count, and financial firms reported modest growth in loan demand. Agricultural conditions remained dry. Prices were mostly stable, and wage pressures remained limited. Employment levels were steady to up. Many responding firms' outlooks reflected fiscal uncertainty during the reporting period.\nPrices\nMost respondents noted stable prices, although accounting and legal services firms reported a modest rise in billing rates and some transportation service contacts noted an increase in freight charges. Overall, costs were flat to up during the reporting period. Some construction-related manufacturers and transportation service firms noted higher input costs. An aviation manufacturer said they planned to implement price increases this month due to rising input costs. Feed costs for livestock were at record high levels, while prices of other agricultural commodities declined slightly.\nThe price of WTI rose over $90 per barrel during the reporting period. Natural gas prices remained depressed. On-highway diesel and gasoline prices trended down, and prices of petrochemical products were mixed.\nLabor Market\nEmployment held steady or increased at most responding firms. Reports of employment increases came from legal firms, auto dealers, and a few manufacturers. Retailers said employment was up from a year ago, and one contact reported difficulty in filling IT positions. Accounting firms reported hiring at a slower pace than the last report. Auto dealers noted difficulty finding qualified workers, and there were scattered reports of shortages of skilled workers at energy-related firms. Wage pressures remained largely subdued, although airlines reported upward pressure and some construction-related manufacturers reported plans to give cost of living adjustments in January.\nManufacturing\u00c2\nConstruction related manufacturers' reports were mixed. Lumber producers noted stronger sales due to strong single-family construction, but demand for other products remained the same or softened since the last report. Outlooks were uncertain, with some responding firms putting off major decisions until the fiscal cliff was resolved. Demand for fabricated metals also softened over the reporting period, although outlooks for 2013 were optimistic. Primary metals producers noted demand growth was slower than expected.\nRespondents in high-tech manufacturing said that production and orders were flat to slightly down. One respondent noted that the weak global economy was slowing demand across a broad array of information technology products. Contacts said customer inventories were lean, while producer inventories had increased slightly but remained near desired levels. Respondents' outlooks for the next three to six months were more uncertain than at the time of the last report. Most said that they are planning for weakness to continue, and that they may reduce employment levels in 2013.\nDemand for paper products was strong in the first part of the reporting period but stalled in recent weeks, in line with normal seasonal patterns. Contacts were more pessimistic in their outlooks, however, due to uncertainty regarding fiscal issues. Food demand increased due to a seasonal pickup, and the outlook was positive among contacts.\nOverall, transportation manufacturing contacts said demand was mostly flat to up slightly. Automobile manufacturers said business was up, and outlooks were more optimistic. Demand for aviation equipment increased, but remained below year ago-levels.\nPetrochemicals producers noted Gulf Coast chemical production was up compared with last year. Gulf Coast refineries were operating at rates above 90 percent, and margins remained healthy. Refiners said that despite sluggish domestic demand for distillates, strong export demand has kept inventories from building.\nRetail Sales\nRetail sales volumes increased since the last report, mainly due to holiday shopping, and contacts said demand was up year-over-year. According to two national retailers, Texas continued to outperform the nation. Contacts were cautiously optimistic in their outlook for 2013; the largest source of uncertainty among contacts was the fiscal cliff.\nReports on automobile sales were mixed over the past six weeks, but were generally positive. All contacts noted that demand was up from a year ago. Selling prices were unchanged since the last report, but manufacturers were offering many more incentives, making the final price to consumers lower. Uncertainty regarding fiscal issues, future taxes, and health care costs, has moderated firms' outlooks.\nNonfinancial Services\nStaffing services firms reported mixed results. Most said that demand held steady, while one said orders had softened slightly. Contacts continued to be very concerned about new health care laws in 2014, and some noted their customers' outlooks were more uncertain due to fiscal concerns. Overall, staffing firms' outlooks were slightly more pessimistic than six weeks ago.\nOverall, accounting activity held steady with little growth; strong energy-related activity was the exception. Contacts expect modest growth in 2013. Legal firms reported steady demand. Transactions and wealth planning practices were reportedly the busiest they have ever been, energy-related activity remained strong, and real estate-related activity was better than expected. Responding firms remained optimistic in their outlooks.\nReports from transportation services were mixed. Intermodal cargo volumes edged down seasonally and have slowed from early 2012, but container volumes increased during the reporting period. Railroads said cargo volumes remained steady despite extremely strong growth in energy-related shipments. Grain and coal volumes remained weak spots during the reporting period, but auto shipments increased despite a strike at the Port of Los Angeles that disrupted the flow of containers. Shipping companies said that small parcel volumes posted very strong growth since the last report, particularly due to retail activity. Air cargo volumes were up slightly in preparation for the holiday season. Airline contacts said that passenger demand was soft over the past six weeks. Outlooks from transportation services firms continued to reflect global economic uncertainty, and most firms expect weak growth in the near-term.\nConstruction and Real Estate\nContacts in the single-family housing sector reported continued improvement in new and existing home sales. Despite increased construction activity housing inventories remain low, pushing overall prices up. Firms remain cautiously optimistic in their outlooks. Apartment demand continued to ease slightly overall, although occupancy rates remain historically high.\nDemand for office and industrial space increased since the last report, according to contacts in the commercial real estate sector. Most firms expect to see an increase in nonresidential construction in 2013. Commercial property investment activity picked up slightly near year-end, and most respondents were fairly optimistic in their outlooks for 2013.\nFinancial Services\nFinancial institutions reported modest growth in overall lending activity. The increase in corporate loan demand was mostly driven by customers opting to make purchases before year-end due to tax uncertainty, but there was also moderate growth in real estate lending activity. Consumer lending improved, with modest growth in mortgage and new automobile loan demand. Loan pricing remained extremely competitive, and deposits continued to grow despite very low rates. Firms' outlooks remained positive, with fiscal and regulatory concerns posing downside risks.\nEnergy\u00c2\nRespondents at energy-related service firms said activity remained at high levels, despite a larger-than-expected decline in the domestic rig count driven by low natural gas prices. Although oil prices remain at healthy enough levels to support current activity, price volatility is making some firms nervous about drilling in higher cost fields. Contacts expect overall activity to be flat this year relative to fourth quarter of 2012, with some improvement expected in the second half of 2013.\nAgriculture\nWith little rainfall, most of the District remained in drought conditions since the last report. The drought is negatively impacting the winter wheat crop, and contacts are beginning to express concern for spring planting. Wheat harvest was mostly completed over the last six weeks, and production was up from 2011, mainly because the drought was less severe. Contacts noted that fiscal cliff concerns and the lack of a farm bill are creating a great deal of uncertainty.\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 16, 2013\nAggregate business activity in the Third District has resumed the modest pace of growth that was evident prior to the disruption by Hurricane Sandy during the previous Beige Book period. In particular, general retail sales, general services, and commercial real estate leasing recovered from temporarily mild growth rates to resume their previously modest growth rates. Sales of new and used autos accelerated to a moderate rate of growth, and residential real estate sales maintained a strong year-over-year growth rate (from a relatively low base). Mild rates of growth are once again evident in manufacturing, staffing services, transportation services, and construction after many sectors suffered storm-related disruptions. Lending volumes at Third District banks also continued to experience slight growth, and credit quality has continued to improve. Overall, beach-going tourist areas are experiencing a typical slow season; however, some storm-damaged areas have lost significant business while some areas that escaped the damage are doing well. General price levels, as well as wages and home prices, were reported to have increased slightly overall. This remains similar to the last Beige Book period, except for home prices, which had remained flat overall.\nThe overall outlook for at least modest growth is considerably more optimistic relative to the views expressed in the last Beige Book. Contacts reported underlying strength in many sectors and expressed relief that part of the fiscal cliff dilemma has been resolved. Contacts from virtually all sectors reported greater expectations of future growth than during our last survey period. Plans for future hiring were also significantly more expansive. Most contacts continued to express concerns over the impact from the recent payroll tax increase and the remaining potential budget cuts that might reduce demand.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported that orders and shipments have recovered to a pace of slight growth. The mild pace can be partially attributed to seasonal trends. Comments from contacts focused primarily on small upticks, new product demand, and emerging markets, rather than on disappointing orders. Makers of food products, lumber and wood products, primary metals, fabricated metal products, and instruments have reported gains since the last Beige Book. Lower activity was reported by makers of industrial machinery and electronic equipment.\nOptimism among Third District manufacturers that business conditions will improve during the next six months has rebounded strongly since the last Beige Book and is evident across nearly all sectors. Firms have also significantly raised their overall expectations of future hiring and their plans for capital spending since the last Beige Book.\nRetail\nThird District retail sales recovered to a modest pace of growth for the holiday shopping season after the disruptions of Hurricane Sandy, according to retail contacts. Sales reports were mixed for mid-market department stores and some home furnishing stores, which reported moderate early holiday sales gains followed by a lull, with slight declines from the prior year. High-end department stores, family apparel stores, and outlet stores reported modest or moderate year-over-year sales throughout the holiday period. Some substantial mall tenants posted strong double-digit sales growth. Until final sales are tallied, retail contacts relied on other early indicators to suggest that the final days of the holiday shopping season had grown modestly, or better. Traditional mall retailers continued to draw shoppers with promotions, while outlet stores used fewer promotions than in prior years. Shopper surveys revealed concern over the consumers' future paychecks from the pending fiscal cliff negotiations.\nAuto sales finished the year at a moderate pace of growth--combining the sector's slower pre-storm pace with a bump up for replacement of cars damaged by the storm. In particular, New Jersey dealers reported strong double-digit December sales, capping a third consecutive year of sales growth. The outlook among dealers remains positive; however, prospects for 2013 are not as strong as they were for 2012. \"Consumers will feel a pinch\" from the payroll tax increase and continued uncertainty about possible budget cuts.\nFinance\nOverall, loan volumes have continued to grow at a slight pace across Third District financial firms since the previous Beige Book. A flurry of year-end business lending kept banks busy facilitating tax-oriented business decisions involving sales and liquidations, mergers and acquisitions, accelerated depreciation, and dividend payouts. Home mortgage refinancing rates continued to remain high. In describing their competition as very aggressive, lenders expressed awareness of some potential portfolio risk, even while the credit quality of their borrowers continued to improve. Generally, financial institutions are expecting growth to continue, if not improve.\u00c2\u00a0\u00c2\nReal Estate and Construction\nResidential builders reported one final surge of contract activity in November and then a downswing in December to conclude with slight year-over-year growth for the period. Despite facing erratic swings in demand through the year, our contacts reported very strong year-over-year growth for the entire year, which is more indicative of their own gains in market share than of the sector overall. Residential brokers reported robust year-over-year sales growth in November, with steady year-end momentum. As with new home construction, existing home sales are growing from a low base. Builders and, to a greater extent, brokers are optimistic that recent growth will be sustained in 2013. As with other sectors, contacts expressed concern that the fiscal cliff negotiations had been extended into their important first quarter.\nNonresidential real estate contacts reported renewed modest growth in overall leasing activity and continued slight growth in construction. Leasing activity finished the year with sustained double-digit growth. Notably, in the fourth quarter, contacts began \"to see a re-emergence of leasing demand in lagging submarkets\" (in the Greater Philadelphia metro area), including southern New Jersey. Stronger employment growth of professional services is credited with much of the demand; however, that demand is partially offset, as existing firms are consolidating and adjusting to more efficient overall office spaces with smaller square footage per person. New construction of large industrial/warehouse space is planned in 2013 in the Harrisburg\u00e2\u20ac\u201cLehigh Valley corridor on the heels of similar spaces built this year; no such construction is anticipated in the southern New Jersey market area. New apartment/condominium projects continue to emerge throughout the Greater Philadelphia region, especially in Center City. Nonresidential real estate contacts retain an outlook of slow, steady growth.\nServices\nThird District service-sector firms have resumed a more modest pace of growth since the last Beige Book, according to contacts in various sectors. Tourist areas along the Delaware and New Jersey shores are in various stages of recovery from Hurricane Sandy. Atlantic City casinos reported significantly lower revenues in November (as much as $55 million) compared with 2011. Businesses and rental housing that serve the central and northern Jersey Shore communities continued to lose some of the money they would have earned in the low season. Southern New Jersey and Delaware beach communities are largely intact and operating normally. A Delaware beach hotel owner reported a strong December finish to the year, which was partly due to an extra holiday weekend. District staffing firms reported a mild pace of growth at year's end \u00e2\u20ac\u201c an improvement after the storm disruptions. Staffing contacts expect moderate growth in 2013 but are watching their clients' reactions to the serial fiscal cliff decisions. Defense-related firms received no relief from the uncertainty of budget cuts that has held their business plans in stasis for the past year. Overall, service-sector firms expressed more confidence in their expectations for growth in the near future.\nPrices and Wages\nOverall, price levels continued to increase slightly, similar to the previous Beige Book. Cost factors among manufacturing firms held steady, while the prices they received rose a little. Tighter auto inventories generate a price environment that favors auto dealers over their customers. Homebuilders noted that rising commodity prices had added about 3 percent to the cost of a new home in the past 90 days. In addition, roofing and siding contractors have lost crews to the Jersey Shore repairs. Real estate contacts continued to report that house prices are firming up and that houses in some markets are receiving multiple offers. Rents are rising in most segments of the Philadelphia central business district market and for industrial space along the corridor from Carlisle, PA, to the Lehigh Valley. In other segments and geographies, rents are flat or still falling. Contacts from all sectors continued to report that wages rose only a little, if at all. After a good year, two homebuilders reported issuing the first pay raises to their staffs in several years. Contacts did report strong growth in unemployment compensation and workers' compensation costs.\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 16, 2013\nBusiness activity in the Fourth District expanded at a modest pace during the past six weeks. Many of our contacts reported that their outlook for the new year is uncertain due to unresolved fiscal policy matters. Manufacturing orders and production were mainly flat or down slightly. Residential and nonresidential construction activity rose, with particular strength noted in the multi-family segment. On balance, retailers described the holiday shopping season as solid. Sales of new and used motor vehicles increased on a year-over-year basis. Shale gas activity continued at a robust pace, though coal production trended lower. The slowdown in freight transport volume seen in September and October has abated. Demand for business credit flattened out, whereas credit use by consumers picked up.\nHiring was sluggish across industry sectors. Staffing-firm representatives saw little change in the number of job openings and placements during the past six weeks. Vacancies were found primarily in manufacturing and healthcare. Wage pressures are contained. Input prices were stable, apart from increases in construction materials.\nManufacturing\nReports from District factories indicated that new orders and production were flat or down slightly during the past six weeks. Companies seeing increases were largely suppliers to the motor vehicle and energy industries. Compared to a year ago, production activity was mixed. Steel producers and service centers described shipping volume as lower relative to levels seen in the third quarter. Many of our contacts expect a slight weakening in business activity during the next few months due to seasonal factors and uncertainty surrounding the outcome of fiscal policy issues. Auto production at District plants showed a moderate decline during November on a month-over-month basis. Relative to prior year levels, production was largely higher, especially for foreign nameplates.\nInventories are being reduced to become more aligned with demand. Manufacturers noted that capacity utilization has fallen in recent weeks; however, rates were within or slightly below their normal range. Capital spending was largely on track for 2012. About one-third of our contacts plan on cutting back capital outlays during this year, and few producers anticipate expanding capacity. Raw material prices were either flat or trended lower, while finished goods prices held steady. On balance, manufacturing payrolls were little changed. Less than half of our contacts expect to hire new workers during 2013. Wage pressures are contained, and rising health insurance premiums remain a challenge.\nReal Estate\nHome builders reported that the upturn in sales of new single-family homes continued into December. Although a seasonal slowdown is expected, builders expressed confidence that sales will pick up again in the spring. Contracts were found mainly in the mid- to higher-price-point categories. The number of single and multi-family housing starts in December was significantly above year-ago levels. List prices of new homes are increasing, which was attributed to shrinking inventories and rising construction costs. Builders have cut back on discounting. Tight lending standards are still seen as restraining the effect of low interest rates for builders and home buyers. Multi-family developments are expected to be the driving force behind new housing construction during the next one to two years.\nNonresidential contractors reported that business activity grew across market segments and was better than a year ago. Nonetheless, margins are still tight. Although inquiries are down, which is typical for this time of year, builders are satisfied with their backlogs going into 2013. Project financing is available, but it is very time consuming to close a deal. As a result, some developers are turning away from banks and looking more to private lenders. Our contacts are optimistic about near-term activity due to customers wanting to complete must-do projects, such as maintenance or production consolidation. However, there is a heightened level of uncertainly about the medium to long term. A general contractor reported that his customers are postponing the design phase of some of their projects. Other builders expect a slowing in health care construction, as providers evaluate the implementation of recently enacted laws.\nResidential and nonresidential builders reported higher prices for drywall and lumber, due to rising demand and a declining supply base. Contractors anticipate widespread price increases for building materials during the first quarter of 2013. General contractors and subcontractors expect to increase their payrolls at a modest pace this year. There is concern about the availability of highly skilled trade workers and back-office personnel, and the potential impact a shortage of either could have on wage pressures.\nConsumer Spending\nReports on the holiday shopping season were generally solid. Most retailers were encouraged by results during the Thanksgiving weekend, and a majority said that sales during this holiday season were above those of a year ago. However, some contacts reported that sales figures fell below expectations for the entire season. Increased volume was seen particularly in electronics and apparel. Sales for the first quarter of the new year are expected to trend higher relative to prior-year levels. Vendor and shelf prices held steady. Capital spending remains on target. A majority of our contacts reported that they plan to increase outlays slightly during 2013, particularly for warehousing, store improvements, and e-commerce. Little new hiring is anticipated, except for staffing new stores.\nYear-to-date sales of new motor vehicles showed a moderate increase during November compared to the same time period a year ago. Dealers reported that purchases of fuel-efficient cars, including hybrids and compact SUVs, are doing well. New-vehicle inventories were described as adequate to strong. A seasonal slowdown in sales is expected during January and February. Several dealers cited uncertainty over the resolution of fiscal policy issues as a factor that may affect auto sales in upcoming months. Year-to-date sales of used vehicles increased slightly during November, though inventories are still tight. Leasing continued to trend slightly higher, which should help to replenish the used-vehicle inventory by mid-2013. One dealer noted that the balance between leasing and traditional financing has returned to normal. Some of our contacts reported that their employment level is lower than prior to the recession, and most do not expect to increase payrolls during the next 6 to 12 months.\nBanking\nDemand for business credit was steady or down slightly since our last report. Some contacts cited a rise in the number of applications for commercial real estate loans and refinancings, but on balance, demand was little changed across sectors and product categories. Several bankers noted that their loan-to-deposit ratio was much lower than desired. On the consumer side, reports indicated an increase in drawdowns on home equity lines of credit and rising credit card receivables, which were attributed to holiday shopping. A few bankers saw an increase in auto loans. Activity was strong in the residential mortgage market, with a large majority of applicants looking to refinance. Delinquency rates held steady or declined across consumer and commercial loan categories. Core deposits grew, with an ongoing transition from time-deposit to transaction accounts. Little change in banking payrolls is expected in the near term.\nEnergy\nConventional oil and natural gas production was stable during the past couple of months. Shale gas activity continued at a robust pace: in West Virginia, well output at the end of 2011 was up 138 percent from the prior year, and during the first six months of 2012, well output across Pennsylvania rose by 42 percent compared to the previous 6 months. In eastern Ohio, 187 wells have been drilled in the Utica shale in the past year, with 44 currently producing. Coal production for 2013 is expected to be flat relative to 2012 levels. Demand for thermal coal increased slightly due to colder weather and a slowdown in switching from coal to gas by electric utilities. Demand for metallurgical coal in the U.S. held steady, but declined from offshore customers, particularly those in Europe. Falling prices for metallurgical coal have leveled off, while steam-coal prices were mixed. Capital expenditures by conventional drillers and coal producers are expected to decline during the first six months of 2013. Production equipment and material prices were flat across most categories. Apart from shale gas companies, little hiring is anticipated during the next 6 to 12 months.\nFreight Transportation\nReports on freight transport indicate that shipping volume has improved since the start of November after an unexpected drop-off during the prior two months. Some contacts attributed the boost to rising demand coming from the retail sector and areas affected by Hurricane Sandy. Freight executives were fairly positive in their outlook for 2013, with the caveat that a resolution is reached on issues involving fiscal policy. Costs associated with truck maintenance held steady, while diesel fuel prices fell. Reports on capital spending were mixed. Some freight haulers said that 2012 expenditures reached targeted levels. Others reported a postponement in purchasing equipment for replacement and expansion due to a sluggish economy and supply issues related to Class 8 trucks. Spending in 2013 is expected to be similar to 2012 levels, and it will be mainly for replacement. Due to uncertainty about the economy, hiring plans for 2013 are tentative. Wage pressures were contained.\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 16, 2013\nEconomic activity in the Second District has shown signs of rebounding since the last report, as widespread disruptions from Superstorm Sandy largely dissipated. On balance, the labor market firmed, with manufacturers reporting flat employment but non-manufacturing contacts indicating some pickup in hiring. Manufacturers and other firms report more widespread price hikes than in recent months, while retail prices were steady to up moderately. Retailers report that holiday-season sales were steady to somewhat higher than this time last year but slightly below plan. Auto sales in upstate New York were mixed but generally strong in November and December. Tourism activity slumped in November, in the aftermath of Sandy, but rebounded somewhat in New York City in December. Both residential and commercial real estate markets were generally steady since the last report. Finally, bankers report a pickup in demand for commercial mortgages but steady demand on other types of loans; they also report no change in credit standards, narrowing loan spreads, and widespread decreases in delinquency rates.\nConsumer Spending\nHoliday season sales were up modestly from last year but came in slightly below plan. A trade association survey of retailers across New York State indicates that sales were disappointing in the days leading up to Christmas as well as in the days after. A major retail chain indicates that sales were below plan in November and December but picked up fairly dramatically in early January. Retail contacts in upstate New York report that sales were flat to up compared to a year earlier. Retailers attribute the weaker than expected holiday sales to a combination of online shopping, mild weather, fiscal cliff concerns, and, in some parts of the region, slow insurance payouts to those affected by Sandy.\u00c2\u00a0 Retail prices were reported to be steady or up moderately.\nBuffalo-area auto dealers indicate that vehicle sales picked up in November but were expected to be flat to slightly lower than a year earlier in December. However, Rochester-area dealers report strong sales for both months to end 2012. Tourism activity slumped in the immediate aftermath of Sandy. Even hotels in the Albany area were reportedly affected by the storm, as widespread meeting and conference cancellations pushed down hotel occupancy rates in November. In New York City, Broadway theaters report that attendance and revenues rebounded after a deep post-Sandy slump in the first half of November. Still, December attendance was down 5 to10 percent from a year earlier, while revenues were little changed. Finally, consumer confidence in the region weakened at year end. The Conference Board's survey of residents of the Middle Atlantic states (NY, NJ, Pa) showed confidence falling to its lowest level in more than a year, while Siena College's survey of New York State residents indicated a modest decline.\nConstruction and Real Estate\nResidential real estate markets in the District were generally steady since the last report, with the storm having little discernible effect on the overall market. New York City's rental market appears to have lost some momentum during the final two months of 2012, as rents in Manhattan and Brooklyn retreated and were up only slightly from a year earlier. The inventory of available rental apartments, however, remained low in late 2012. Apartment sales activity in New York City was robust in the fourth quarter--particularly in Manhattan. A major appraisal firm attributes some of the high sales volume to looming tax changes and notes that there has been a flood of appraisal requests for tax-related financial planning. Prices are reported to be flat to up slightly. In contrast, an overhang of inventory has kept prices from rising in northern New Jersey and Long Island. Sandy disrupted construction activity in late 2012, though a contact in the homebuilding industry notes that construction sub-contractors are getting a great deal of work from storm-related repairs and reconstruction during a typically slow season.\nOffice markets were relatively stable in the final months of 2012. A commercial real estate contact reports that the recovery from Sandy in Lower Manhattan has been slow, as a number of buildings in the flood zone remained out of service at year end. More broadly, leasing and sales activity across Manhattan were sluggish in November but picked up in December. Vacancy rates have been steady, while asking rents have edged up, led by brisk gains in Midtown South. Strong demand from the new media and advertising sectors and some pickup from legal services have offset weak demand from the financial sector. Elsewhere in the region, vacancy rates were little changed in the fourth quarter, though asking rents fell noticeably in northern New Jersey.\nOther Business Activity\nContacts in the manufacturing sector continue to report little or no growth in activity though they remain mildly optimistic about the near-term outlook. Non-manufacturing contacts report some improvement in business conditions and have grown increasingly optimistic about prospects for 2013. New York City area firms--both manufacturing firms\u00c2\u00a0 and non-manufacturing firms--say that Sandy adversely affected revenues in November but that business was seen to be back on track in December.\nOn balance, labor market conditions firmed in late 2012. While business contacts in the manufacturing sector report little or no change in employment, contacts in other sectors note some pickup in hiring. A major New York City employment agency specializing in office jobs said that while it is difficult to assess the labor market during the holiday season some continued softness in labor market conditions is apparent. In particular, financial sector hiring has remained sluggish, but year-end bonuses are expected to be up moderately from a year ago. Much of the bonus pay typically distributed in January was reportedly paid out in December in advance of higher tax rates.\nFinancial Developments\nSmall- to medium-sized banks report no change in demand for all loan types except commercial mortgages, where loan demand increased. Bankers report little change in demand for refinancing. The vast majority of respondents continue to report that credit standards were unchanged across all categories. Respondents indicate a decrease in spreads of loan rates over the costs of funds for all loan categories--particularly in residential mortgages, where nearly three in five bankers report lower spreads. Respondents also indicate a decrease in average deposit rates, on balance. Finally, bankers note declining delinquency rates in all loan categories--most notably in commercial mortgages, where well over half of those surveyed report lower delinquencies.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

/beige-book-reports/2013/2013-01-ch

"Beige Book Report: Chicago\nJanuary 16, 2013\nEconomic activity in the Seventh District continued to expand at a slow pace in late November and December. Many contacts expected that growth in 2013 would match or outperform 2012, but some remained more cautious than others, citing the impact of continued uncertainty over federal fiscal policy on the near-term economic outlook. Consumer spending increased somewhat, while growth in business spending remained tepid. Growth in manufacturing production was again moderate. Residential construction continued to increase at a slow but steady pace, but nonresidential construction remained weak. Credit conditions continued to improve gradually. Cost pressures eased some, and wage pressures remained moderate. Cattle and hog prices moved higher; while corn, soybean, and milk prices moved lower.\nConsumer Spending\nConsumer spending increased somewhat from the previous reporting period. Retailers noted that holiday sales were slightly below expectations. Multiple retailers reported that store traffic volumes fluctuated more throughout the holiday season than in recent years. Apparel and jewelry sales were strong, while sales of toys and electronics were more in line with expectations, and general merchandise sales were weaker. Auto sales in the District lagged the national pace, with several dealers indicating that lower consumer confidence hurt year-end sales. Some auto dealers also noted that inventory levels were slightly high. However, dealers expected new car sales to be stronger in 2013 due to pent-up consumer demand, easing credit conditions, and rising used vehicle prices.\nBusiness Spending\nGrowth in business spending remained tepid in late November and December. Inventory investment was little changed while spending on equipment and structures continued to slowly increase. Some contacts again noted a reluctance to spend given heightened uncertainty related to federal fiscal policy. Labor market conditions were unchanged. Hiring plans for the coming year were limited. Retail employment increased with some seasonal hiring, but few significant full-time post-holiday additions were expected. A recruiting firm noted that customers that are heavily dependent upon government spending were very cautious about increasing headcount amidst the fiscal cliff negotiations. Companies with exposures to Europe were likewise being more conservative in their hiring plans. However, contacts indicated that there is still strong demand for talent in technology, engineering, accounting and finance, energy, and skilled manufacturing jobs. Manufacturers indicated a reluctance to reduce headcount despite the recent slowdown in activity, choosing to cut overtime hours instead in expectation of a rebound in production in the first quarter. In addition, some contacts are also beginning to limit hours for part-time workers to less than 30 hours in order to avoid the 30-hour (full-time employee status) rule related to the Affordable Care Act.\nConstruction and Real Estate\nConstruction and real estate activity was mixed in late November and December. Residential construction continued to rise. However, homebuilders noted that new construction would stay moderate in many regional markets as long as existing home prices remained well below new home prices. Existing home prices did edge up in some areas of the District, and rental rates continued to rise. In addition, contacts reported that in many cases credit for homebuyers remained tight, slowing the pace of home sales. Demand for nonresidential construction remained weak, but some improvement was noted in the light industrial and office markets. Several commercial real estate contacts observed that uncertainty surrounding federal fiscal policy continues to weigh on structures spending in a number of market segments. However, commercial real estate conditions improved slightly. Vacancy rates continued to decrease; and while the pace of leasing and acquisition deals remained slow, it picked up slightly as financing became easier to obtain.\nManufacturing\nGrowth in manufacturing production continued to be moderate over the reporting period. Capacity utilization in the steel industry increased slightly and service center inventories were noted to be at desirable levels. Specialty metal manufacturers reported a decline in quoting and new orders as customers continued to delay purchases until the last minute. In contrast, a contact in the defense industry noted a substantial rebound in orders due to the two-month delay in sequestration. Contacts noted a slight pick-up in demand for construction equipment due to improvement in the housing market, although demand from the public sector remained weak. The auto industry remained a source of strength for manufacturing. Auto suppliers reported strong orders through the end of the year, and many expected vehicle production to expand in 2013. Activity in the energy industry appeared to slow. The lower price of natural gas, in part due to abundant supply, has negatively affected coal mining. In addition, one contact noted the lower prices had also led to a pause in shale gas production. However, contacts expected activity in the energy industry to rebound in early 2013.\nBanking and Finance\nCredit conditions continued to gradually ease over the reporting period. Credit spreads and financial market volatility remained low, and asset quality continued to improve. Credit line utilization rose substantially, with contacts citing end-of-year factors such as tax planning and special dividends as reasons for the increase. Banking contacts also reported moderate growth in demand for small business loans, particularly from manufacturing industries such as machining and packaging. Pricing for business loans changed little, while contacts cited some loosening of loan standards. Consumer loan demand, particularly for mortgage and auto loans, continued to increase. Contacts indicated, however, that less home refinancing activity was being processed than in the previous reporting period.\nPrices and Costs\nCost pressures eased in late November and December. Most raw material prices moved lower, although there was some pressure on lumber and drywall prices and concerns remained around potential food and energy price increases. In contrast, manufacturers supplying the defense industry said their customers were attempting to negotiate large price decreases; these contacts thought they could instead secure multi-year price agreements in exchange for more moderate price reductions. A contact in the grocery industry indicated that they have been unable to fully pass on recent meat and milk cost increases. More generally, retailers reported that discounting and promotions increased over the holiday shopping season. Wage pressures remained moderate, but nonwage costs increased. Contacts again cited higher healthcare costs; however, a few noted that increases this year were less pronounced than a year ago. Several contacts also reported increasing 401(k) payouts and year-end bonuses.\nAgriculture\nAlthough drought conditions eased, depleted soil moisture remained a concern in much of the District. The low levels of the Mississippi River hampered barge traffic moving both crops to market and inputs to farms. Crop operations tended to come out ahead for the year if they had adequate insurance coverage, and most crop farmers saw their net worth grow. Uncertainty regarding the tax treatment of capital expenditures led farmers to move up purchases of equipment and other capital improvements into 2012. Corn and soybean prices slid during the reporting period. Milk prices decreased, while cattle and hog prices increased. Of these agricultural products, only hog prices were below the levels of a year ago. Farmland values trended higher, with an extra spurt of farm sales at the end of 2012 in anticipation of tax code changes. Cash rents for cropland increased as well for the upcoming season.\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 16, 2013\nThe Tenth District economy expanded modestly in November and December. After a strong start to holiday shopping, retail sales remained solid as the holiday season progressed and vehicle sales remained higher than a year ago. Manufacturing activity, while above year-ago levels, eased further, especially in the non-durable goods sector. Although energy activity remained historically high, both oil and natural gas rig counts dropped and District contacts expected further declines in the coming months. Residential and commercial real estate markets strengthened as prices and sales trended up and inventories declined. Bankers also reported strong demand for both residential and commercial real estate loans. Historically high crop prices supported crop sector incomes, and livestock profits improved with an uptick in livestock prices. Wage pressures remained subdued except for the ongoing need to fill specialized positions in energy, high-tech, transportation, and construction industries. Numerous business contacts noted they were delaying hiring plans due to economic uncertainty associated with the fiscal cliff and potential policy changes.\nConsumer Spending\nConsumer spending edged up in November and December, and sales expectations softened heading into the new year. Retail sales rose since the last survey period but retailers expected less growth after the holiday season. Several store owners noted that lower-priced items and home furnishings sold particularly well while sales of high-end items remained sluggish. Auto sales slowed but remained higher than a year ago and some dealers noted undesirably high inventory levels. Near-term sales expectations also eased but generally remained positive. Hotel traffic fell sharply and occupancy rates were substantially below last year's levels. Although tourist activity picked up somewhat, visitor counts remained well below a year ago and were not expected to improve in the near-term. Despite slightly better sales and higher selling prices, restaurant owners turned pessimistic about future sales growth as food costs mounted. Numerous contacts pinned their less positive outlook for future growth on uncertainty associated with the fiscal cliff that was inhibiting consumer spending.\nManufacturing and Other Business Activity\nManufacturing activity eased since the last survey period, particularly in the non-durable goods sector. Factory production retreated to year-ago levels after a more pronounced contraction in non-durable goods activity trimmed production over the past month. The relative strength of durable goods activity was supported by the production and sales of electrical equipment, appliances, and components. Manufacturers expected generally stronger activity over the next six months. Factory managers at non-durable goods plants, however, were more optimistic about future activity than their peers at durable goods plants with stronger expectations for production, shipments, and new orders over the next six months. Despite a potential rebound in manufacturing activity, factory employment was not expected to rise, with some manufacturers noting that they were delaying hiring plans because of uncertainty in tax and regulatory policies. High-tech service firms expected robust sales and capital spending over the next three months. With railroad traffic continuing to rise and flat sales expectations at transportation service firms, backlogs and capital spending remained solid.\nReal Estate and Construction\nResidential and commercial real estate sales accelerated since the last survey period despite some weakness in new residential construction. Persistently strong sales of existing residential homes drove prices higher as home inventories continued to fall. Real estate contacts noted that low- to mid-priced homes continued to sell well. Overall mortgage activity and refinancings remained higher than a year ago although expectations for the coming months edged down. Despite recent strength at construction supply firms, sales deteriorated unexpectedly over the past month due partly to higher selling prices. Builders noted that surging lumber and drywall costs led to fewer housing starts in November and December. Commercial real estate markets also improved substantially since the last survey period. Vacancy rates continued to fall with a notable improvement in sales, absorption, and rents, although some contacts noted that economic uncertainty hindered activity. Rising commercial real estate prices were expected to persist in the coming months, but contacts expected a slower pace of both sales activity and absorptions.\nBanking\nBankers, on average, reported stronger loan demand, improved loan quality, and higher deposit levels in the recent survey period.\u00c2\u00a0 Overall loan demand continued to strengthen, led by demand for residential and commercial real estate loans. Respondents also reported stable loan demand for both commercial and industrial loans and consumer installment loans. Interest rates on commercial and industrial loans continued to edge lower. Most bankers reported improved loan quality compared to a year ago, and they also expected the outlook for loan quality to continue improving over the next six months.\u00c2\u00a0 Credit standards remained largely unchanged in all major loan categories and respondents also reported generally higher deposit levels since the last survey period.\u00c2 \u00c2\nAgriculture\nDrought continued to impact crop conditions and livestock profits improved with higher livestock prices and lower feed costs. District winter wheat conditions remained relatively poor due to persistent drought. The drought also caused water levels on the Mississippi River to fall further, hindering commodity transportation to and from agricultural regions. Still net farm incomes remained high due to historically high crop prices and crop insurance payments. Livestock profit margins also improved over the past six weeks due to a post-harvest decline in crop prices and rising livestock prices. District contacts noted a surge in land sales, sparked by concerns of tax policy changes in the new year.\nEnergy\nDistrict energy activity contracted in November and December and was expected to slow further in the coming months. The number of active oil rigs in the District eased from the previous survey period despite a year-end uptick in crude oil prices. The number of active natural gas rigs declined as high supplies of natural gas in storage kept prices from rising due to winter heating needs. Energy contacts expected steady demand to stabilize oil prices and the current oversupply of natural gas to push prices lower. Wyoming's coal output dropped in December and annual production fell moderately short of year-ago levels. District ethanol production remained steady and profit margins, while still poor, improved slightly with easing corn prices.\nWages and Prices\nAlthough wage pressures remained subdued during the survey period, raw materials prices rose further and more companies expected to raise finished goods prices in the coming months. Many businesses reported delaying hiring due to uncertainty surrounding the fiscal cliff and health care policy. Yet, some firms were offering wage premiums to fill specialized positions, particularly in the energy, high-tech, transportation, and construction industries. Raw material costs at factories climbed higher, and more factories planned to raise finished goods prices over the next six months. Builders expected higher prices for many construction materials, particularly lumber and drywall, to continue climbing due to tight supplies. After rising during the holiday shopping season, retailers expected retail prices to flatten during the coming months. Restaurant owners planned to increase menu prices due to high food costs. In contrast, fewer bookings led hotel operators to reduce average room rates.\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\nNovember 28, 2012\nEconomic activity in the Seventh District continued to expand at a slow pace in October and early November. Contacts noted heightened uncertainty over the near-term economic outlook as the deadline for the fiscal cliff approaches, but remained cautiously optimistic that growth would pick up to a moderate pace in 2013. By sector, gains in consumer spending were up slightly from the previous reporting period, while growth in business spending moderated further. Manufacturing production decelerated, while construction increased at a slow but steady pace. Credit conditions continued to improve gradually. Cost pressures were little changed, although food prices eased. Corn and soybean production in the District did not suffer as much from the drought as previously had been expected.\nConsumer Spending\nThe pace of consumer spending, while still moderate, increased slightly from the previous reporting period. Furniture sales improved slightly, while sales of electronics were flat from the previous reporting period. In contrast, retail auto sales fell, in part because incentives have become more directed towards leasing. Overall, retail sales surpassed expectations, which contacts attributed to promotions and generally improving consumer confidence. Nonetheless, some retailers noted a slower sales pace in early November, and many lowered their expectations for the first half of 2013. In particular, contacts expressed concern over the impact of potential changes in federal tax policy on consumers' willingness to spend.\nBusiness Spending\nGrowth in business spending moderated further in October and early November. Inventory investment continued to slow. Retail contacts reported no transportation delays stemming from Hurricane Sandy; and inventories, although slightly elevated, were indicated to be within typical seasonal ranges. Steel service center inventories were also slightly elevated, and manufacturers reported that material lead times decreased significantly. Capital spending on equipment and structures also slowed. A number of contacts reported that given the heightened uncertainty surrounding the near-term economic outlook, they were reluctant to make capital expenditures beyond productivity enhancements. Labor market conditions improved slightly from the previous reporting period. Job growth in manufacturing slowed, but there was an increase in professional services employment. However, a number of firms noted that they have put hiring plans on hold and have delayed temp-to-perm conversion decisions until next year. Those that did report ongoing plans to hire continued to note difficulty in finding skilled workers, and many have created internal training programs as a result.\nConstruction and Real Estate\nConstruction activity continued to increase at a slow, but steady pace in October and early November. Multi-family construction remained a source of strength with the continued rise in residential rents and declines in apartment vacancies. Single-family construction also increased. For the first time in several years, homebuilders reported new land development projects were underway, although these remained limited to a handful of desirable locations. Demand for nonresidential construction continued to increase at a slow pace, with contacts noting that many of their customers are waiting for the resolution of the fiscal cliff and stabilization in Europe before moving ahead on capital spending projects. Vacancy rates remained elevated for many property types, and contacts indicated that few leasing and acquisition deals are being made in the retail and office spaces. That said, contacts also noted some signs of improvement in commercial real estate conditions, pointing to moderate declines in vacancies and space available for sublease.\nManufacturing\nManufacturing production decelerated in October and early November. Contacts expected activity to remain subdued in the coming year, and voiced concerns about the potential impact of the fiscal cliff and weaker global demand for their products. Exports to Europe and Asia as well as many parts of South America softened, but remained stronger to North America, particularly to Mexico. Capacity utilization in the steel industry decreased, but an industry contact reported that orders were anticipated to pick up some over the next two quarters. Specialty metal manufacturers also reported weaker orders. There was continued strength in demand from the power generation industry, and the heavy equipment and auto industries also remained sources of strength. However, contacts expect demand for heavy machinery to flatten in 2013 as dealer rental fleet growth returns to more a normal pace. In contrast, improving housing demand continued to benefit manufacturers of construction materials.\nBanking and Finance\nCredit conditions continued to gradually ease in October and early November. Credit spreads and financial market volatility remained low, and asset quality steadily improved. Banking contacts reported modest growth in small business loan demand, but also slower growth in debt restructuring and leveraged finance deals as well as lower utilization of credit lines. Contacts attributed the decrease in credit demand from middle market customers to heightened uncertainty about future tax rates on capital spending. Loan pricing and standards remained broadly unchanged, with the exception of commercial and industrial and auto lending, where credit terms and availability continued to ease. Contacts noted that community and regional banks have been particularly aggressive in pricing and covenants to compete with larger banks for a limited supply of new loan opportunities.\nPrices and Costs\nCost pressures were little changed in October and early November. Several contacts noted that even though steel and scrap prices were lower than they were a few months ago, both had increased in recent weeks. A contact in the steel industry noted that the recent rise in scrap prices may reflect the impact of Hurricane Sandy as well as slightly higher global demand. Construction contacts also reported an increase in prices of raw materials such as lumber. Retail food prices eased, on balance, as higher prices for meat were offset by lower prices for produce, dairy, and some other grocery items. More generally, retailers indicated that discounting and promotions for non-food items also eased some over the reporting period, but were expected to pick up again after Thanksgiving. Wage pressures remained moderate, but nonwage costs increased as many contacts again cited higher healthcare costs.\nAgriculture\nThe corn harvest was completed ahead of last year's pace, while the soybean harvest was proceeding more quickly than typical. Much of the District reported higher yields than had been expected during the previous reporting period, reflecting in part timely local rains, later planting, and irrigation. Nonetheless, the drought still cut the District's output of corn and soybeans substantially relative to last year. Concerns about crop quality due to the drought seemed to diminish, although there were some reports of deliveries rejected for crop diseases. Corn and soybean prices--and with them livestock feeding costs--fell further, though they remained elevated from the levels of a year ago. Milk, hog, and cattle prices edged up from the prior reporting period, which also helped the cash flow of livestock operations. Sugar beet output in Michigan was higher than a year ago, and sugar prices were higher as well. Farmland values continued to rise despite the drought. Moreover, there seemed to be more farmland available to buy, partly due to uncertainty about future tax rates.\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\nNovember 28, 2012\nAggregate business activity in the Third District continued to grow modestly--comparable to the previous Beige Book--until the end of October. After pummeling the Mid-Atlantic coast, Hurricane Sandy made landfall in southern New Jersey as a tropical storm on October 29, moving quickly inland and over the Greater Philadelphia area. While the storm took a path through the heart of the Third District, the most severe impacts were felt along the central New Jersey shoreline and beyond our region in northern New Jersey, New York City, and Long Island where the wind and storm surges were greatest. Overall, the storm left over a hundred people dead, 8.5 million customers without power across 21 states, thousands of homes damaged or destroyed, and tens of billions of dollars of damage and economic disruption. Third District residents and businesses bore a substantial share of the damage; the Third District economy lost a couple of days' output.\nMost individual sectors, abetted by Hurricane Sandy, declined a little further or slowed their pace slightly. Manufacturing activity declined a bit. Retail sales slowed to a slight pace of growth, while auto sales slowed to a modest pace. Lending volumes at Third District banks have continued to grow slightly, and credit quality has continued to improve. Signed contracts for new home construction have slowed, while brokers report strong percentage growth in sales of existing homes. Commercial real estate contacts reported slightly more leasing activity and some initial interest for new office construction, as well as robust construction for industrial space. Service-sector firms reported generally slower growth with significant challenges facing tourism. Price pressures have changed little.\nThe overall outlook appears less optimistic relative to the views expressed in the last Beige Book. Recovery from Hurricane Sandy and a renewed focus on the looming fiscal cliff contribute to greater uncertainty than before. Expectations over the next six months among manufacturers declined for overall activity as well as for capital spending and hiring. Auto dealers, contractors, real estate firms, and financial service contacts remain optimistic, as their ongoing positive trends are supported further by recovery spending. Holiday sales expectations remain strong but have diminished slightly among general retailers. Service-sector contacts express a mix of outlooks with a substantial cloud hanging over the Jersey Shore's tourism industry.\nManufacturing\nHurricane Sandy's impact on Third District manufacturers seems to have somewhat accelerated the slight overall declines in orders and shipments reported during the prior Beige Book period. The immediate economic impact from Sandy is largely negative--a combination of economic disruptions and destruction of capital. Nevertheless, makers of food products, lumber and wood products, fabricated metal products, and instruments reported further gains. Makers of primary metals, industrial machinery, and electronic equipment reported further declines. A significant global manufacturer reported that growth in the U.S. and worldwide is weak and continues to slow; this firm and another large exporter specifically reported that growth in China is slowing further.\nExpectations among Third District manufacturers that business conditions will improve during the next six months softened in October then held steady through mid-November despite the election and the storm. Firms in several sectors anticipate additional demand over the next three to six months from storm-related rebuilding activity. However, firms also reported lower expectations of future hiring increases and slight declines in future capital spending.\nRetail\nPrior to the storm's advance, Third District retailers reported a small improvement in October's year-over-year sales trends following a disappointing decrease in September sales. The storm is said to have wrecked those gains temporarily. Sales shifted to necessities then slowed overall on October's final weekend as the storm approached. In many areas throughout the District, malls closed for most of two days--which are otherwise slow days of a slow week prior to the start of the holiday shopping season. By opening while many local school districts were still closed, these retailers attracted high food sales, but general retail sales remained slow and focused on hard goods through the weekend following the storm. One drug store chain closed 790 locations during the storm's peak on October 29th; only one remained completely closed two weeks later in a nearly inaccessible stretch of the Jersey Shore. Chain stores, restaurants, and independent retailers remain closed in scattered locations from Cape May to Point Pleasant Beach. More severe property damage clustered along the narrowest strips of the barrier islands where the ocean met the bay at the height of the storm. While rebuilding raised sales expectations for home repair supplies, the storm tarnished expectations for the atypically long holiday sales season, as households are preoccupied with recovery efforts.\nAuto dealers reported that October sales had been somewhat \"flat\" in New Jersey at 5.7 percent year-over-year growth and slowed a little in Pennsylvania prior to the storm. Sales fell off on the weekend prior to the storm and for the following two weeks. A significant sales bump is expected in November, as insurance companies begin to cut claims checks for an estimated 30,000 cars damaged in New Jersey. The stronger sales may extend over several months. In addition, an estimated 15,000 new cars awaiting delivery to dealerships were reported to be irreparably damaged by storm surge at the Port Newark--Elizabeth Marine Terminal in northern New Jersey. This loss will further tighten inventories at new car dealers throughout the eastern seaboard.\nFinance\nThird District financial firms have reported continued growth with a slight overall improvement since the prior Beige Book. This growth has occurred despite contacts reporting that many customers have been in a \"wait-and-see mode\" regarding capital investment decisions with respect to the nation's upcoming fiscal decisions. Power outages associated with Hurricane Sandy created widespread bank and ATM closings, but few long-term disruptions or significant losses. While credit quality continued to improve, contacts suggest that the storm impacts may create a surge in cash flow borrowing and an increase in delinquencies, especially for New Jersey businesses and homeowners. Lenders maintain a positive outlook.\nReal Estate and Construction\nOctober began as a disappointing month for some residential builders, punctuated by Hurricane Sandy, which closed their offices and reduced their traffic. Brokers continued to report significantly stronger sales activity (from previously low levels) and expect to conclude their strongest year of the recovery despite the storm impacts. Inventory levels of real estate listings are significantly lower than one year ago. Jersey Shore real estate has been thrown into turmoil by an excess of displaced residents, in addition to utility, construction, and FEMA workers competing for all available rental units as temporary housing. Construction activity has already begun on the easy repairs, but it is likely to take years to repair or replace the thousands of homes damaged and demolished. Overall, builders and brokers remain cautiously optimistic.\nNonresidential real estate contacts reported that prospect activity was up slightly; large blocks of Class A office space in Philadelphia's central business district were becoming scarce; and growing companies have begun to talk about new buildings. Construction activity for industrial space continued apace with over 7 million square feet of active construction from Chambersburg, PA, to Easton, PA, and from Pittston, PA, to Middletown, DE. Storm impacts were generally described as minimal away from the shore; however, some contractors noted that extensive repair work has already begun on some critical facilities requiring significant amounts of well-paid union jobs on weekend and overtime schedules. Nonresidential real estate contacts retain a positive outlook for slow, steady growth.\nServices\nThe growth of Third District service-sector firms has succumbed to the perils of Hurricane Sandy and has slowed, if not declined, since the last Beige Book. Tourist areas on the Delaware and New Jersey coasts suffered a severe blow; most of the Delaware shore and parts of the South Jersey shore saw limited damage and are largely open for business. However, many areas were awash--houses demolished and businesses and their infrastructure and/or inventories ruined. Revenue reports suggest that Atlantic City casinos alone may have lost about $35 million by the end of October, despite suffering little damage. Contacts suggest the casinos have been losing another $5 million a day since. The storm also caused the cancellation of the city's largest regular, annual convention and the delay (at best) of several others. Some of the barrier island homes well north of Atlantic City are now inaccessible--cut off by new channels carved by the storm from the bay to the sea. Most of the Jersey Shore will likely be rebuilt and ready for the summer season; however, some year-round businesses will not survive this off off-season; others may never rebuild.\nMost District staffing firms reported an ongoing slowdown in activity, although a few business lines associated with warehousing and distribution in advance of the pending holiday season were the strongest in over a decade. Staffing firms tended to suffer disproportionately greater revenue losses as their contract workers were unable to log hours when the storm impacts shuttered their offices. With the possibility of sequestration looming, many firms reported taking this time as an opportunity to restructure for efficiency (with potential layoffs), as many defense-related firms have already done or are in the process of doing. While attention has been focused on Hurricane Sandy and the fiscal cliff, some firms reported strong gains from the enormous advertising dollars during this election year, while others reported losses from the NHL lockout. Overall, the steady, modest growth of other service-sector firms has slowed slightly in recent weeks, and the positive outlook for continued growth six months out has grown a little more uncertain.\nPrices and Wages\nPrice levels have continued to show little overall change since the previous Beige Book. Cost factors have risen somewhat among manufacturing firms as have prices received. Homebuilders and retailers indicated that modest cost pressures continue and that strong competition restrains the prices that they can charge. Builders and contractors were beginning to grow concerned about labor shortages and rising wages, as general activity increased; Hurricane Sandy has escalated their concerns in New Jersey, as rebuilding begins to draw labor to storm-damaged areas. With few exceptions, most low-end home markets have stable or slightly rising prices, while most high-end home markets are still trending lower. One contact speculated that prices will probably fall further in storm-damaged areas along the Jersey Shore. Commercial real estate contacts expressed little change in leasing trends. Similarly, wage pressures remain minimal for most positions; medical benefits continue to trend higher.\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\nNovember 28, 2012\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of October through mid-November. Price inflation for final goods and services was subdued overall, and upward wage pressures were quite limited. Sales of retail items and most business and consumer services rose further on net, and contacts noted expectations for sales growth during the holiday retail season. District manufacturing activity was uneven but appeared to expand on balance. Agricultural output and sales increased, and extraction activity rose for providers of energy resources. Housing demand continued to firm, and conditions were largely stable for commercial real estate. Contacts from financial institutions reported that overall loan demand was largely unchanged, while credit quality improved.\nWages and Prices\nUpward price pressures were very limited on balance during the reporting period. Prices fell for some energy items, mainly crude oil and retail gasoline; prices rose significantly for natural gas but remained very low by historical standards. Earlier price increases for food commodities prompted moderate price increases by restaurants, in the range of 2 to 3 percent. Price movements for raw materials used in the agricultural, industrial, and construction sectors were uneven but appeared to be slightly upward on balance. Retail prices were characterized as largely flat.\nUpward wage pressures were modest overall. In most sectors, limited hiring activity and extensive worker availability held down recent and planned increases in wages and overall compensation, with reported numerical increases of 2 to 3 percent in general. Only a few cases of significant upward wage pressures were noted, including for truck drivers, health-care workers, and entry-level employees in a few geographic areas where unemployment rates have declined substantially.\nRetail Trade and Services\nRetail sales expanded further. A pickup was noted for department store sales during the reporting period, on the heels of a slight slowdown earlier. Significant sales gains were reported for consumer technology products such as tablet computers and games, and retailers added to inventories of these products in anticipation of solid sales growth during the upcoming holiday season. Sales of new and used automobiles remained strong, running well above levels from 12 months earlier, with further gains expected at year-end.\nDemand for business and consumer services expanded on net. Sales continued to grow for various technology services, as consumer demand remained high and businesses in many sectors focused their limited capital spending on information technology equipment and software. Demand for health-care services stayed somewhat weak, due to an ongoing decline in the use of discretionary medical services; however, health-care providers continued to invest in new information technology products to enhance efficiency and respond to emerging legislative requirements. Sales expanded further for restaurants. Activity in the travel sector was robust, with strong growth for visitor counts and spending in Hawaii and continued sales growth and profitability reported for U.S. airlines in recent months.\nManufacturing\nDistrict manufacturing activity was mixed across sectors but appeared to expand on balance during the reporting period of October through mid-November. P roduction activity for commercial aircraft and parts has been running well above levels from last year, with further gains in production and sales expected over the next few years. Demand continued to grow at a modest pace for pharmaceutical manufacturers. For producers of wood products, capacity utilization and sales have held up in recent months and generally have been running above their levels from last year. By contrast, the slowdown continued for makers of information technology equipment, with further sales declines reported for some equipment categories. Demand for scrap metal and steel remained low by historical standards but improved a bit, largely as a result of increased demand for use in automobile manufacturing and infrastructure construction projects. Production activity fell at petroleum refineries in response to recent declines in consumer demand for gasoline.\nAgriculture and Resource-related Industries\nAgricultural producers saw further sales gains, and extraction activity of natural resources used for energy production continued to expand. Contacts noted that the agricultural sector appears to be immune from factors that have restrained growth in other sectors of late: production activity and sales of most crop and livestock products have been growing at a solid pace, as has investment spending on new production equipment. Extraction activity expanded on balance for petroleum and natural gas, although the number of rigs used for natural gas extraction has been falling as producers have shifted their extraction activities toward higher-valued oil formations.\nReal Estate and Construction\nHome demand in the District continued to strengthen, while demand for commercial real estate was largely stable. Home sales have been growing on a sustained basis in most areas, spurring incremental gains in home construction activity. Home prices also have firmed, with significant gains reported over the past 12 months in some areas, substantially reducing foreclosure pressures. Construction activity for multifamily rental projects grew further in response to rising rents and tight availability of lower-priced homes. Demand for nonresidential space was largely stable overall, and contacts noted that the amount of new commercial construction was limited, although significant construction activity continued for large infrastructure projects such as roads and bridges.\nFinancial Institutions\nDistrict banking contacts reported that loan demand was largely unchanged on balance. Business loan demand was characterized as weak to moderate. Firms in most sectors remain uncertain about near-term prospects for their revenues and costs; hence, they are reluctant to make new capital investments other than those that directly enhance business efficiency and pay returns within a short time frame. The reports continued to highlight ample liquidity and stiff competition among lenders to provide credit to well-qualified business loan applicants, with community banks facing increasing competition from larger national banks for small business lending. Consumer lending expanded further, primarily for automobile purchases and new or refinanced home mortgages. Contacts noted that credit quality has been showing slow but steady improvement for business and consumer loans.\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\nNovember 28, 2012\nPrepared at the Federal Reserve Bank of Richmond and based on information collected before November 14, 2012. 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.\nEconomic activity expanded at a measured pace in recent weeks, according to reports from contacts in the twelve Federal Reserve Districts. Cleveland, Richmond, Atlanta, Chicago, Kansas City, Dallas, and San Francisco grew at a modest pace, while St. Louis and Minneapolis indicated a somewhat stronger increase in activity. In contrast, Boston reported a slower rate of growth. Weaker conditions in New York were attributed to widespread disruptions at the end of October and into November caused by Hurricane Sandy. Philadelphia reported general weakness that was exacerbated by the hurricane. However, in the Boston and Richmond Districts, the storm's effects were mostly limited. Contacts in a number of Districts expressed concern and uncertainty about the federal budget, especially the fiscal cliff.\nAmong key sectors, consumer spending grew at a moderate pace in most Districts, while manufacturing weakened, on balance. Seven of the twelve Districts reported either slowing or outright contraction in manufacturing, and two others gave mixed reports. In some cases, such as high-tech equipment and steel production, an industry slowed in one District while strengthening in another. Several Districts reported slight gains in residential and commercial real estate. Travel and tourism varied by District; for example, Minneapolis contacts marked levels of activity above a year ago, and tourism fell in the Kansas City District. Non-financial services also differed among Districts, with Philadelphia businesses indicating softer demand, while firms in other Districts reported pockets of robust demand for professional, scientific, and technical services. In transportation, reports were, again, mixed. In addition, hurricane disruptions slowed freight shipments in some Districts, while simultaneously boosting demand for shipments of emergency supplies. In banking and financial services, higher demand for home mortgage loans and auto loans increased consumer lending in some Districts, although small business loan demand was generally described as weaker to only moderately higher. Credit quality improved on net.\nReports on agricultural conditions were mixed, as drought conditions persisted in several Districts, such as Atlanta, Chicago, and Kansas City; other areas reported solid production and, in some cases, increased investment. In the energy sector, extraction expanded on balance in San Francisco and activity remained at high levels in the Minneapolis and Dallas Districts. However, there were fewer active oil rigs in Kansas City, Dallas, and San Francisco. In addition, coal production fell in the Cleveland and Kansas City Districts. Most Districts reported modest gains in hiring, while wage and price pressures remained mostly subdued. Employment increased in more than half of the twelve Districts. Wage growth was described as modest at best, constrained in part by an abundant labor supply. However, a few Districts reported pockets of strength in wage growth, notably in North Dakota, where oil drilling had pushed up demand for workers, and in the Kansas City District, where wages were rising for specialized workers in transportation, high-tech, and energy. San Francisco reported stronger wage growth for truck drivers and health-care workers. Price increases, for the most part, remained in line with the modest pace reported in our last assessment. Examples of some exceptions were input prices for construction in Cleveland, Chicago, Minneapolis, Kansas City, and San Francisco. Richmond reported generally slower retail price increases, and in Chicago, retail food prices eased, except for meats. In contrast, Kansas City contacts indicated that retail prices had edged up.\nConsumer Spending and Tourism\nConsumer spending increased at a moderate pace in most Districts in recent weeks, with mixed reports from Dallas. In New York, sales were ahead of plan prior to Hurricane Sandy, and merchants expect to recoup sales lost during the storm as residents replace destroyed or damaged property. Philadelphia contacts reported slower growth since the last report. Apparel sales picked up in Boston, and Richmond indicated that home and garden stores reported stronger sales ahead of Hurricane Sandy. Durable goods sales varied across Districts. For example, Boston and Chicago noted an improvement in furniture, while sales in that category declined in Cleveland. Chicago reported flattening in electronics sales, whereas San Francisco contacts reported significant sales gains for consumer technology products.\nAutomobile sales varied by District, with Cleveland, St. Louis, Minneapolis, and San Francisco indicating strength. Sales of both new and used vehicles in the San Francisco District were reported as running well above year-ago levels. Car sales were strong in Atlanta, although a bit less robust than earlier in the year. Richmond car sales were mixed. New York contacts said sales had flattened, and sales held steady in Kansas City. In contrast, auto sales slowed in Philadelphia and new vehicle sales fell at dealerships contacted by Chicago and Dallas. Sales of used vehicles were also mixed. Used car sales remained robust in New York and rose in Cleveland, with Cleveland District inventories remaining tight; in St. Louis, a majority of dealerships noted that used car sales had decreased relative to new car purchases, and in Minneapolis, used car sales softened.\nLooking to the holiday sales season, the Districts whose contacts gave an outlook noted mostly upbeat expectations. New York retailers anticipated recovering lost sales during the holiday season, and in Philadelphia, expectations remained bright overall for holiday sales, despite somewhat less optimism among general retailers. Boston contacts indicated that they were positioning their businesses for increased internet sales, and a Richmond retailer commented that he was competing with his suppliers for online sales. While retailers anticipated a good holiday season in Minneapolis, mall contacts reported recent declines in traffic and sales. Contacts in Boston, Cleveland, and Chicago remarked on their uncertain sales expectations because of the potential for tax changes in 2013, as the national budget outlook remained uncertain.\nTourism slowed in some Districts while strengthening in others. New York District tourism was mixed prior to Hurricane Sandy; hotel bookings initially dropped off following the storm, but business bounced back the next week. In addition, late cancellation of the New York marathon likely brought large numbers of visitors to the city in early November. Hurricane Sandy affected areas of the Philadelphia District along the coastlines of Delaware and southern New Jersey, in some cases demolishing houses and devastating businesses. New Jersey also suffered losses in revenue from the closure of Atlantic City casinos and the cancellation or delay of conventions there; expectations were that most areas along the Jersey shore would be rebuilt and ready for the summer season. Richmond reported seasonally slower autumn bookings, along with scattered cancellations caused by Hurricane Sandy, and in the Kansas City District, tourism spending fell, leading to price reductions by hoteliers. In contrast, travel and tourism remained strong in Atlanta, with international visitors bolstering activity in Florida and District convention bookings picking up. The exception there was at cruise lines, for which bookings continued to fall below expectations. Travel and tourism rose in Minneapolis.\nNonfinancial Services\nReports from nonfinancial services providers differed among Districts. Boston reports were generally weaker than expected for tech services, while New York businesses indicated that the effects of Hurricane Sandy had negatively impacted both workers and customers. In the New York District, prolonged power and communications outages and extreme flooding hurt firms and residents, particularly on Long Island and in northern New Jersey. Slowing demand for nonfinancial services in the Philadelphia District was further hampered by the hurricane. St. Louis reported a net decline, but with expansion in some categories such as business support, telecommunications, casinos, legal, and crisis management services. Dallas noted steady demand overall, and contacts reported robust demand for insurance, audit, and legal services. However, Richmond, Minneapolis, and San Francisco reported net expansion, with examples of growth at engineering, technology, and architectural firms. A number of contacts across Districts expressed uncertainty about business conditions for the months ahead as the firms and their customers waited for the outcome of federal budget negotiations.\nTransportation sector activity was generally mixed since the last assessment. Dallas noted that intermodal cargo volumes were down. Declines in rail cargo volumes were led by such products as coal, metals, and forest materials. Atlanta also cited declines in coal shipments, due to softening global demand for metallurgical coal and less demand from domestic utility plants. Cleveland reported fewer freight shipments, which their contacts attributed to hurricane disruptions and weakness in Europe, even as freight demand was boosted by housing, motor vehicles, and retail. Kansas City also noted a pickup in trucking traffic due to emergency food shipments in the wake of Hurricane Sandy. Shippers in that District also reported an increase in their capital expenditures. According to contacts for the Dallas District, domestic airline demand was flat to down, and in the St. Louis District, air transportation firms announced plans to reduce operations.\nManufacturing\nConditions in the manufacturing sector were mixed, though on balance, most Districts reported that conditions had weakened since the previous report. The Boston, New York, Philadelphia, Atlanta, Chicago, Minneapolis and Kansas City Districts reported that activity had either slowed or declined somewhat, with most reports leaning toward the latter. Activity was mixed in the Dallas and San Francisco Districts, while reports from the Cleveland, Richmond, and St. Louis Districts were positive. The Boston, Dallas, and San Francisco Districts noted slower growth for information technology equipment, while business activity expanded at high-tech firms in the Kansas City District. Car and auto parts producers in the Atlanta District said that orders softened slightly. Similarly, auto production in the Cleveland District declined somewhat for domestic nameplates but increased for foreign nameplates. In contrast, heavy equipment and auto industries remained sources of strength in the Chicago and the Kansas City Districts. Demand was flat to down for transportation equipment in the Dallas District, and the Philadelphia District indicated that makers of primary metals, industrial machinery, and electronic equipment reported further declines.\nNoteworthy gains in manufacturing related to the aerospace industry were reported in the Richmond and San Francisco Districts, while demand for aviation equipment held steady in Dallas. Steel production was down slightly in Cleveland, while the demand for steel in the San Francisco District improved a bit from low levels. Manufacturing contacts from five of the twelve Districts expressed concern about the outlook for 2013, in part, due to the uncertainty regarding the outcome of the fiscal cliff.\nReal Estate and Construction\nOverall, markets for single-family homes continued to improve across most Districts with the exception of Boston and Philadelphia. Residential real estate markets in the New York District were mixed but generally firm prior to the storm. Selling prices were steady or rising. Boston, New York, Richmond, Atlanta, Kansas City, and Dallas noted declining or tight inventories. The Cleveland District indicated that the number of single-family housing starts had increased since our last report and from a year ago; most sales contracts were in higher price-point categories. Similarly, Richmond noted more residential work in the high-end home category for the first time in three years, and builders cited significant pent-up demand in the first-time buyer segment. Atlanta indicated that existing home sales were up slightly compared to a year ago and reported that investors were more active in Florida than in the rest of the District. In Chicago, residential construction increased at a slow but steady pace in October and early November, and construction increased for single-family as well as multi-family homes. St. Louis reported that residential real estate market conditions continued to improve, and Minneapolis indicated that segments of construction and real estate were growing at a double-digit clip. Kansas City characterized residential real estate activity as brisk and noted that a solid rise in home sales had reduced home inventories. Dallas noted that single-family housing activity remained strong, with both new and existing home sales activity increasing. San Francisco reported that home demand continued to strengthen and that home sales continued to grow on a sustained basis in most areas, spurring new home construction. However, sales growth generally slowed for both the condominium and single-family home markets in the Boston District, and the Philadelphia District noted that October began as a disappointing month for some Realtors, only to be punctuated by Hurricane Sandy.\nConstruction and commercial real estate activity generally improved across Districts since the last report. Gains, albeit modest in most cases, were reported by Philadelphia, Richmond, Chicago, and Minneapolis. The gains among Cleveland's contacts were tempered by reports in recent weeks of a slowdown in inquiries and a decline in public-sector projects. Kansas City described activity as holding firm and noted that real estate markets remained stronger than a year ago. Demand for office and industrial space continued to increase in Dallas, although contacts at some businesses said they were \"holding back on expansions due to uncertainty.\" Several Districts noted segments of little change in commercial real estate activity. Boston described market fundamentals as flat, and San Francisco depicted market conditions as stable but with pockets of strength for large infrastructure projects such as roads and bridges. Commercial and industrial conditions were mixed in the St. Louis District and throughout most of New York prior to the hurricane. New York added that, while office markets across upstate New York were unaffected by the storm, there were some signs of recent softening.\nBanking and Financial Services\nLoan demand generally was either mixed or slightly stronger across most Districts in recent weeks. Among those noting mixed results, New York reported that demand for consumer and especially commercial and industrial loans weakened, but commercial and residential mortgage demand was steady. Richmond said that a small commercial banker was encountering a slight improvement in overall loan demand but added that consumer loans were unchanged from \"meager\" levels and small business loans were virtually non-existent. Chicago noted that small business loan demand experienced modest growth, but a decrease in credit demand occurred among middle-market customers. According to St. Louis contacts, overall lending activity was essentially unchanged over the period. St. Louis added that, while credit standards for commercial and industrial loans were largely unchanged, both the demand for these loans and the number of inquiries ranged from moderately lower to moderately higher. Used car loan demand was weak in the Dallas District, although first mortgage and energy-related lending increased. San Francisco cited weak-to-moderate business loan demand, but consumer lending expanded further with the help of auto loans and home mortgage refinancing; however, San Francisco noted that lending activity as a whole was unchanged. Most remaining Districts, including Philadelphia, Cleveland, Atlanta, and Kansas City reported moderate increases in total loan demand. In the Philadelphia District, banks reported widespread bank and ATM closings due to Hurricane Sandy.\nCredit standards and credit quality were somewhat improved, on net, since the last report. Chicago, St. Louis, and Kansas City noted that credit standards on most types of loans were unchanged, and Dallas cited a loosening of credit standards, which contributed to very competitive loan pricing. Atlanta cited contacts who reported that underwriting standards had become more restrictive and burdensome since its last report, both in terms of credit scores and information requests. With respect to loan quality, New York reported that delinquency rates increased in the consumer and commercial and industrial segments but held steady in the residential and commercial mortgage segments. Philadelphia contacts cited moderate improvement. Cleveland and Richmond noted improvements in delinquency rates across consumer and business loan categories. Richmond added, however, that some contacts were concerned that banks were increasing their risk exposure by making longer-term loans in an effort to get higher yields. Kansas City and San Francisco also mentioned moderate improvement in loan quality.\nAgriculture and Natural Resources\nAssessments of agricultural activity were mixed. Varying degrees of drought conditions persisted in several Districts, while Hurricane Sandy's agricultural damage was minimal and localized mainly in coastal areas. In the Atlanta District, much of Georgia experienced drought conditions, while Chicago reported that corn and soybean production in their District did not suffer as much from the drought as previously expected. Correspondingly, Minneapolis indicated that their District crop producers remained in mostly good shape, despite this year's drought. Low soil-moisture levels in the Kansas City District hindered winter wheat emergence, raising concerns that persistent drought could strain U.S. crop production, keep crop and feed prices high, and force further livestock herd liquidations. However, Richmond stated that most farmers in Virginia were relieved that Hurricane Sandy brought much needed rain without significant damage to the corn and soybeans still in the fields. San Francisco noted that production activity and sales of most crop and livestock products have been growing at a solid pace, as had investment spending on new production equipment. Moreover, the St. Louis District reported that harvest completion rates were considerably higher than the five-year average there.\nActivity in the energy industry was generally mixed since the last report. Coal production was above year-ago levels in the St. Louis District but was lower in the Cleveland and Kansas City Districts. More electricity was being generated from natural gas in Kansas City. In the Atlanta District, Hurricane Sandy's damage to refineries and infrastructure in the Northeast caused southeastern regional refiners to increase production and transportation of oil products to supply affected areas. Minneapolis reported that oil and gas production remained at record levels but noted that exploration activity was flat to down in some areas since our last report. Similarly, extraction activity in the San Francisco District expanded on balance for petroleum and natural gas, although the number of rigs used for natural gas extraction fell as producers shifted their activities toward higher-valued oil formations. The number of active oil rigs also fell in the Kansas City and Dallas Districts. Minneapolis mentioned that iron mines in northern Minnesota remained busy, although production fell slightly compared to recent months.\nEmployment, Wages, and Prices\nModest improvements in hiring activity were reported by most Districts. Labor markets were generally described as improving modestly by Boston, Atlanta, Chicago, Minneapolis, and Dallas. Staffing firms, according to Boston and Cleveland, experienced improved business conditions. However, Richmond reported that labor markets in general were weaker than in the last report, citing examples of soft demand and an unwillingness of some manufacturers to hire long-term unemployed workers. Contacts for Boston noted that demand for office and clerical assistants and accountants remained weak, and Cleveland reported that hiring across industries was generally sluggish except in autos. Atlanta indicated that employment agencies were seeing a pickup in orders for temporary help. Some large employers, however, announced plans to move toward hiring more part-time, rather than full-time, employees. Chicago reported that a number of firms were putting hiring on hold and had delayed temp-to-perm conversion decisions until next year. With respect to the upcoming holiday season, Cleveland reported that retailers were planning to hire the same number of temporary workers as last year, while Boston and Atlanta noted that some retailers were expecting to hire more help over the holidays. Finally, contacts in a number of Districts reported difficulties finding qualified workers in some specialized occupations.\nWage pressures were generally characterized as \"subdued\" or \"contained\" throughout much of the nation, according to the latest District reports. Virtually every District described wage growth as modest at best. Contacts in the Atlanta District attributed flatness in wages to the large number of applicants for newly posted positions. Richmond reported that manufacturing and retail wage growth edged up, but wage growth slowed at non-retail firms. In addition, non-labor costs were increasing in the Chicago District, mostly due to health-care costs. St. Louis cited stable wages but added that non-labor costs in manufacturing were rising. Minneapolis noted pockets of stronger wage growth in some geographical areas, such as North Dakota where oil drilling was pushing up demand for workers. However, even this pressure was easing in recent weeks. Kansas City noted strengthening in wage growth among specialized positions in transportation and high-tech firms. Finally, San Francisco noted that limited hiring and abundant labor supply were holding down wage and compensation increases. However, San Francisco added that a few cases of wage pressures were occurring among truck drivers, health-care workers, and entry level positions in areas with low unemployment.\nAs with wages, price pressures changed little from the modest pace that was reported in the last assessment. Almost every District described price growth as modest, although examples of higher price growth were occasionally cited. For example, Atlanta noted that, even though overall input price increases had eased, firms were being challenged by higher energy and crop-related input prices and by rising health-care costs. Cleveland, Chicago, Minneapolis, Kansas City, and San Francisco all reported increasing prices of construction-related materials, and Chicago and Minneapolis also cited increases in metals prices. In addition, Kansas City remarked on rising prices in construction materials and manufacturing raw materials in general. Richmond reported increasing raw materials prices and slower increases in finished goods prices. Retail prices in general eased in the Richmond District, and Chicago noted that retail food prices eased, except for meats. According to contacts in the Kansas City District, however, retail prices edged higher. In the Richmond District, the pace of increases in services prices also moved up.\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\nNovember 28, 2012\nThe Ninth District economy experienced moderate growth since the last report. Increased activity was noted in consumer spending, tourism and professional services. Some significant parts of construction and real estate are growing at a double-digit clip. Activity in the energy and mining sectors continued at a rapid pace. District crop producers remained in mostly good shape, despite this year's drought. Meanwhile, activity slowed slightly in the manufacturing sector. While labor markets continued to show signs of tightening in several areas, some layoff notices were reported. Overall wage increases were moderate, although stronger increases were reported in some areas. Price increases were generally modest.\nConsumer Spending and Tourism\nConsumer spending posted moderate gains. During the past two months, a Minnesota auto dealer reported strong sales activity for new vehicles and somewhat softer sales activity for used vehicles. A Minnesota-based restaurant and bar chain reported that recent same-store sales were up over 5 percent from last year. Same-store sales at a Minnesota-based retailer increased over 2 percent in October compared with a year ago. However, a mall manager in the Minneapolis area noted slight decreases in traffic and sales during September and October compared with last year. In Montana, a mall manager reported that sales were down slightly during September after a generally flat summer.\nRecent travel and tourism activity was above a year ago. Convention and tourism business in the Sioux Falls, S.D., area was trending above last year's levels with prospects for a good 2013, according to an official. A travel agency in Minnesota noted that corporate and leisure travel sales in October were above year-ago levels. Travel and tourism activity in the Duluth, Minn., area was above last year, and businesses are optimistic for 2013, according to an official.\nConstruction and Real Estate\nCommercial construction activity increased significantly since the last report. The permitted value of new commercial construction in October increased substantially from the same period last year in Sioux Falls and nearly quadrupled in Billings, Mont. A recent survey of Minnesota building professionals conducted by a trade association noted an improvement in market conditions. Residential construction increased from a year ago. The value of October residential building permits in the Sioux Falls area was up 16 percent from last year. In the Minneapolis-St. Paul area, the value of October residential permits was up 70 percent compared with a year ago, while it tripled in Billings.\nCommercial real estate markets expanded at a slow pace. A group of Minnesota commercial real estate investors and real estate professionals noted a recent uptick in activity and a reduction in vacancy rates since the last report. Residential real estate market activity increased. Home sales in October were up 15 percent from the same period a year ago in the Minneapolis-St. Paul area; the inventory of homes for sale was down 30 percent, and median sales prices rose 15 percent. In the Sioux Falls area, October home sales were up 19 percent, inventory was down 13 percent and the median sales price was flat relative to a year earlier.\nServices\nActivity at professional business services firms grew since the last report. The aforementioned survey of building professionals revealed that 59 percent of engineers reported improving conditions compared with 16 percent who saw declines, while 36 percent of the architect respondents reported increases and 21 percent noted declines. A marketing consulting firm noted a large increase in demand from firms that are launching new products or services. Demand for scientific researchers increased for a large diversified manufacturing company. A logistics consulting firm noted some disruptions in rail traffic due to Hurricane Sandy.\nManufacturing\nManufacturing slowed slightly since the last report. An October survey of purchasing managers by Creighton University (Omaha, Neb.) found that manufacturing activity decreased for a fourth straight month in Minnesota and South Dakota, but continued to increase in North Dakota. A wood-products facility in northern Minnesota closed. More than half of manufacturing respondents to a late-October Minneapolis Fed ad hoc survey reported that they had cut capital expenditures in the past six months. In contrast, an agricultural machinery producer announced a $20 million expansion to a facility in North Dakota, a Minnesota vehicle manufacturer announced a $20 million expansion and a plastic pipe producer broke ground on a new plant in South Dakota. A maker of outdoor gear is expanding its operations in Minnesota due to strong demand from the military.\nEnergy and Mining\nActivity in the energy and mining sectors continued at a rapid clip. Oil and gas production remained at record levels, but exploration activity since the last report was flat in North Dakota and decreased in Montana. An oil pipeline operator announced capacity expansions on a pipeline in Minnesota and is considering construction of a high-capacity line from the North Dakota oil patch to Wisconsin. Sand mining growth continued; plans for a new loading facility in Minnesota were announced, along with plans for a rail depot in North Dakota. Iron mines in northern Minnesota remained busy, but production fell slightly from recent months.\nAgriculture\nDistrict crop producers remained in mostly good shape, despite this year's drought. Farm incomes were bolstered by high crop prices, and farmers were looking at record harvests in areas less affected by drought. However, livestock and dairy producers continued to suffer from higher input costs. Reports of ranchers culling herds due to low hay production and increased feed prices continued to surface. After years of delays, a South Dakota beef slaughter and processing plant began operations in October. Prices received by farmers for wheat, corn, soybeans, beef, dairy products and chicken increased in October from a year earlier; hog, dry bean, turkey and egg prices decreased.\nEmployment, Wages, and Prices\nWhile labor markets continued to show signs of tightening in several areas, some layoff notices were reported. According to the aforementioned survey of building professionals, 31 percent expect to hire more workers during the upcoming year compared with 18 percent in last year's survey. Demand for nurses has picked up in western North Dakota. A representative of Montana State University noted that job prospects for graduates have improved. In Minnesota, a manufacturer of equipment used for transporting and storing natural gas as a liquid broke ground on an expansion that will add 80 jobs, and a paints and coatings manufacturer recently announced plans for an expansion that will create about 135 jobs. However, a dairy plant closing in Minnesota will lead to 130 job reductions by the end of the year, and an equipment manufacturer announced plans to close a plant, which will affect 100 jobs. Meanwhile, the closing of a pest control product plant in North Dakota will result in almost 150 job cuts.\nWage increases were moderate, with some exceptions noted. Reports of solid wage increases continued from the oil-drilling area of North Dakota, although the pace of growth has started to ease recently.\nOverall price increases were modest. Minnesota gasoline prices decreased about 50 cents per gallon from early October to mid-November. Some metals prices also decreased since the last report. In contrast, a bank director noted that smaller cattle herds will likely keep beef prices elevated. A wood products industry observer noted some recent increases in prices for oriented strand board.\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\nNovember 28, 2012\nThe Tenth District economy expanded modestly in October. Stronger retail sales underpinned a rebound in consumer spending that was expected to continue during the upcoming holidays. Commercial and residential construction remained solid, and real estate agents expected real estate prices to rise further with stronger sales. Bankers reported stronger commercial lending activity and additional demand for residential real estate loans. District manufacturing activity slowed, but factory managers expected a moderate rebound in orders, production, and shipments. High feed and fuel costs drove agricultural loan demand higher, and dry conditions hindered winter crop development. District contacts expected natural gas drilling activity to strengthen seasonally with prices during the winter heating months. The prices of raw materials for manufacturing and construction rose, and some finished goods prices edged higher. Wage pressures were subdued except for specialized positions at transportation, high-tech and energy firms. Several business contacts commented that uncertainty regarding political, economic, and tax policies was inhibiting growth, limiting business investment, and delaying hiring plans.\nConsumer Spending\nConsumer spending rebounded modestly in October and retailers expected further sales gains during the holidays. District retailers reported that sales rose above year-ago levels, although they were generally below expectations. Several store owners noted particularly strong sales for major appliances and seasonal apparel, in addition to an uptick in demand for premium and custom goods, such as fine jewelry. Auto sales held steady after rising in the last survey period, and sales were expected to improve by year's end. Fuel-efficient cars sold well, while demand for large, expensive cars and trucks remained weak. Tourism contacts reported that visitor counts and tourism spending fell below year-ago levels. Furthermore, hoteliers reduced room rates and noted the fall in hotel occupancy rates was likely to continue in coming months. Restaurant owners reported lower sales revenue and a decline in average check amounts. Some leisure and hospitality contacts attributed the slowdown in sales to high gas prices that limited spending and kept some customers at home.\nManufacturing and Other Business Activity\nAlthough manufacturing activity slowed slightly since the last survey period, sales at transportation and high-tech service firms rebounded. While still above year-ago levels, District manufacturing activity edged lower in October as production of both durable and non-durable goods slowed, most notably at machinery, electronics and food processing plants. In addition, order backlogs fell further and were expected to remain low. The volume of new orders and shipments dropped in October, but were expected to rebound and provide a modest boost to production during the next six months. Capital spending at District factories generally held steady; however, fewer plant managers were hiring and the average work week declined. Trucking traffic picked up, due in part to emergency food shipments to areas affected by Hurricane Sandy. Several transportation firms reported an increase in capital spending and a shortage of qualified truck drivers. After easing in the last survey period, business activity at high-tech firms expanded and sales were expected to strengthen in the months ahead. Several business contacts attributed customer delays in ordering to uncertainty regarding the current political, economic and tax environment.\nReal Estate and Construction\nResidential real estate activity remained brisk in October, and commercial real estate activity held firm. A solid rise in home sales reduced home inventories further, with real estate agents noting particular buyer interest in foreclosed properties. Low- and mid-priced homes continued to sell well, while the market for luxury homes and condominiums remained weak. Residential mortgage lenders saw loan applications for home purchases rise above year-ago levels and saw an upswing in loan refinancing activity. Stronger sales supported further home price increases for both existing and new homes. Housing starts were up from the previous survey, but were expected to level off with a seasonal slowdown in construction over the winter months. Sales at construction supply firms rebounded, particularly for lumber products. Commercial real estate markets remained stronger than a year ago and District contacts expected additional strength in coming months. New commercial construction edged up and was expected to hold steady. Commercial sales activity and real estate prices remained above year-ago levels with strong expectations through the end of the year. District contacts expected commercial real estate rents to rise as vacancy rates trended lower. Developers, however, were concerned about the size of down payments and reported a slight deterioration in access to credit.\nBanking\nIn the recent survey period, some District bankers reported stronger loan demand, improvements in loan quality and a slight rise in deposit levels. Total loan demand rose moderately, led by gains in demand for real estate loans for both residential and commercial properties. In addition, more bankers reported higher loan demand and lower interest rates for commercial and industrial loans. A few bankers noted continued weakness in consumer installment loan demand. Many bankers reported a moderate improvement in loan quality compared with the last survey with additional quality improvements expected during the next six months. Otherwise, credit standards remained largely unchanged in all major loan categories.\nAgriculture\nHigh input costs reduced farm profitability and boosted farm loan demand since the last survey period. Demand for farm operating loans rose as surging feed costs cut livestock operator incomes and crop producers paid higher fuel costs to run irrigation and harvest equipment. With reduced incomes, especially for livestock producers, farm loan renewals and extensions edged up and loan repayment rates eased from recent peaks. Still, bankers reported that sufficient funds were available to meet short-term financing needs. Low soil-moisture levels hindered winter wheat emergence, raising concerns that persistent drought could strain U.S. crop production, keep crop and feed prices high, and force further livestock herd liquidations. Farmland values, however, continued to set new record highs in the District.\nEnergy\nDistrict energy activity fell in October, but was expected to improve heading into the winter heating season. The number of active oil rigs in the District eased from recent highs as oil prices declined. After falling from summer peaks, the number of natural gas rigs held steady since the last survey and some District contacts expected a seasonal uptick in natural gas prices as winter approached. Wyoming's coal production remained well below year-ago levels as more electricity was being generated from natural gas. District ethanol production edged up, but persistently high corn prices limited profits.\nWages and Prices\nWage pressures remained subdued during the survey period, raw materials prices rose, and some finished goods prices edged up. Many firms were reluctant to increase wages or hire staff amid political and economic uncertainty. Some businesses, however, were offering higher salaries to recruit workers with specialized skills, such as engineers, software developers, and commercial truck drivers. The cost of raw materials for manufacturing continued to climb, and a few firms were raising finished goods prices. Builders and construction supply companies expected further price increases for construction materials due to Hurricane Sandy. Retail prices edged up but were expected to hold steady during the holiday shopping season. Restaurant owners, however, planned to increase menu prices due to high food costs. Low occupancy rates prompted hotel operators to reduce average room rates.\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\nNovember 28, 2012\nThe Eleventh District economy expanded at a modest pace over the past six weeks. Reports on manufacturing and transportation services activity were mixed. Demand for staffing services declined, while that for other business services held steady or increased slightly. Retailers' reports on demand were mixed, while automobiles sales were flat. Residential sales and construction increased, and energy activity remained steady at high levels. Financial firms reported mixed demand. Agricultural conditions remained mostly dry. Most respondents said prices held steady, and employment levels were steady to up. Many firms' outlooks remain uncertain, given regulatory and fiscal concerns and short-term disruptions caused by Hurricane Sandy.\nPrices\nMost reporting firms said prices were steady, however there were a few scattered reports of higher prices. Retailers said prices had not changed much since the last report, but the drought is expected to increase food costs. Some transportation services firms noted that prices were up due to increased fuel and labor costs. Several manufacturers of construction products said that stronger demand was supporting higher prices. Some paper manufacturers noted an increase in selling prices. Grain prices declined over the reporting period and cotton prices remained weak.\nThe price of WTI was volatile during the reporting period but ended up in the mid-$80 per barrel range. Natural gas prices, while still depressed, rose to $3.40 per thousand cubic feet over the same period. On-highway diesel and gasoline prices trended down over the reporting period, and prices of petrochemical products were mostly flat.\nLabor Market\nEmployment held steady or increased at most responding firms. Accounting and legal firms reported hiring, and one staffing firm was adding to its payrolls despite a recent slowdown in demand for temporary workers. Shortages of truck drivers continued to be noted by transportation service firms and there were scattered shortages of workers at energy-related firms. Wage pressures remained subdued.\nManufacturing\nOverall demand for construction-related products was mixed. Demand for stone, clay, cement, glass, and lumber held steady or improved, and outlooks were more optimistic compared with the previous report. Demand for fabricated metals products held steady over the past month, but contacts noted that overall demand has been steadily improving since the beginning of 2012. Primary metals manufacturers characterized demand as poor over the past six weeks and said that they expect continued weakness in sales through year-end.\nHigh-tech manufacturers said that shipments and new orders declined since the last report. Demand for industrial and computing products was particularly weak, and contacts noted weakness in personal computer sales was negatively impacting sales of other related hardware such as printers. One respondent noted that while orders have declined recently, cancellations have not increased, suggesting that declines in orders may be due to thinning of inventories not due to slowing of final demand. Continued high uncertainty about economic prospects was restraining capital investment, and respondents expected sustained weakness over the next six months.\nDemand for paper products was flat to up, and most contacts were slightly more optimistic in their outlook. Food producers reported stable demand over the past month, and noted that sales were higher than a year ago. Overall, transportation equipment manufacturers said demand was flat to down over the past six weeks. Demand for aviation equipment held steady. Outlooks were cautiously optimistic, and contacts expect demand to pick up in the second half of 2013. A producer of recreational vehicles noted a slight lull in sales, and an emergency vehicle manufacturer reported stable demand.\nPetrochemicals producers noted Gulf Coast chemical production was up slightly, but uncertainty cautioned firms' outlooks. Gulf Coast refiners said they were operating at rates above 90 percent, and strong export demand was keeping inventories from building.\nRetail Sales\nRetailers said demand was mixed over the past six weeks. Sales in the Eleventh District continued to outperform the nation, according to two national retailers. Contacts said the loss in sales resulting from Hurricane Sandy was temporary and would not impact holiday spending. Outlooks through year-end were mixed.\nOverall automobile sales were flat, while new vehicle sales declined slightly since the last report. One contact noted that obtaining credit approval has not been an issue and customers wanting to buy cars can get financing. Prices are stable, but margins are thin. Outlooks remain positive for the fourth quarter, but contacts expect the cost of doing business to increase next year.\nServices\nStaffing firms said demand \"came to a sudden stop\" over the past six weeks, as several clients delayed hiring until after the election. Declines were reported in orders from mid-sized manufacturing and construction firms. However, one contact noted steady demand for professional, technical, and information technology positions. Outlooks were mixed.\nOverall, accounting firms noted steady demand for their services. Demand for insurance and audit services was robust, while that for tax services was flat to slightly down. Real estate related activity remained weak. Outlooks were more positive than earlier in the year, with contacts expecting an increase in tax and transactional related services in the near-term. Legal firms reported a modest pickup in activity, with continued strength in intellectual property litigation, energy and real estate-related services. Outlooks for next year were upbeat among legal industry contacts.\nReports from transportation service firms were mixed. Intermodal cargo volumes declined, while container volumes increased over the reporting period. Railroads said cargo volumes declined slightly over the past four weeks, with declines in shipments of coal, metals, primary forest materials, and metallic ores outpacing increases in shipments of grain, chemicals, lumber and wood, and motor vehicles. Airlines noted that demand was flat to down since the last report. Demand for domestic travel declined, while that for international travel was strong. Airline contacts were cautious and uncertain in their outlooks.\nConstruction and Real Estate\nSingle-family housing activity remained strong. Both new and existing home sales activity increased over the past six weeks. Contacts noted that despite a pickup in new construction, low inventories of both existing and new homes have led to moderate price increases overall. Apartment construction remained robust, but contacts said that leasing activity slowed. Outlooks are positive through year-end.\nContacts in the commercial real estate industry said that demand for office and industrial space continued to increase since the last report. Contacts said that some businesses were holding back on expansions due to uncertainty, but overall outlooks remained positive. Investment activity remains less aggressive than earlier in the year, although some contacts noted that investment in apartment development remains quite strong.\nFinancial Services\nFinancial institutions reported mixed loan demand. Contacts said used auto lending was weak, while first mortgages and energy-related lending increased. Loan pricing continues to be very competitive, partly due to loosening credit standards. Despite low deposit rates, deposit levels at most institutions remain high. Contacts expressed concern about new regulations for community banks.\nEnergy\nRespondents at energy-related service firms said activity remained steady at high levels despite a decline in the rig count that was mostly natural gas related. Although oil prices remain at healthy enough levels to support current activity, recent price declines coupled with high volatility are making some firms nervous about drilling in higher cost fields. Contacts expect activity to be flat through year-end, with improvement in 2013.\nAgriculture\nThe District remained largely in drought, although dry conditions eased in some areas. The crop harvest generally progressed at a good pace. Winter wheat crop conditions were much better than last year, when the drought was more severe in the District. Grain prices trended down over the reporting period but were still at relatively high levels. Cotton prices remained weak and may lead to fewer cotton acres being planted next year. Cattle prices were still higher than normal but contacts noted that high feed costs were keeping producers from expanding their operations and were creating negative margins for feedlots.\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\nNovember 28, 2012\nThe economy of the Eighth District has continued to expand at a moderate pace since our previous survey. Retail and auto sales in October and early November increased over year-earlier levels. Recent reports of planned activity from manufacturing firms have been positive. In contrast, reports from services contacts have been negative on net. Residential real estate market conditions have continued to improve, while commercial and industrial real estate conditions have remained mixed. Reports of lending activity at a sample of large District banks indicated little change during the third quarter of 2012. Prices wages, and employment levels have remained generally stable.\nConsumer Spending\nContacts reported that retail sales in October and early November were up, on average, over year-earlier levels. Fifty-four percent of the retailers reported increases in sales, while 27 percent saw decreases and 19 percent saw no changes. Forty-eight percent of the retailers noted that sales levels met their expectations, 48 percent reported that sales were below expectations, and 4 percent reported that sales were above expectations. The sales outlook through the end of the year was mostly optimistic: 66 percent of the retailers expect sales to increase over 2011 levels, while 17 percent expect sales to decrease and 17 percent expect sales to be similar to last year\u2019s levels.\nCar dealers in the District reported that sales in October and early November were up, on average, compared with last year. Fifty percent of the car dealers surveyed saw increases in sales, while 21 percent saw decreases and 29 percent saw no changes. Twenty-four percent of the car dealers noted that new car sales had increased relative to used car sales, while 6 percent reported the opposite. The sales outlook through the end of the year was mostly optimistic: 64 percent of the car dealers expect sales to increase over 2011 levels, while 14 percent expect sales to decrease and 22 percent expect sales to be similar to last year's levels.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our previous report. Several manufacturing firms reported plans to hire new workers or expand operations, while fewer manufacturers reported plans to lay off workers or reduce operations. Firms in the plastic, poultry processing, shoe and apparel, aerospace, paper product, and beverage manufacturing industries announced plans to hire new employees or expand operations. In contrast, firms in the compressor, coal, semiconductors and related devices, auto parts, and food manufacturing industries announced plans to lay off workers or reduce operations.\nReports of planned activity in the District\u2019s service sector have been negative on net since our previous report. Firms in business support, telecommunications, casinos, legal, and crisis management services announced plans to increase employment or expand operations. In contrast, a greater number of service firms, including firms in air transportation, sports, information, health insurance, health care, and financial services, announced plans to lay off workers or reduce operations.\nReal Estate and Construction\nHome sales increased throughout most of the Eighth District on a year-over-year basis. Compared with the same period in 2011, September 2012 year-to-date home sales were up 15 percent in Louisville, 4 percent in Little Rock, 11 percent in Memphis, and 14 percent in St. Louis. Residential construction also increased. Compared with the same period in 2011, September 2012 year-to-date single-family housing permits increased 40 percent in Louisville, 25 percent in Little Rock, 36 percent in Memphis, and 19 percent in St. Louis.\nCommercial and industrial real estate conditions were mixed throughout most of the District. A contact in Louisville reported that office and industrial space leasing in the third quarter of 2012 was less robust than in the previous quarter. A contact in northeast Arkansas reported strong commercial real estate activity in the Jonesboro-Paragould area but soft activity in other areas in the region. Commercial and industrial construction activity continued to improve throughout most of the District. Contacts in Little Rock noted a couple of commercial construction projects in the downtown area. A contact in south central Kentucky noted that commercial construction remains strong. A contact in Memphis noted new speculative construction in the suburban market. Contacts in Memphis also reported several commercial construction projects in Jonesboro and large industrial construction projects in Shelby County.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks found little change in overall lending activity during the third quarter of 2012. During this period, credit standards for commercial and industrial loans remained largely unchanged, while the demand for these loans and the number of inquiries ranged from moderately decreased to moderately increased. Credit standards for commercial real estate loans were unchanged, while demand remained largely unchanged. Credit standards for prime residential mortgage loans remained generally unchanged, while demand ranged from about the same to substantially stronger. Meanwhile, credit standards and demand for consumer loans remained largely unchanged, although a third of the banks reported that demand for auto loans was moderately stronger.\nAgriculture and Natural Resources\nAs of early November, the rice crop in the District states was fully harvested; similarly, over 90 percent of the corn, cotton, sorghum, and soybean crops have also been harvested. Harvest completion rates were 3 to 12 percentage points higher than their 5-year averages. Planting of winter wheat across the District states was 8 percent ahead of its 5-year average, while over 90 percent of all winter wheat was rated in fair or better condition. Excluding eastern Kentucky, the District\u2019s year-to-date coal production for the end of October was 6.4 percent higher compared with the same period last year. Meanwhile, the District\u2019s coal production for October 2012 was 6.2 percent higher than in October 2011.\nPrices, Wages, and Employment\nContacts indicated that price levels over the past three months have stayed the same relative to the same period last year. Similarly, non-labor costs have generally stayed the same, although the majority of manufacturing contacts noted increases in costs. The majority of contacts reported that wages per employee and benefits per employee over the past three months have stayed the same relative to last year. Employment levels over the past three months showed signs of improvement; 38 percent of contacts reported increases in employment compared with the same period last year, while about half of contacts reported that their total employment has remained the same relative to last year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"