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Cleveland

/beige-book-reports/2012/2012-11-cl

"Beige Book Report: Cleveland\nNovember 28, 2012\nThe economy in the Fourth District grew at a modest pace since our last report. On balance, manufacturing orders and production rose. Residential and nonresidential construction activity increased, with particular strength noted in the multi family segment. Realtors reported a rise in purchases of existing homes. Retailers and auto dealers saw higher sales during October relative to year-ago levels. Conventional oil and gas well output held steady, while coal production trended lower. Freight transport volume slowed. And the demand for business credit moved slightly higher.\nHiring was sluggish across industry sectors. Exceptions were found in the auto industry, where hiring continued at a more robust pace, and construction, where payrolls began to grow. Staffing-firm representatives said that the number of job openings has picked up slightly during the past six weeks. Vacancies were found primarily in manufacturing, information technology, and healthcare. Wage pressures are contained. Input prices were stable, apart from increases in construction materials.\nManufacturing\nDistrict factories reported that new orders and production increased on net during the past six weeks. Companies citing increases were mainly linked to the aerospace, construction machinery, medical device, motor vehicle, and oil and gas industries. Compared to prior-year levels, production activity was mixed. Several producers pointed to rising inventories but said that they are manageable. Many of our contacts are expecting a slight weakening in business activity during the next few months due to seasonal factors and uncertainty surrounding the outcome of the fiscal cliff. Steel producers and service centers reported that shipping volume was down slightly, which they attributed in part to weaker international demand. Inventories have been reduced relative to sales. Steel producers expect market conditions to remain flat through at least the end of the year. District auto production showed a moderate decline during September on a month-over-month and year-over year basis for domestic nameplates, while their foreign counterparts increased production.\nLittle change in capacity utilization was reported; rates were within or slightly below their normal range. Several companies, particularly those serving the energy and transportation sectors, reported plans to expand capacity. Capital spending was largely on track. Raw material prices were either flat or trended lower, while finished goods prices were mainly steady. Manufacturers noted that they are feeling pressure from customers to lower prices. The auto industry provided a boost to District employment. Otherwise, manufacturing payrolls expanded at a modest pace, even at companies experiencing a pick-up in demand. Wage pressures are contained, and rising health insurance premiums remain a challenge.\nReal Estate\nReports from home builders indicated that the number of single-family housing starts since mid-September increased relative to earlier in the third quarter and on a year-over-year basis. Sales contracts were found mainly in higher price-point categories. Some contractors commented that shrinking inventories of existing homes have spurred new residential developments. Opportunities in constructing multifamily and special-needs housing remain strong. Nonetheless, tight lending standards are seen as restraining the effect of low interest rates for builders and home buyers. Builders are hopeful that the recent improvement in sales will continue after the winter slowdown. List prices of new homes are beginning to rise, and builders have cut back on discounting. Sales of existing homes have picked up, with a few reports of bidding wars.\nNonresidential contractors reported that business activity is expanding. Although inquiries have slowed in the past few weeks, most builders are satisfied with their backlogs going into 2013. Project work is driven by multifamily housing and industrial contracts. Public-sector projects have declined. Obtaining financing remains difficult, particularly for projects that are deemed speculative by lenders. Nonetheless, contractors are cautiously optimistic about activity going into 2013.\nResidential and nonresidential builders reported higher prices for construction materials, especially drywall and lumber, with rising prices being attributed in part to a cutback in output by suppliers. Many builders have added to their payrolls during the past couple of months, although some layoffs of seasonal workers are expected. Wage pressure was felt among the skilled trades due to a lack of qualified workers.\nConsumer Spending\nMost retailers reported a modest rise in sales during the past six weeks relative to the same time period a year ago. Increased volume was seen across product categories, except for home furnishings, which declined slightly. There is concern about potential tax increases in 2013 and the effect they might have on household spending, especially those in higher-income brackets. Our contacts are cautiously optimistic about the holiday shopping season. Two retailers said that they have expanded their inventories (after seasonal adjustments) in anticipation of rising sales volume. Vendor pricing has been fairly stable. Any increases were absorbed into store margins. Capital spending remains on target. A few retailers reported that they are considering increasing outlays during 2013, particularly for improvements to their distribution systems. No permanent hiring is expected other than at new stores. The number of temporary workers being hired for the holiday season is similar to 2011.\nNew-vehicle sales were stronger during October when compared with the same time period a year ago. Dealers reported that sales of fuel-efficient cars and compact SUVs are doing well. Truck sales have picked up, with the onset of the winter season. New-vehicle inventories are rising, although one dealer said that trucks are in short supply. Dealers expect little change in monthly sales for the remainder of this year. Purchases of used vehicles rose slightly, though inventories are still tight. Leasing continued to grow in popularity, which should help to replenish the used-vehicle inventory by mid-2013. Bank credit was more readily available as is captive financing. Hiring for sales and service positions is slow. We heard reports about dealers partnering with technical colleges to train people for all facets of dealership work.\nBanking\nDemand for business credit moved slightly higher since our last report. Many applications were for refinancing loans originated by competitors. Small business owners found that credit is available, but collateral requirements are more stringent than prior to the recession and personal guarantees are often required. In contrast, micro-businesses reported that it remains very difficult for them to obtain credit. On the consumer side, several of our contacts reported a decline in auto lending, while demand for other consumer products held steady. Activity was strong in the residential mortgage market. Although a large majority of applicants are looking to refinance, bankers noted an increase in new-purchase requests. Delinquency rates improved across consumer and commercial loan categories. Growth in core deposits was driven more by business customers. Little change in banking payrolls is expected for the remainder of this year and into 2013.\nEnergy\nConventional oil and natural gas production held steady during the past six weeks. Most of our contacts reported plans to increase drilling in the upcoming months, which will boost capital outlays beginning early in 2013. Wellhead prices for natural gas are up slightly, while oil declined about $5 per barrel. Shale gas activity continued at a robust pace. Coal production for the year is below 2011 levels due to lower demand from domestic utilities and offshore customers and a stricter regulatory environment. Reports of idled mines were common. However, an increase in thermal coal production is expected beginning in December for the winter heating season. As a result, one producer reported that he has rehired about 25 percent of his laid-off workers. Declining prices for metallurgical coal have leveled off, while steam coal prices were mixed. Production equipment and materials prices were flat across most categories. Wage pressures are contained.\nFreight Transportation\nReports on freight transport indicated that volume has slowed since late in the third quarter, though part of the slowing was attributed to seasonal factors. Our contacts told us that Hurricane Sandy and weakness in European markets might be contributing to the downturn. Industries driving demand include housing, motor vehicles, and retail. Most of our contacts believe that activity will be slow through year's end, with a pick-up during the first quarter of 2013. However, rebuilding in the aftermath of Sandy could provide a year-end volume boost. Costs associated with truck maintenance held steady. One contact is experiencing pushback from customers when negotiating rate increases. Reports on capital spending were mixed. Some freight haulers said that 2012 expenditures are on track. Others reported a postponement in purchasing replacement equipment due to a sluggish economy and uncertainty about the outcome of the fiscal cliff. Hiring is mainly for replacement. Recruiting qualified personnel remains difficult, which is contributing to wage pressures.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

/beige-book-reports/2012/2012-11-ny

"Beige Book Report: New York\nNovember 28, 2012\nEconomic activity in the Second District has weakened since the last report, largely reflecting widespread disruptions from Sandy. Prices of finished goods and services have generally been stable. The labor market is difficult to gauge at this point--while hiring activity tapered off noticeably due to the storm, relatively few business contacts indicate that they plan to reduce headcounts in the months ahead. Retailers report fairly strong sales for October but indicate that business in the last two weeks has been severely hampered by storm disruptions; auto dealers in upstate New York report some softening in auto sales in October. Tourism activity in New York City was fairly strong prior to the storm; hotel business tapered off only modestly in early November, as the adverse effects of travel cancellations were partly offset by increased demand from local residents without power or access to their homes. Residential real estate markets were generally firm through the latter part of October, though the storm has caused a substantial slowing in sales activity in and around New York City. Finally, bankers report some weakening in loan demand and increased delinquency rates in the consumer and commercial & industrial loan segments; for residential and commercial mortgages, both loan demand and delinquency rates are little changed.\nConsumer Spending\nRetail sales are reported to have been ahead of plan in October but exceptionally weak in early November in the New York City area, mainly due to widespread power outages, store closings and accessibility problems for both customers and workers. With the holiday sales season coming up--and with many residents in the region needing to replace destroyed or damaged property--all the lost sales are expected to be made up in the weeks ahead. One major chain reports that it is hiring more holiday-season staff than in 2011. The pricing environment is described as stable. Auto dealers in upstate New York report some flattening out in sales in October, though used car sales reportedly remain fairly robust. There has also been some softening in business at dealers' service departments. Wholesale and retail credit conditions remain favorable.\nTourism activity in New York City was mixed in October but dropped off noticeably following the late-October storm. Hotels across much of lower Manhattan lost business in late October and early November, when they were without power for a number of days. Overall revenue for Manhattan hotels slumped nearly 10 percent below 2011 levels during the week of the storm but bounced back in the subsequent week. The New York City marathon, although cancelled at the last minute, likely brought large numbers of visitors to the city during the first weekend in November. Attendance and revenues at Broadway theaters, which had already weakened modestly in October, fell sharply during the week of the storm; attendance rebounded modestly in the second week of November but remained roughly 15 percent below last year's level. Finally, consumer confidence in the region climbed to its highest level in well over a year in October (prior to the storm), based on 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.\nConstruction and Real Estate\nResidential real estate markets in the District were mixed but generally firm prior to the storm, and its effects on the market remain unclear at this point. Manhattan's rental market remained on a positive trajectory in October, with rents up roughly 5 percent from a year earlier and vacancy rates continuing to decrease. Sales markets in both Manhattan and the outer boroughs were fairly active in October, with prices steady and the inventory of available homes characterized as low. On the other hand, housing markets in the Buffalo area showed signs of softening in October. An expert on New Jersey's housing sector notes that conditions were improving gradually prior to Sandy and expects that post-storm rebuilding will boost multi-family construction.\nThe storm caused a noticeable slowdown in sales activity throughout the New York City metropolitan region, but this is expected to be temporary. With many homes along the New York City, Long Island and New Jersey shorelines severely damaged or destroyed, the lean housing inventory is a concern, as displaced residents seek short-term rentals. There is some concern as to how much of the shore communities will be rebuilt and how quickly, but one industry expert anticipates that residents in the severely-damaged areas will be strongly motivated to return and rebuild. Some of the biggest potential challenges are likely to be shortages of construction equipment and materials, and steeper prices for insurance.\nCommercial real estate markets were mixed prior to the storm. A number of large office buildings in lower Manhattan remain out of commission due to extensive flooding; however, a major brokerage contact indicates that displaced businesses do not seem to have had much trouble finding temporary quarters. Overall market conditions are not reported to have changed much, thus far, since the storm--between the end of September and mid-November, asking rents have risen modestly in Manhattan but declined modestly in northern New Jersey. Office markets across upstate New York, which was not directly affected by the storm, have shown some signs of softening in recent weeks.\nOther Business Activity\nManufacturers across the District indicate continued weakness in general conditions since the last report; virtually all contacts in the New York City area report some loss in business due to storm-related disruptions. Manufacturers in upstate New York, which was not significantly affected by Sandy directly, reported only scattered and indirect effects from the storm, though these contacts also report some further weakening in business conditions.\nBusiness contacts throughout the southern part of the District--in both manufacturing and other sectors--report widespread effects of the storm, particularly in northern New Jersey and on Long Island. In these parts of the District, many businesses indicate that the impact has been both severe and protracted, due to prolonged power and communications outages, as well as transportation disruptions that have prevented both workers and customers from accessing the business. A trucking industry expert notes that many terminals and warehouses sustained severe flooding, which has disrupted business; at least one firm has gone out of business as a result. Business contacts in both manufacturing and other sectors report steady input price pressures and little change in selling prices.\nLabor market conditions have weakened, probably temporarily, in the aftermath of Sandy. A major New York City employment agency specializing in office jobs reports a sharp drop-off in business after the storm, because many firms either shut down or operated without key personnel. Separately, a growing number of manufacturing contacts--not only in the New York City area but also in upstate New York--report declines in employment at their firms. However, businesses in other sectors report little or no change in employment. Contacts in both manufacturing and other sectors expect headcounts to remain steady, on net, over the next six months.\nFinancial Developments\nSmall- to medium-sized banks across the District report weaker demand for consumer and especially commercial & industrial loans but steady demand for commercial and residential mortgages. Bankers report increased demand for refinancing. Respondents do not report any change in credit standards in any loan category. Bankers indicate a decrease in spreads of loan rates over costs of funds for all loan categories--particularly commercial mortgages. Respondents also indicate decreases in average deposit interest rates: nearly two in five bankers report a decrease while none reports an increase. Bankers note increased delinquency rates for consumer loans and commercial & industrial loans but no change in delinquency rates for residential or commercial mortgages.\nWhen asked what effects Sandy had on their business, almost half of the bankers report no noticeable effect so far; however, many of these respondents expect that effects of the storm could become evident in the future, especially for commercial businesses and as damage to collateral is assessed. On the other hand, more than 40 percent of those surveyed were affected directly by the storm, with widespread branch closings and power outages reported. Banks in the most severely affected areas--largely New Jersey, as well as lower Manhattan and Queens--have received a high volume of calls from customers with home damage, and banks are physically inspecting buildings for damage before making new loans.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

/beige-book-reports/2012/2012-11-ri

"Beige Book Report: Richmond\nNovember 28, 2012\nFifth District economic activity strengthened at a tempered pace since our last report. Manufacturing activity improved, retail sales increased moderately, and customer demand rose modestly at non-retail services firms. Reports on banking conditions were mixed, and mortgage refinancing bolstered consumer lending. Real estate markets also strengthened, with both residential and commercial contacts reporting an uptick in activity. In contrast, labor market activity slowed since our last report. Also, tourism contacts noted a seasonal decline in reservations. Agricultural conditions were favorable before Hurricane Sandy arrived, although some farmers in the District were affected by the storm. Manufacturers' input prices and finished goods prices rose at a slower rate, while wages rose more quickly. The pace of service providers' price increases edged up and non-retail wage growth slowed. Price increases slowed at retailers, while wages rose at a faster pace. Several businesses lost power during Hurricane Sandy, but most returned quickly to normal operations. In addition, we received reports of supplier issues and less customer traffic.\nManufacturing\nDistrict manufacturing activity continued to improve modestly. A manufacturer of dental products reported an increase in orders and commented that his company would finish the year slightly ahead of 2011. A manufacturer of organizational products said that he expected shipments to remain high; he remarked that his company was picking up market share through consolidation in the industry. A producer of plastic components noted a pickup in activity after several months of reduced orders. In addition, an aerospace manufacturer reported that the company is expanding and is completing a new manufacturing facility. According to our latest survey, both raw materials and finished goods prices rose at a slower pace since our last report.\nRetail\nRetail contacts reported a moderate acceleration in sales during late October and early November. Hardware and home and garden stores noted higher demand for storm-related items ahead of Hurricane Sandy. Quipped one executive, \"Bad weather is good for business.\" A store manager at a department store reported that his sales were stable, although he is competing with his suppliers for online sales. Car and light truck dealers gave mixed reports. Dealers in Maryland and West Virginia saw a drop in sales, however a West Virginia dealer recently completed expansion at his location to accommodate additional inventory for ongoing strong sales, and a North Carolina dealer commented that year-over-year sales were mostly strong across the board. The pace of retail price increases slowed since our last report.\nServices\nExecutives at services firms generally reported a modest rise in customer demand since our last report, especially at professional, scientific, and technical firms. Additionally, several architectural and engineering firms indicated that their business strengthened somewhat. Although financial services firms reported that activity had improved, a central Virginia broker commented that clients \"remained conservative\" and were evaluating alternative plans in case the economy worsens. Contacts at healthcare organizations noted little change in demand other than typical seasonal expansion. However, freight trucking firms reported slight softening in the industry. Service providers noted a minor pickup in the pace of price increases.\nFinance\nReports on banking conditions varied widely since our last report. An official for a large bank stated that business borrowing softened over the last six weeks, while mortgage demand edged higher. A West Virginia banker said that home equity loans were down, in part due to consumers rolling that debt into their mortgage. A small commercial banker in Virginia described demand in general as improving slightly, but added that consumer loans were unchanged from \"meager\" levels and small business loans were virtually non-existent. Several loan officers noted that an exception to weak consumer demand was auto loans, but one banker said that even those had weakened in recent weeks. A credit union loan manager reported that consumer loan applications were up and he expected modest gains to continue. Overall loan demand strengthened, according to a northern Virginia banker, mostly for auto loans, home mortgage refinancing, and equipment purchases. Several officials also expressed concern that banks were increasing their risk by making longer termed loans in an effort to get higher yields. Yet, most bankers stated that the quality of their loan portfolio remained healthy, with few delinquencies in recent months.\nReal Estate\nResidential real estate activity improved modestly since our last report. A Realtor in the Richmond area said that closings were up double digits compared to a year ago. He noted that inventory is very low and prices continued to rise. A contact in South Carolina reported that the single-family segment in the Myrtle Beach market was particularly robust, although the area continued to work down a glut of inventory in the condominium market. A builder in South Carolina cited significant pent-up demand in the first time buyer segment, because many could not get financing, although the move-up market improved. Another builder in South Carolina stated that inventories were moving toward balance and he believed that a real recovery was underway. Similarly, another source reported that there was a steady, slow improvement, and that foreclosures were falling. A contact in Charlotte noticed more residential work in the high-end home category for the first time in more than three years.\nCommercial real estate and construction improved slightly over the last few months. While some contacts stated that activity remained weak and little changed from the summer months, most contacts reported modest gains in at least some segments of their local market. A real estate representative in the Baltimore area said that her third quarter market report showed \"grinding and gradual improvement,\" with the majority of growth in the Baltimore-DC region. A developer in the Carolinas reported that absorption rates in the office segment were improving, even though vacancy rates remained elevated. Other contacts also noted tightening of available office space, especially among Class A properties, but attributed some of that gain to the lack of new construction. A Charlotte Realtor described his market as \"choppy,\" with downtown office space faring better than suburban locations. He also noted some tightening in industrial space, due mostly to expansion of distribution and call center demand. Several contacts, especially in Virginia, noted slight improvements in retail vacancy rates for restaurants and apparel stores. Most Realtors reported modest firming in leasing rates, although concessions on long-term leases were occasionally available. While several contractors noted a slowdown in government and education-related projects, private sector projects were edging forward, most notably for strip malls in underserved areas and for distribution centers near major retail markets. Additionally, a contact reported expanding activity at industrial and health care facilities.\nLabor Markets\nLabor markets were more negative on balance than in our last report. Employment agencies reported somewhat stronger demand for temporary workers, but reiterated their difficulty finding qualified workers to fill open positions in manufacturing, aerospace, defense, automotive, and construction. A contact in South Carolina said that labor demand remained fairly soft, with the exception of some IT positions, noting that hiring came to a stop in the third quarter. A Charlotte area temp agency executive reported that manufacturers were unwilling to hire long-term unemployed workers because their skills may have diminished. Manufacturers worried that taking on talent at reduced wages might lead to more turn-over when the economy picks up. A North Carolina contact commented that college graduates who were unable to find full-time work were choosing to remain on unemployment rather than take part-time positions. According to contacts, retail wage growth picked up, while wages at non-retail services firms rose more slowly; manufacturing wage growth also edged up.\nTourism\nMost tourism contacts reported seasonally slower autumn bookings. Several added that, at this time of year, they focus on attracting tourists who are located within a day's drive. There were scattered reports of storm-related hotel cancellations caused by Hurricane Sandy, as tourists from outside the District were affected by the weather at home. In addition, a couple of contacts noted some patches of beach and highway erosion on the Outer Banks of North Carolina and storm-related snow in parts of West Virginia, which might affect near-term visits. However, most planned events continued on schedule. A few District hoteliers stated that they were able to raise rates slightly since our last report.\nAgriculture\nAgricultural conditions prior to Hurricane Sandy remained favorable. Strong income boosted farm loan repayment rates. Lenders reported a drop in the number of loan renewals and extensions, even as spending for agricultural equipment rose. During October, beef prices rose as farmers struggled with higher feed costs--some producers culled herds, including breeding stock. More recently, Hurricane Sandy's damage was minimal and localized mainly in coastal areas. In Maryland, an analyst reported that small grain emergence may be affected by standing water and salt water flooding. Snow and cold temperatures in North Carolina hindered farm activity and livestock producers were forced to begin feeding hay due to snow covered pastures; fruit production was not affected. In contrast, most farmers in Virginia were relieved that Hurricane Sandy brought much needed rain without significant damage to the corn and soybeans still in the field.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

/beige-book-reports/2012/2012-11-bo

"Beige Book Report: Boston\nNovember 28, 2012\nReports from business contacts in the First District reflect a growing economy, although the pace of growth appears to be somewhat slower than in the last round. Retailers cite mixed sales results, manufacturers note slow growth, and software and IT services firms report disappointing results. By contrast, staffing firms are seeing a pick-up in growth. Commercial real estate contacts indicate that fundamentals remain flat, and sentiment has soured somewhat in recent weeks; residential real estate respondents say growth in home sales has slowed but home prices are rising modestly in some areas. Hurricane Sandy reportedly had very modest effects on economic activity in New England. Prices are said to be level in general, with minimal inflationary pressures. While some firms cite shortages of specialized workers, few are hiring, none extensively, and no one mentions upward wage pressures.\nRetail and Tourism\nFirst District retailers contacted for this round report that year-over-year October sales changes ranged from single-digit decreases to single-digit increases. A durable goods retailer reported a large single-digit decrease which they attributed to a decline in customer traffic related to preparations for and the aftermath of Hurricane Sandy. Sales of adult apparel and home furnishings continue to be strong. Some retailers have increased their hiring in anticipation of the holiday season.\nRespondents say that prices are holding steady and they do not see inflationary pressures. Many contacts are actively managing inventories to remain nimble and some are undertaking multi-year plans to better position their businesses for the future in which the Internet will account for an increasing share of sales. Because of the so-called fiscal cliff, there is some uncertainty about what to expect in terms of tax policy; this is viewed as particularly affecting planning by small businesses.\nManufacturing and Related Services\nManufacturing respondents give a general picture of weak growth. Of the 10 firms contacted this cycle, all but one report growth versus the period a year earlier but only four report higher year-on-year growth versus the previous quarter. Similarly mixed numbers appear across other measures, with three firms reporting an improved outlook, four reporting higher employment and four reporting higher capital expenditures.\nFirms that are growing attribute growth to idiosyncratic factors and not to the economy. A pet healthcare firm plans for 7.5 percent growth in 2012 but says it is all the result of \"innovation\" and not the economy. A manufacturer of medical equipment said government spending on VA hospitals had led to a large increase in demand for its products. A semiconductor equipment manufacturing firm reported a dramatic reduction in its expected sales in the fourth quarter. As in recent Beige Book rounds, they blame this on the semiconductor equipment \"cycle.\"\nWe continue to hear occasional complaints of difficulty finding qualified workers. A pharmaceutical manufacturer reports hiring 75 new people this year but still having 58 openings which they have been trying to fill \"for a long time\" and which \"they do not anticipate to be able to fill this year...\" They attribute the difficulty to their need for \"highly qualified scientists with specific sets of skills.\" A manufacturer of analytical laboratory equipment finds it \"increasingly difficult to find qualified people in China.\"\nIn general, manufacturing contacts' recent weakness has not yet led them to revise substantially their capital expenditure plans. That said, many of these plans involve spending outside the United States. For example, a manufacturer of lab equipment is spending almost 50 percent more this year than is typical, but all that increment involves a new plant in England; capital expenditure in the U.S. is entirely on maintenance.\nSoftware and Information Technology Services\nNew England software and information technology services contacts generally report weaker-than-expected activity through October, with revenues in the third quarter roughly on par with year-earlier levels. The downtick in activity reportedly reflects heightened political and economic uncertainty, which has rendered many potential clients unwilling to commit to projects. Many contacts report increasing difficulty in executing large license agreements, particularly in Europe, where one contact says sluggishness in the manufacturing sector led to a year-over-year decline in license revenue of nearly 40 percent. Delays in contract signings and project starts have led many respondent firms to slow the pace at which they are hiring; one contact may reduce headcount modestly in coming months, after hiring \"in advance of anticipated need\" earlier this year. Capital and technology spending and selling prices have gone largely unchanged since February.\nLooking forward, New England software and IT contacts are generally less upbeat than they were three and six months ago, with many expressing growing concerns regarding the \"fiscal cliff\" and macroeconomic conditions in Europe. Most expect only modest growth through Q1 2013.\nStaffing Services\nNew England staffing firms generally report improved business conditions, with most describing business since Labor Day as \"pretty good.\" Year-over-year revenue changes in the third quarter varied widely, from down slightly to up by about 20 percent. Labor demand is up slightly in the IT and engineering sectors, and one contact reports renewed activity in the manufacturing sector. However, demand for office and clerical assistants and accountants remains weak. In terms of labor supply, candidates with high-end skill sets such as nurses, mechanical and electric engineers, and software developers remain hard to find. In addition, one contact reports that turnover has recently decreased, as those with jobs are hunkering down for the holiday season. Nevertheless, bill rates and pay rates have gone largely unchanged since August. The outlook among New England staffing contacts is generally consistent with that of three months ago, with most expecting more robust growth in 2013.\nCommercial Real Estate\nAccording to contacts across the First District, commercial real estate fundamentals were roughly flat in recent weeks amid light leasing activity. In Hartford, downtown office vacancy rates (as percentages) remain in the mid-20s, although absorption could improve in the coming months if pending lease deals go through. A Providence contact also sees some chance of significant absorption in the downtown office market but noted downside risks linked to macroeconomic conditions. In Portland, leasing activity in recent months remained light and fell below expectations, resulting in flat rental rates. In Boston, office fundamentals showed modest improvements in the third quarter, but leasing inquiries have reportedly fallen off recently amid concern over the fiscal cliff. Sales activity in Boston also softened, despite prior expectations that property owners would rush to take capital gains at current tax rates in light of pending 2013 rate increases. The multifamily sector remains strong in Hartford and Boston, with rents rising as much as 10 percent over the year for some properties in greater Boston. Loan terms remain highly favorable for high-quality properties and a regional lender to commercial real estate continues to experience record loan volume.\nA majority of contacts note that business sentiment soured recently, with the national election results and the fiscal situation cited as key factors. The outlook for commercial real estate among our contacts turned more pessimistic on balance in light of these same factors and also, according to some, risks to growth stemming from Europe and other parts of the world. While contacts report no immediate impacts of Hurricane Sandy on the commercial real estate markets in their respective cities, two contacts point out that insurance rates for commercial structures along the Eastern seaboard are likely to rise going forward, restraining development in some areas.\nResidential Real Estate\nSales growth slowed in September throughout much of the First District among both the condominium and single-family home markets. In the Greater Boston area, single-family home sales actually declined, representing the first decrease in 15 consecutive months. By contrast, condominium sales in Greater Boston rose, reaching historic levels for the month of September. Slowing growth across much of the region was attributed to the dwindling number of properties in the market and damped confidence in the local economy. Most contacts note modest price appreciation. However, in Rhode Island and Connecticut, prices declined compared to a year ago, but consistent growth in sales is expected to place upward pressure on prices. First District contacts remain fearful that ongoing declines in inventory levels will hurt the selection of homes on the market and discourage buyers in the market. Some contacts say homeowners interested in selling have been reluctant to list their homes in anticipation of greater future price appreciation.\nOutlooks for the coming month remain similar to previous reports in spite of less robust growth recently. Contacts generally say the housing market continues to recover and expect positive year-over-year growth in sales in the coming months because of low interest rates and affordable prices; they also expect modest appreciation in prices. Inventory levels are not expected to increase until the Spring. Overall, contacts remain optimistic about the recovery in the housing market, but caution that gains could be undermined by worsening economic conditions.\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\nNovember 28, 2012\nMost businesses across the Sixth District described economic activity as increasing marginally in October, and most contacts expect little change in the near term.\nRetailers cited mild sales growth, while automobile dealers continued to experience strong results. Overall, tourism activity remained robust. Residential brokers indicated an increase in existing home sales and prices, while homebuilders signaled sales were flat to slightly up. Multifamily development continued to dominate the commercial real estate market. Manufacturing activity softened as new orders, production, and employment levels decelerated. Bankers noted that overall loan demand had picked up slightly. On net, payrolls continued to expand at a modest pace, and price pressures remained in check for most businesses in the region.\nConsumer Spending and Tourism\nDistrict contacts indicated demand and sales were up slightly in October compared with September. Most retailers felt that consumer confidence is improving as they head into the holiday season, which led to expectations that sales would improve over last year's results. Retailers anticipate a healthy holiday season and most shared plans to hire the same amount of seasonal staff compared with last year, although there were some contacts that anticipate hiring a bit more help over the holidays than they did in 2011. Automobile dealers continued to report strong sales growth, albeit a bit less robust than earlier in the year. Low interest rates, aging vehicles, available credit, and the popularity of new fuel-efficient models were factors cited as driving growth.\nTravel and tourism activity remained strong for all sectors except cruise lines, which continued to underperform against projections made earlier in the year. Hotel occupancy and room rates were up in most areas, resulting in increased revenue per available room. International visitors continued to bolster activity in Florida. Convention bookings were also up over year-ago levels in most major District cities. The general consensus among hospitality contacts is that the sector is performing well, and that trend is expected to continue into 2013.\nReal Estate and Construction\nDistrict residential brokers indicated that recent existing home sales were up slightly compared with year-earlier levels. Brokers reported that current home owners accounted for the largest share of home buyers in the District, while investors and first-time home buyers both were about a quarter of the market, respectively. Reports cited that investors were more active in Florida compared with other parts of the District. Most brokers again noted declining inventories and rising home prices. The outlook for sales among brokers remained positive. Most expect sales growth to be flat to slightly positive on a year-over-year basis in the short term.\nReports from District homebuilders remained positive as well. While recent new home sales were only flat to slightly up from a year earlier, the majority of builders reported that new home inventories were below the year-earlier level and prices were slightly up compared with a year earlier. In addition, contacts reported robust buyer traffic in October. In spite of reports of challenges to obtaining development and construction financing, the outlook for construction activity remained strong and most builders were looking forward to additional increases in new home sales in 2013.\nApartment development continued to dominate the District's commercial real estate market. Multifamily rent growth remained positive but had slowed somewhat in recent months in many parts of the region. Contacts indicated that most office, industrial, and retail markets in the District experienced modest positive absorption of space during the third quarter. Contractors continued to expect modest gains in commercial construction activity in 2013.\nManufacturing and Transportation\nManufacturing activity in the Southeast softened in October. Contacts in the region reported that new orders, production, and employment levels decelerated. Finished inventory levels were flat. Auto and auto parts producers experienced slightly softer orders, resulting in somewhat lower output after several months of very strong demand. Other durable goods contacts experienced modest growth, especially those tied to the improving housing market. Energy-related manufacturers continued to report robust activity.\nRail contacts reported that domestic coal shipments were down because of softening global demand for metallurgical coal and less demand for coal to fire domestic utility plants as electricity producers shifted to natural gas. However, there have been increased movements of crude oil via rail. Ports experienced weaker container volumes, but slight increases in the level of break-bulk volumes. Truck freight activity was described as similar to year-ago levels. Increased fuel costs remained a significant concern for ocean carriers, but most other industries have been able to pass along increases. Reports indicated that there appears to have been a shift in the holiday shipping timeframe, representing a \"just-in-time\" approach to ordering as retailers maintain tight inventories as the shopping season approaches.\nBanking and Finance\nSmall business loan demand increased slightly in some areas, but many firms remained hesitant to borrow, citing economic and political uncertainty as a drawback. Competition for high quality borrowers remained fierce among banks. Banks experienced some residential loan growth from refinancing activity. Some contacts in the District reported an increase in demand for construction loans and noted a slight increase in lending levels compared with last year. Regulatory compliance was cited as adding an additional burden by many community bankers, which hampered their ability to originate loans. Some contacts reported underwriting standards had become more restrictive and burdensome for borrowers since the last report, in terms of both credit scores and information requests.\nEmployment and Prices\nEmployment conditions across the District continued to improve, albeit at a modest pace, in October. Auto- and energy-related firms reported additional hiring, as did some firms tied to residential construction. On the services side, accounting, and healthcare firms were the most positive. Employment agencies reported a pickup in orders for temporary help. Along those lines, some large employers announced plans to move towards hiring more part-time versus full-time employees. Firms also reported that they continued to receive a large number of applications for most newly-posted positions, causing wages to remain flat. That said, we continued to hear reports of some higher skilled positions going unfilled because of a lack of qualified applicants.\nControlling costs remained a central theme for businesses in the District as they were challenged by higher energy and crop-related input prices along with rising healthcare costs. However, most firms throughout the region noted that the pressure from overall input prices had eased over the last several months. Contacts also noted that the relative weakness in natural gas prices had helped to keep costs in check, particularly for more electricity-intensive firms. Results from our October Business Inflation Expectations survey indicated that unit costs were up 1.4 percent over the past 12 months--with manufacturers experiencing a bit more cost pressures over the last year than service-providing companies. Looking forward, business expectations for unit cost increases over the next year have been stable, varying between 1.7 and 1.9 percent over the past six months.\nNatural Resources and Agriculture\nHurricane Sandy's damage to refineries and infrastructure in the Northeast caused southeastern regional refiners to increase production and transportation of oil products to affected areas. Natural gas prices and rig counts decreased switching focus to higher priced oil commodities. Contacts noted inexpensive domestic natural gas prompted downstream manufacturers to relocate foreign operations to the United States, prioritizing locations near refining operations.\nMuch of Georgia continued to experience varying degrees of drought conditions, while the rest of the region enjoyed normal conditions. Some agriculture contacts reported labor shortages. Compared with last year, prices paid to farmers for grain corn, rice, soybeans, beef, and broilers were up while cotton prices were down.\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 10, 2012\nThe Ninth District economy expanded modestly since the last report. Increased activity was noted in construction and real estate, consumer spending, tourism, and professional services. Energy and mining were steady at high levels, while agriculture varied widely, with crop farmers generally in better condition than animal producers. Meanwhile, activity slowed slightly in the manufacturing sector. Labor markets tightened somewhat. Overall wage increases remained subdued, although stronger increases were reported in some areas. Price increases were generally modest.\nConsumer Spending and Tourism\nConsumer spending increased moderately. Same-store sales at a Minnesota-based retailer increased 4 percent in August compared with a year ago. A Minneapolis area mall manger reported that sales over the past two months were up about 4 percent compared with a year earlier, while another Minneapolis mall reported that while traffic was flat, sales were up somewhat. In North Dakota, a mall manager reported that sales in August and September were up more than 5 percent from last year. Recent sales increased at a Minnesota-based women's apparel store. A domestic auto dealer reported strong sales activity near the end of September and solid commercial fleet sales. A representative of an auto dealers association in North Dakota reported strong vehicle sales across the state.\nTourism activity was above year-ago levels. In response to an end-of-summer survey of lodging and camping businesses by Minnesota's tourism office, 46 percent of businesses reported higher occupancy than last summer, while 31 percent reported that occupancy was the same. In addition, the number of visitors to the Minnesota State Fair fell just short of a record. Tourism officials in Montana reported strong occupancy levels during the summer and expect this year to finish ahead of last year.\nConstruction and Real Estate\nCommercial construction activity increased since the last report. The value of commercial building permits issued in August more than quadrupled from the same period last year in both the Sioux Falls, S.D., and Billings, Mont., areas. A Minneapolis area construction contact noted interest in building a regional warehouse, while a research and development building was also planned. Residential construction increased from a year ago. The value of residential building permits in the Sioux Falls area in August was up 11 percent from the same period last year. The number of residential permits more than doubled in the Minneapolis-St. Paul area in August compared with a year ago. The value of residential permits issued in August more than doubled in Billings.\nCommercial real estate markets expanded at a slow pace. Vacancy rates for Minneapolis office, industrial and retail properties declined slightly since the last report, according to local real estate professionals. Residential real estate market activity was brisk. Home sales in mid-September were up 18 percent from the same period a year ago in the Minneapolis-St. Paul area; the inventory of homes for sale was down 30 percent. In the Sioux Falls area, August home sales were up 44 percent, inventory was down 14 percent and the median sales price rose 5 percent relative to a year earlier.\nServices\nActivity at professional business services firms grew slightly since the last report. According to an architecture firm, demand for services picked up recently. An information technology consulting company noted a recent uptick in the number of projects. A data center opened in northern Minnesota. An environmental consulting firm noticed increased activity primarily due to oil and gas pipeline analysis. A logistics consulting firm noted that recent freight volumes are about the same as last year.\nManufacturing\nThe manufacturing sector weakened slightly since the last report. A survey of purchasing managers by Creighton University (Omaha, Neb.) found that manufacturing activity decreased in Minnesota and South Dakota in August for the second month in a row, though the rate of contraction was not as sharp as in July. Activity increased in North Dakota, but at a slower pace than the previous month. In contrast, an agricultural equipment maker announced that it will open operations in Minnesota, and a machining firm expanded operations in Michigan's Upper Peninsula.\nEnergy and Mining\nActivity in the energy and mining sectors remained strong. Oil and gas exploration decreased slightly in North Dakota and increased in Montana; however, North Dakota oil production hit a new record. A large railroad increased its capacity for carrying crude oil out of North Dakota's Williston Basin. Several large transmission-line projects were under way around the District. In contrast, another Minnesota ethanol plant shut down, and a North Dakota wind-turbine producer cut production, citing reductions in demand and uncertainty over the expiration of a federal tax credit. District iron ore mines continued operating at near capacity. Sand mines saw increased demand from oil and gas producers.\nAgriculture\nAgriculture was mixed, as crop farmers saw strong prices but widely varying yields, while animal producers saw tighter profit margins. Harvests were well ahead of schedule for crops around the region, thanks to hot and dry conditions late in the summer. District sugar beet producers were expecting a record harvest. The condition of the corn and soybean crops remained much better in Minnesota and North Dakota than in core corn belt states. However, portions of Wisconsin and South Dakota were hit much harder by drought. In addition, meat and dairy producers struggled with higher feed costs. Prices received by farmers increased for most agricultural outputs in September compared with a year earlier; the primary exceptions were milk and hogs, which saw price decreases.\nEmployment, Wages, and Prices\nLabor markets tightened modestly. According to a survey by an employment services firm, 20 percent of respondents in Minneapolis-St. Paul expect to increase staffing levels during the fourth quarter, while 6 percent expect to decrease staff. A year ago, 12 percent anticipated increases, while 11 percent expected decreases. A recent Minnesota Chamber of Commerce survey showed that only 49 percent of companies responding said that the state has enough skilled workers in their respective industries. In Minnesota, a foreign information technology consulting firm plans to add 300 workers and a telecommunications company recently announced that it will add 150 call-center employees. In contrast, a North Dakota wind turbine manufacturer announced that it will lay off 300 workers. A hardboard plant in Minnesota closed, affecting 140 workers, and a medical devices company laid off 80 of its Minnesota workers as part of a reorganization plan.\nOverall wage increases remained subdued, although stronger increases were reported in some areas. For example, a health care system recently offered substantial bonuses to recruit registered nurses in eastern North Dakota.\nPrice increases were generally modest, with some exceptions noted. Late September Minnesota gasoline prices increased almost 20 cents per gallon since late August. Metals prices increased somewhat since the last report, as well as some lumber prices.\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 10, 2012\nPrepared at the Federal Reserve Bank of New York and based on information collected on or before September 28, 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.\nReports from the twelve Federal Reserve Districts indicated that economic activity generally expanded modestly since the last report. The New York District noted a leveling off in economic activity, and Kansas City indicated some slowing in the pace of growth. In general, other Districts reported that growth continued at a modest pace.\nConsumer spending was generally reported to be flat to up slightly since the last report. A number of Districts characterized retail sales as expanding at a modest pace, while reports from New York, Chicago, and Kansas City indicated flat or softening sales. Vehicle sales were also generally characterized as stable but up from a year earlier and generally at favorable levels. Used car sales were mixed. Most Districts described tourism as fairly robust, though Kansas City noted some general softening, while New York and Dallas indicated some scattered signs of weakening.\nResidential real estate conditions improved since the last report. Most Districts reported strengthening in existing home sales, while prices were described as steady to increasing, with declining inventories noted in the Boston, Atlanta, Minneapolis, Dallas, and San Francisco Districts. Residential construction was also described as rising in most Districts. Commercial real estate markets were mixed since the last report. Office markets showed signs of softening in the northeastern Districts--Boston, New York, and Philadelphia--while most other Districts reported stable or mixed market conditions. Industrial markets showed some strength in the New York, Philadelphia, Cleveland, and Atlanta Districts, while softer conditions were noted in Richmond.\nConditions in the manufacturing sector were mixed but, on balance, somewhat improved since the last report. The Boston, Richmond, Atlanta, St. Louis, Kansas City, and San Francisco Districts reported some expansion in activity, whereas New York, Chicago, and Minneapolis reported some weakening in activity. The nonfinancial services sector showed modest improvement in the latest reporting period. Richmond, Minneapolis, Dallas, and San Francisco reported some expansion in activity, while New York and Philadelphia indicated steady or mixed conditions.\nOverall loan demand was steady to stronger in most Districts. Credit standards were little changed since the last report, and a number of Districts noted improvements in loan quality or steady to declining delinquency rates. Agricultural conditions were mixed, with drought conditions continuing to adversely affect much of the mid-section of the nation. Activity in the energy sector remained robust.\nDistricts mostly reported little change in prices of both finished goods and inputs. Prices for agricultural commodities and petroleum-based products were generally reported to be higher, while natural gas prices were said to be low or declining. Employment conditions were little changed since the last report. Several Districts continued to report shortages of highly skilled workers, but otherwise wage pressures remained modest. Philadelphia, Cleveland, and Chicago noted increases in the costs of employee medical benefits.\nConsumer Spending and Tourism\nConsumer spending was mixed but generally reported to be flat to up slightly over the latest reporting period. Retail sales were said to have improved modestly in the Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco Districts, while sales were characterized as flat to softer in the New York and Kansas City Districts. In general, retail sales were reported to be running only modestly ahead of a year ago. A number of reports noted various factors affecting sales, such as rising gasoline prices, political uncertainty, concerns about the \"fiscal cliff\" and weather. Atlanta and San Francisco noted that discounters have been outperforming traditional department stores. Cleveland reported that back-to-school merchandise sold well, while Chicago said that such sales were below expectations. Boston noted a pickup in furniture sales, Richmond cited brisk sales at building supplies stores, and San Francisco reported stronger demand at restaurants and food-service establishments.\nVehicle sales were mixed but generally at favorable levels. Sales of new vehicles were steady to stronger and running ahead of comparable 2011 levels. Philadelphia, Atlanta, Minneapolis, and San Francisco described sales as strong, while New York and Chicago reported some moderation in sales in September, after a fairly strong August. Kansas City and Dallas reported some softening or leveling off in sales. The Cleveland and Kansas City Districts noted that crossover SUVs have been selling well relative to less fuel-efficient vehicles. Sales of used vehicles were mixed, with San Francisco describing them as robust but New York and Cleveland characterizing them as flat.\nTourism was generally described as steady at robust levels, though there have been scattered indications of some softening. Boston, New York, Philadelphia, Richmond, Atlanta, Minneapolis and San Francisco described tourism as strong, whereas the Kansas City and Dallas Districts indicated some signs of weakening. Even Districts reporting strength noted some pockets of softening: Boston reported a small drop in advance bookings, New York indicated a dip in activity in mid-September, Richmond noted a significant drop in government-sponsored bookings, and Atlanta mentioned disappointing cruise bookings and on-board spending. The Dallas District noted weakening travel demand from Europe and Asia; Atlanta also indicated weakening traffic from Europe but added that Canadian and Latin American visitors largely picked up the slack.\nReal Estate and Construction\nResidential real estate showed widespread improvement since the last report. All twelve Districts reported that existing home sales strengthened, in some cases substantially. Selling prices were steady or rising. Boston, Atlanta, Minneapolis, Dallas and San Francisco noted declining or tight inventories, which have put upward pressure on prices. Modest price increases were reported in the New York, Richmond, Chicago, and Kansas City Districts. New York and Richmond reported relatively strong demand at the high and low ends of the market, whereas Philadelphia and Kansas City noted relative strength for mid-range homes; Boston indicated a shift in the mix toward lower or medium priced homes. New home construction and sales were more mixed but still mostly improved: increased construction and/or new home sales were reported in the Atlanta, Chicago, St. Louis, Kansas City, Dallas and San Francisco Districts. Multi-family construction, in particular, was described as robust in the Boston, New York, Atlanta, Chicago, and Dallas Districts. Residential rental markets continued to be characterized as strong, even in the New York and Atlanta Districts where rents increased somewhat less strongly than in recent months.\nCommercial real estate markets were mixed since the last report. Office markets showed signs of softening in the northeastern Districts--Boston, New York and Philadelphia--with New York remarking on substantial new supply coming on the market in early 2013. In contrast, Atlanta, Minneapolis and San Francisco noted some improvement, while most other Districts reported stable or mixed market conditions. Industrial markets showed some strength in the New York, Philadelphia, Cleveland and Atlanta Districts, while conditions were described as sluggish in Richmond and mixed in St. Louis. Atlanta noted weakness in the market for retail space. Commercial construction activity was also mixed: Atlanta, Minneapolis and Kansas City reported some improvement in non-residential construction activity, while Richmond and Dallas noted that activity was sluggish.\nManufacturing\nConditions in the manufacturing sector were mixed since the last report, though on balance, more Districts reported that conditions had improved than worsened. The Boston, Richmond, Atlanta, St. Louis, Kansas City, and San Francisco Districts reported that activity expanded, though growth was generally seen as modest. Activity was reported as mixed in the Dallas District, while the New York, Chicago, and Minneapolis Districts reported that activity weakened, though declines were mild for the latter two. Significant gains in manufacturing related to the construction, energy, and transportation sectors were reported across several Districts, with particularly robust gains tied to the automotive industry. There were exceptions in the Kansas City and Dallas Districts where manufacturing related to transportation equipment was reported as mixed.\nSteel production was said to be flat in the Cleveland and San Francisco Districts, and lower in the St. Louis District. Activity related to machinery and equipment was reported as lower in the Philadelphia, Chicago, and Kansas City Districts. Weaker sales growth in the high tech industry was reported by Dallas, and Kansas City said that growth among high-tech firms remained sluggish in its District. The Boston District noted some weakness in the semiconductor industry, while the San Francisco District said that new orders from the semiconductor industry had improved. Manufacturing contacts in the St. Louis District were tentative about the outlook for 2013, and contacts in the Dallas District noted some uncertainty about the outlook due to the upcoming election.\nNonfinancial Services\nActivity in nonfinancial services was stable to slightly stronger since the last report. The Richmond, Minneapolis, Dallas, and San Francisco Districts reported that service-sector activity expanded, while such activity was reported as steady in the New York District and mixed in the Philadelphia District. Richmond noted that business activity strengthened for professional, scientific, and technical service firms, and Dallas noted strength in energy, accounting, and audit-related services. There was an increase in activity for a wide range of consulting services in the Boston and Minneapolis Districts. Activity related to health care was reported to be stable in the San Francisco District, but increased significantly in the Boston District. San Francisco reported continued sales growth for a wide variety of technology services, and noted that demand picked up for restaurants and other food-service providers.\nReports on goods transportation services generally remained positive. A pick up in such activity was noted in Cleveland, Atlanta, Richmond, and Dallas, while such activity was said to be flat in Kansas City. Contacts in the Cleveland, Atlanta, and Dallas Districts reported strong shipments of automotive, construction, and energy-related products. Port activity expanded to record levels in the Atlanta and Richmond Districts. Air cargo volume increased in the Atlanta District, but declined in the Dallas District due to weakness in the international sector.\nBanking and Finance\nOverall loan demand increased slightly on net since the last Beige Book report. New York, Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, and San Francisco reported stronger loan demand on balance, while Kansas City and Dallas reported flat demand and Chicago reported somewhat weaker demand. Most Districts reported an increase in mortgage lending, especially for refinancing purposes. New York, Cleveland, St. Louis, Kansas City, and San Francisco reported some increase in demand for commercial and industrial loans, while demand for business loans was weak in Chicago and Dallas, and was characterized as mixed in Richmond. Demand for consumer credit, particularly for auto loans, was said to be strong in the Cleveland, Atlanta, St. Louis, Dallas, and San Francisco Districts, while consumer loan demand was more limited in New York, Richmond, Chicago, and Kansas City.\nCredit standards were little changed since the last report. However, New York noted some tightening for consumer loans and residential mortgages, while Richmond and Chicago reported some easing for commercial and industrial loans. Still, loans remained difficult to obtain for many small businesses in the Cleveland, Richmond, and Chicago Districts. Banking contacts in the Philadelphia, Cleveland, Dallas, and San Francisco Districts reported stiff competition among lenders. Philadelphia, Kansas City, and Dallas noted general improvements in loan quality, and delinquency rates generally held steady or declined in the New York, Cleveland, and Dallas Districts.\nAgriculture and Natural Resources\nAgriculture conditions were mixed since the last report. Drought conditions continued to hurt the agriculture sector in the Chicago District, parts of the Minneapolis District, and the Kansas City and Dallas Districts. However, agriculture activity was reported as higher in the Atlanta and St. Louis Districts, as well as in parts of the Minneapolis District, and was reported as stable in the San Francisco District. The Chicago and Dallas Districts noted that increased rainfall had improved crop conditions. In the Dallas District, crops were reported to be mostly in fair to good shape, with production levels ahead of last year but below average due to ongoing dry conditions. Producers in the St. Louis District reported that crops were generally in better condition than at the time of the previous report, and harvest rates for corn and rice were well ahead of their five-year averages. Contacts in the Atlanta District reported that the rise in some crop prices related to the drought in the Midwest led to an increase in crop production in the Southeast. Higher feed prices continued to adversely affect livestock producers in the Atlanta, Chicago, Minneapolis, Dallas and San Francisco Districts, though the Chicago District noted some easing in higher feed prices which provided a bit of relief.\nActivity in the energy sector remained strong, with the Minneapolis, Kansas City, and Dallas Districts reporting robust gains in activity. The Minneapolis District reported that oil production hit a new record high in North Dakota, and the Cleveland District reported that oil and natural gas production held steady. Natural gas exploration was reported as lower in the Kansas City District and in parts of the Minneapolis District. Coal producers in the Cleveland District reported declines in production.\nEmployment, Wages, and Prices\nEmployment conditions were little changed since the last report. The Boston, Cleveland, Atlanta, Minneapolis, and Dallas Districts indicated that employment levels were flat or up slightly, with stagnant demand and uncertainty related to the upcoming presidential election, U.S. fiscal policy, and European debt issues cited by some as restraining hiring. The New York and Chicago Districts noted weaker labor market conditions, and conditions were described as mixed in Richmond. Firms in the St. Louis District reported an increase in hiring plans. Several Districts continued to report that employers were having difficulty filling highly skilled positions. In response, a few Districts noted that firms were starting to increase training programs to meet their staffing needs.\nMost Districts reported that wage pressures remained modest since the last report, though an increase in the cost of employee medical benefits was noted in Philadelphia, Cleveland, and Chicago. To the extent that wage increases were observed, they were concentrated among highly skilled workers in information technology, health care, professional services, and some of the skilled trades, according to reports from the Chicago, Minneapolis, Kansas City, and San Francisco Districts.\nPrice pressures were said to be contained as most Districts reported that both finished goods and input prices were little changed since the last report. Higher prices were cited by some Districts for agricultural commodities and petroleum-based products, although low or declining natural gas prices were reported in the Atlanta, Kansas City, Dallas, and San Francisco Districts. Contacts in the Atlanta, Chicago, Kansas City, and Dallas Districts noted that drought conditions continued to result in higher feed prices. There were scattered reports of higher crop prices starting to show through to food prices at the consumer level. Atlanta reported an increase in corn and soybean prices, while Chicago and Kansas City reported that these prices declined somewhat. Slightly lower prices for some technology-related products were reported in the San Francisco District.\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 10, 2012\nEconomic activity in the Eighth District has expanded at a moderate pace since our previous survey. Recent reports of planned activity from manufacturing and services contacts have been positive. Residential real estate market conditions have continued to improve moderately, while commercial and industrial real estate market conditions have continued to be mixed. Overall lending activity at a sample of small and mid-sized District banks increased slightly from mid-June to early September. Agricultural conditions in the District have generally improved since our previous report.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our previous report. Several manufacturers reported plans to hire new employees, open new plants, or expand operations, while fewer manufacturers reported plans to lay off workers or close plants. Firms in poultry processing, furniture, commercial printing, boat, conveyor equipment, HVAC equipment, and industrial gas manufacturing plan to hire new workers, open new facilities, or expand current operations. In contrast, firms that manufacture iron and steel products, mining equipment, and food products plan to lay off workers or close existing facilities.\nReports of planned activity in the District's service sector have been positive since our previous report. Firms in business support, distribution, healthcare technology, and personal care reported plans to hire new workers or expand operations. A transportation services firm also announced large-scale hiring plans for seasonal employees recently. In contrast, a financial services firm announced plans to relocate workers to a new location outside the District. Lastly, auto dealers in certain parts of the District reported weak hybrid vehicle sales.\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, August 2012 year-to-date home sales were up 15 percent in Louisville, 6 percent in Little Rock, 11 percent in Memphis, and 17 percent in St. Louis. Residential construction increased in the majority of the District. August 2012 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2011. Permits increased 41 percent in Louisville, 27 percent in Little Rock, 39 percent in Memphis, and 17 percent in St. Louis.\nCommercial and industrial real estate conditions were mixed throughout most of the District. A contact reported that apartment occupancy rates in northwest Arkansas remained high in Rogers, Bentonville, Fayetteville, and Springdale and strong multi-family real estate activity is expected in the second half of 2012. A contact in Louisville reported that office leasing activity declined in the central business district, while it remained strong in the suburban area. A contact in Memphis reported that industrial real estate activity has improved. Commercial and industrial construction activity improved throughout most of the District. A contact in Little Rock reported several new office building construction projects in the Fayetteville metropolitan area. A contact in Louisville reported that with demand for multi-family units remaining strong, plans for apartment construction continued to increase. A contact reported new mixed-use development plans in the Memphis metropolitan area.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks increased 1.4 percent from mid-June to early September. Real estate lending, which accounts for 73.3 percent of total loans, increased 0.2 percent. Commercial and industrial loans, accounting for 15.8 percent of total loans, increased 1 percent. Loans to individuals, accounting for 4.7 percent of total loans, increased 2.5 percent. All other loans, accounting for 6.2 percent of total loans, increased 16.4 percent. During this period, total deposits at these banks increased 0.2 percent.\nAgriculture and Natural Resources\nThe condition of pastureland in the Eighth District has improved significantly from early August to late September. Excluding Mississippi, where 97 percent of pastureland was already rated as fair or better, the fraction of pastureland in fair or better condition has increased by at least 20 percentage points in all District states. The share of crops in fair or better condition has similarly increased across the District, although the condition of the corn crop remains relatively unchanged. Harvest completion rates have outpaced their 5-year averages for almost all crops in all District states. In particular, harvest completion rates for corn and rice are on average 30 percentage points ahead of their 5-year averages. Total year-to-date coal production in the states comprising the District, with the exception of eastern Kentucky, was 9 percent higher through the end of August than it was in the first eight months of 2011. August production, however, was 6.8 percent lower than in August 2011.\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 10, 2012\nEconomic activity in the Second District has held steady since the last report. Prices of finished goods and services have generally been stable. The labor market has shown further signs of softening, as fewer business contacts report that they are adding workers, and a major employment agency describes hiring activity as sluggish. Retailers, including auto dealers, note some leveling off in sales activity following increases. Tourism activity has generally held steady at a high level, though there were some indications of softening in mid-September. Residential real estate markets have shown further signs of improvement. Office markets have shown some signs of slackening, but industrial markets have picked up modestly. Finally, bankers report increased loan demand, except on consumer loans, steady to tighter credit standards, and lower delinquency rates on commercial loans and mortgages.\nConsumer Spending\nRetailers report that sales activity has remained flat in recent weeks. A major retail chain reports that sales in the region were sluggish in August and especially in September, running well below comparable 2011 levels. Some of the weakness is attributed to unseasonably mild weather, which dampened sales of seasonal merchandise. A major mall in upstate New York describes sales activity as \"stagnant\", with sales flat to down slightly from a year ago in August and September. The pricing environment is described as quite promotional, and acquisition costs of goods are characterized as mostly stable to declining modestly. Auto dealers in upstate New York report steady sales activity. New vehicle sales were up 6-9 percent from a year earlier in August but are projected to be flat to up slightly in September. Sales of used cars have been mixed since the last report, while dealers' service departments note some slowing in business. Wholesale and retail credit conditions remain favorable.\nTourism activity has been steady at a fairly robust level since the last report, despite hints of weakness in mid-September. A trade association survey conducted in September indicated that 70 percent of hoteliers across New York State report that business over Labor Day weekend was at least as good as in 2011. Similarly, occupancy rates and room rates at Buffalo hotels are reported to be running well ahead of 2011 levels. Manhattan hotel occupancy rates were little changed at slightly over 90 percent in August, with room rates continuing to run a modest 2 percent ahead of a year ago. Anecdotal reports for September suggest that business remained strong in the early part of the month but tapered off a bit at mid-month. Similarly, weekly attendance and revenues at Broadway theaters were running ahead of comparable 2011 levels in August and early September but slipped well below year-earlier levels for the third week of the month. Finally, consumer confidence fell in August and was little changed at a low level in September, according to the Conference Board's monthly survey of residents of the Middle Atlantic states (NY, NJ, Pa).\nConstruction and Real Estate\nResidential real estate across the District has continued to improve. Housing markets in metropolitan Buffalo reportedly flattened out in August but picked up sharply in September. Northern New Jersey's housing market has shown further modest signs of improvement, and there has been a sustained pickup in rental apartment construction, as builders appear to see a persistent shift toward renting. Home prices across northern New Jersey appear to recovering gradually--an industry expert notes that foreclosures and distress sales are no longer pushing down prices of other properties, though they are dampening any increase. Manhattan's co-op and condo market has remained stable--both in terms of sales activity and prices. The upper end of the market has been relatively strong, partly fueled by foreign buyers. Market conditions are reported to have strengthened in Brooklyn and especially Queens in the third quarter, while Long Island's housing market is weak but stabilizing. New York City's apartment rental market remains robust: rents have decelerated a bit in recent months but are still estimated to be rising at a 6-8 percent annual pace.\nCommercial real estate markets showed signs of softening in the third quarter. In particular, office vacancy rates in metropolitan Syracuse, Albany, northern New Jersey, Westchester and Fairfield counties climbed to their highest levels in a number of years, while asking rents were flat to down slightly. Office vacancy rates also edged up in Manhattan, after drifting down over the first half of 2012. Sluggish leasing demand from financial and other firms is reported to be more than offsetting strong leasing demand from tech firms. A substantial amount of office space is scheduled to come onto the Lower Manhattan market in early 2013.\nIndustrial markets have strengthened: vacancy rates have declined modestly since the beginning of the year in northern New Jersey, Westchester and Fairfield counties, and the Buffalo and Syracuse areas; but rates have held steady in Long Island and metropolitan Rochester. Industrial rents have begun to rise modestly across most of the District for the first time in a number of years.\nOther Business Activity\nManufacturers across the District indicate some further softening in general conditions since the last report, whereas contacts in most other sectors report that activity held steady. Both manufacturers and other contacts report little change in input price pressures since the last report, though a number of manufacturing contacts say they plan to hike selling prices in the months ahead.\nLabor market conditions across the District have been tepid since the last report. Business contacts generally indicate that they have scaled back hiring activity in recent months, and almost as many business contacts say they plan to reduce as increase employment in the months ahead. A major New York City employment agency specializing in office jobs reports that hiring activity remained sluggish after Labor Day--a time when recruitment activity typically picks up. Moreover, the weakness is reported to be fairly broad-based, though most evident in the finance sector.\nFinancial Developments\nSmall to medium sized banks in the District report increased demand for all loan types except consumer loans, where demand was unchanged. Bankers also report increased demand for refinancing. Bankers report some tightening in credit standards for the household sector: roughly one in five bankers report tighter standards for consumer loans and residential mortgages, while no respondent reports easing standard in any individual loan category. Respondents indicate a decrease in spreads of loan rates over costs of funds for all loan categories except for consumer loans. The decrease in spreads was most prevalent in commercial mortgages. Respondents also indicate a decrease in the average deposit rate. Finally, bankers report some decrease in delinquency rates for commercial and industrial loans and commercial mortgages but no change 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"

Dallas

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"Beige Book Report: Dallas\nOctober 10, 2012\nThe Eleventh District economy expanded at a moderate pace over the past six weeks. Energy activity remained strong, and construction and real estate activity picked up as housing demand strengthened. Demand for business services improved slightly, and transportation services activity continued to expand. Reports on manufacturing activity were mixed. Growth in retail and auto sales slowed over the reporting period, but Eleventh District sales continued to outperform the national average, according to respondents. Lenders noted steady loan demand. Agricultural conditions improved slightly. Price and wage pressures were modest over the reporting period, and employment levels continued to edge up. Many respondents across industries said continued uncertainty about upcoming elections was clouding outlooks.\nPrices\nMost reporting firms said prices were steady. Several contacts in the transportation services industry noted higher diesel prices led to higher costs. Shipping firms expect higher ground and air prices as a result. Airline industry contacts noted that business travelers were very price sensitive and soft demand was keeping a lid on fares. Food and cattle producers noted price increases due to continued commodity price pressures.\nThe price of WTI rose during the reporting period, reaching nearly $99 per barrel. Natural gas prices remained depressed. Retail and on-highway prices of both gasoline and diesel ended the reporting period slightly higher. Contacts noted that Hurricane Isaac had little impact on energy pricing. The prices of petrochemical products were flat to slightly up over the past six weeks.\nLabor Market\nEmployment held steady or increased at most firms. Shortages of truck drivers continued to be reported in several industries. Accounting and legal firms noted increased hiring and said compensation has risen this year. Staffing firms reported additional hiring in response to high levels of demand, but there were no reports of pressures on wages or salaries. Skill shortages remained an issue for energy services firms, although some large firms noted slight easing. Retailers said hiring increased since the last report and expected holiday hiring to be stronger than last year.\nManufacturing\nOverall demand for construction-related products was mixed over the last six weeks. Producers of stone, clay, glass and lumber reported steady to slightly increased demand, with particular strength in residential activity. Fabricated metals contacts said growth in demand had slowed. Reports from primary metals contacts were mixed, although a large electrical wire manufacturer said demand in August was stronger than in any other month this year. Across the board, contacts noted uncertainty in their outlooks due to the upcoming election.\nHigh-tech manufacturers said sales growth slowed modestly over the reporting period. Most contacts attributed the slowdown to weakened international demand and lower forecasts for world economic growth. Weaker demand was noted across a broad range of products, including industrial, computers and communications infrastructure. Contacts expect demand to remain weak through year-end.\nDemand for paper products increased in line with normal seasonal patterns. Food producers noted increased business over the last thirty days due to a slight pickup in consumer demand. Reports from most transportation equipment manufacturers were mixed; aviation manufacturing orders were down slightly while other firms noted flat to increased activity.\nPetrochemicals producers said demand remained mostly flat since the last report. Ethylene production fell to a three-year low as plants went offline for maintenance and improvement. Ethylene and polyethylene margins remained relatively stable and largely healthy, although exports softened. Gulf Coast refiners said operating rates remained over 90 percent, and strong export demand was preventing a buildup in domestic inventories. Refinery margins rose to the highest level since 2008 in August and have since remained very healthy.\nRetail Sales\nRetail sales growth softened over the reporting period, and sales are up slightly year-over-year. Sales in the Eleventh District continue to outperform the nation, according to two national retailers. Contacts noted that holiday hiring has begun or will begin soon, and hours worked are up from the previous report. Commodity input costs are easing, but the drought has caused prices for grains and feedstock to rise. The outlook for the rest of the retail quarter, which ends in October, is mixed but contacts are cautiously optimistic for the fourth quarter.\nAutomobile sales were flat over the past six weeks but are up year-over-year. Contacts expect a modest increase in selling prices with the 2013 models due out soon. Outlooks are generally uncertain because of the election and consumer confidence, but fourth quarter is expected to be better year-over-year.\nServices\nStaffing firms said demand growth slowed slightly but is expected to turn around in coming weeks. Demand from the steel industry was very strong, with contracts extending through 2014. Engineering and mortgage processor jobs were in high demand, while the need for oil workers has \"become less crazy.\" There were fewer requests for workers in the plastics industry. Outlooks remained fairly optimistic.\nAccounting firms noted a slight increase in activity. Demand for insurance and audit services experienced positive growth, while that for advisory and tax services was flat to slightly down. Demand for energy-related services remained strong. Legal contacts said overall demand for services was not much changed since the last report. However, activity related to energy, labor-services and real estate had increased. Outlooks were cautiously optimistic.\nReports from transportation service firms were mostly positive. Railroad contacts said volumes picked up since the last report. Motor vehicle shipments continue to be strong, and contacts noted healthy volumes of some construction-related products, including lumber and wood and crushed stone. Container volumes continued to increase and shipping firms said small parcel volume growth had recently accelerated, led by improvements in wholesale and retail trade. Air cargo volumes continued to decline due to weakness in the international sector.\nAirlines noted softer passenger demand since the last report, citing weakness in Europe and Asia. Respondents were cautious in their outlooks, and slightly more pessimistic than six weeks ago.\nConstruction and Real Estate\nSingle-family housing activity continued to increase at a good pace over the past six weeks. Contacts said new and existing home sales outpaced expectations, and new home construction activity increased. Inventories of both new and existing homes remained tight, leading to price gains. Apartment construction picked up since the last report, and outlooks for the multifamily sector remain quite optimistic. Leasing activity in the office and industrial real estate sectors remained steady at a good pace. While commercial construction remains at low levels, contacts expect activity to improve.\nFinancial Services\nOverall, financial firms reported flat loan demand. Auto loan demand, particularly for new autos, was a bright spot, and energy-related lending remained strong. Business lending and commercial real estate lending were weak. Loan pricing remained very competitive and has squeezed profit margins. Loan quality continued to improve as delinquency rates trended down and new loans are granted to more creditworthy customers. Deposits kept growing even as rates remained very low. Outlooks were mixed, and contacts said fiscal worries were negatively impacting loan demand.\nEnergy\nRespondents at energy-related firms said business remained strong with long lead times, although the District active rig count declined modestly over the reporting period. Producers concentrated their production on oil, as the prices of both natural gas and natural gas liquids remain very low. Outlooks were essentially flat. Activity was robust but there is little hope for further improvement through the end of the year.\nAgriculture\nThe District remained largely in drought, although scattered rainfall improved soil moisture conditions in several areas. Crops were mostly in fair to good shape. Production is expected to be better than last year--when the drought was much more severe in the Eleventh District--but below average because of ongoing dry conditions. Grain prices remained high due to the Midwest drought, adversely affecting Texas' large livestock sector as feed costs reached record highs.\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 10, 2012\nBusiness activity expanded in the Fourth District since our last report, although the rate of growth remains modest. On balance, manufacturing output rose. In the real estate sector, nonresidential construction picked up, while reports on single-family housing starts were mixed. Sales of existing family homes increased. Retailers and auto dealers saw a modest improvement in sales during August and September on a year-over-year basis. Shale gas activity continued at a robust pace, while coal production fell below prior-year levels. The slowdown in freight transport volume, which began in the second quarter, has abated. And the demand for business and consumer credit moved slightly higher.\nLittle net hiring was reported across industry sectors. We heard a number of reports that recruiting qualified workers for open positions remains difficult. Staffing-firm representatives said that the number of job openings and placements has slowed during the past six weeks. Vacancies were found primarily in healthcare and manufacturing. Wage pressures are contained. Input prices were stable, apart from increases in some agricultural commodities and petroleum-based products.\nManufacturing\nDistrict factories reported that production levels were stable or increased during the past six weeks, while new orders weakened. Rising production was mainly limited to goods sold to the construction, energy, and transportation sectors. Compared to prior-year levels, output was higher for a majority of our contacts. Several producers pointed to a rise in inventories, but said that they are manageable. The outlook by manufacturers was mixed. Steel producers and service centers reported that shipping volume was flat or down and they continued to reduce their inventory. A seasonal pickup that typically begins in September has yet to materialize. Several contacts noted that competition (volume and pricing) from offshore producers has intensified. 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 auto plants returned to normal production schedules. Compared to a year ago, production figures were down slightly for domestic producers, while showing a moderate rise for foreign nameplates. The latter is attributable to the abatement of supply chain issues.\nLittle change in capacity utilization was reported, although a majority of our contacts said that rates were slightly below normal levels. Capital spending remained on track, but several producers intend to delay some projects during the upcoming months. Raw material prices were either flat or trended lower, while finished goods prices were steady. Little change in payrolls was noted, although attracting skilled workers remains very difficult. Wage pressures are contained.\nReal Estate\nReports from home builders on single-family housing starts were mixed. Compared to a year ago, construction activity was described as similar. On balance, builders expect a modest rise in new-home construction in the near term. Spec building remains on the low side, due in part to difficulty in obtaining financing. List prices of new-homes held steady, though most builders indicated that they have cut back on discounting. Sales contracts were found across all price-point categories. Reports of higher prices for lumber, shingles, and concrete were widespread, rising mainly in the mid-single digits. Sales of existing homes continued to show improvement, although inventory is tight in the mid-price range.\nNonresidential contractors reported that business activity continued to improve, and most are satisfied with their backlogs going into 2013. Project work is driven by industrial (manufacturing and energy), education, healthcare, multi-family housing, and some public works. Most contractors expect that the momentum built up this year will be maintained in 2013, though some commented that customers seemed hesitant about moving forward at this time. Material price increases were mainly limited to petroleum-based products.\nResidential and nonresidential builders reported little change in their payrolls. Some seasonal layoffs are expected. A few builders said that they would like to hire more workers but are hesitant to do so because of uncertainty surrounding the upcoming election and the fiscal cliff. Wage pressures are contained, but sharp increases in health insurance premiums were noted by many contacts. Subcontractors are holding their prices steady and many are finding it difficult to recruit skilled trades.\nConsumer Spending\nRetailers reported a modest improvement in sales during August and September relative to year-ago levels. Consumers have responded positively to new lines of fall merchandise and back-to-school sales were characterized as good. Some retailers noted that consumers in middle-income brackets have entered a holding pattern until after the elections. Our contacts expect growth in the fourth quarter to be in the low-to-mid single digits relative to 2011. Vendor pricing has been stable, with little change in shelf prices. Grocery store chains reported that their costs have risen due to the summer drought. Attempts at passing through higher food prices were met with mixed results. Capital spending for the year remains on target. Two retailers noted that they may accelerate spending before year's end, mainly for distribution equipment. No permanent hiring is expected other than at new stores. The number of temporary workers expected to be hired for the upcoming holiday season is planned to be a little higher than last year.\nNew-vehicle sales were stronger in August and September when compared with the same time period a year ago. Dealers reported that sales of fuel-efficient cars and crossover vehicles are doing particularly well. New-vehicle inventories increased since our last report and most dealers described them as acceptable. Dealers expect little change in monthly sales for the remainder of 2012. Used-vehicle sales were flat, which was attributed primarily to a lack of inventory. Most dealers reported that credit is more readily available and leasing is growing in popularity. Hiring for sales and service positions remains at a slow pace. Recruiting qualified people is challenging.\nBanking\nDemand for business credit moved slightly higher since our last report, with requests mainly for commercial loans and refinancings. Several small business owners told us that it remains difficult for them to obtain credit. The interest rate environment was described as very competitive. Consumer lending was up a little, driven by demand for auto loans and home equity lines of credit. In the residential mortgage market, activity is fairly strong. Although a majority of applicants are still looking to refinance, many bankers noted an increase in new-purchase requests. No changes were made to loan application standards. Delinquency rates continued to improve across consumer loan categories; however, several bankers reported an uptick in delinquencies from commercial customers. Core deposits grew, especially in transaction accounts. Bankers expect little change in payrolls for the remainder of this year.\nEnergy\nConventional oil and natural gas production held steady during the past six weeks, with little change projected in the upcoming months. Wellhead prices for natural gas rose slightly. Drilling rigs are migrating from other states to Ohio to take advantage of the higher-priced wet gas found in the Utica shale. To date, 375 permits have been issued in Ohio for drilling horizontal shale gas wells. Thirty wells are now producing, with 50 expected to be in production by year's end. Coal producers reported production declines in 2012 of between 10 and 50 percent over prior-year levels due to lower demand from electric utilities and a stricter regulatory environment. Reports of idled mines are widespread. Spot prices for export metallurgical coal declined further, while domestic steam coal prices rose slightly due to tight supplies. Production equipment and materials prices were flat in most categories, other than for diesel fuel. Capital outlays remain at projected levels. Several coal operators announced layoffs. In Ohio, a regulatory agency more than doubled its employment size over the past 12 months to cope with expanding shale gas activity.\nFreight Transportation\nReports on freight transport indicated that volume is returning to normal trends after a second-quarter slowdown. Industries which contributed to the pickup include automotive, construction, and shale gas. However, lower-than-expected harvests have negatively impacted revenues for some carriers. Most of our contacts believe that their companies' growth objectives for 2012 will be met. Apart from fuel prices, costs associated with truck maintenance held steady. Carriers have successfully passed through higher diesel prices via a surcharge. Reports on capital spending were mixed. Half of our contacts said that 2012 expenditures are on track. Others reported a slowdown or postponement in purchasing new trucks, citing a sluggish economy, uncertainty about the fiscal cliff, and difficulty obtaining financing. Hiring is for replacement and adding capacity. Recruiting qualified personnel remains difficult, which is contributing to wage pressures.\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 10, 2012\nReports from business contacts in the First District indicate the region's economy is expanding at a modest pace. Most retail and manufacturing contacts report sales or revenue gains from a year earlier, although the manufacturers say growth is slower than earlier in the year and some have seen actual declines. Consulting and advertising firms are generally upbeat, with results depending on specific client industries. Residential real estate contacts note increases in sales and only small changes in median sale prices. Commercial real estate leasing activity has slowed somewhat, while investment conditions remain positive. With the exception of a consulting firm that has expanded recently and a manufacturer citing especially strong growth, responding firms are doing only modest hiring. While contacts in most industries mention the upcoming election, so-called fiscal cliff, and Europe as risk factors increasing uncertainty, it is only in commercial real estate leasing that respondents say current activity levels are measurably damped by such concerns.\nRetail and Tourism\nFirst District retailers contacted for this round indicate that sales through mid to late September are slightly above 2011. Year-over-year sales increases in recent months range from low single-digit to high single-digit percentage gains, although one retailer reports that its 2012 sales to date are 2 percent to 3 percent below last year's. Furniture sales have picked up after declining during the summer, while spending on apparel and household items remains strong. Contacts express some concern that consumer sentiment could be negatively affected by domestic politics and the fiscal cliff, which increases their uncertainty about how well the end-of-year 2012 holiday sales season will turn out. While such concerns lead retailers to expect the U.S. economy will remain flat over the next 6 to 8 months, respondents are nonetheless cautiously optimistic that their 2012 revenues will end up slightly ahead of 2011 levels.\nThe Boston tourism industry continues to benefit from a rebound in domestic and international business travel, although the leisure sector has seen a small drop in advance bookings compared to six months ago. The tourism industry has slightly downgraded its overall forecast for 2012, but this year's performance looks to be the industry's best since 1999-2000. Expectations are that Boston tourism will be strong again in 2013, with revenues rising slightly from 2012.\nManufacturing and Related Services\nDiscussions with manufacturing contacts in the First District paint a picture of an economy that is growing slowly but, on net, still growing. About half the respondents report a substantial slowdown in growth or outright fall in sales in the most recent period compared with a year earlier. Three contacts supplying equipment to factories note weakness in the semiconductor industry, which they say reflects its idiosyncratic cycle and not the macro economy. A contact in the toy business reports that orders for Christmas are coming later and later in the year, partly because lead times have shrunk and firms can order in September for November delivery.\nNot all responding firms report softening. For example, a contact at a pharmaceutical firm says the company's growth is strong. The firm plans to hire 1,000 people over the next year, which represents a 20 percent increase in headcount; the hires will be mostly in sales and marketing.\nFor the most part, firms reporting weakness indicate it has yet to affect either hiring or investment substantially. Only about one-quarter of respondents say they are actually cutting staff; for one firm, the layoffs are in Europe and another firm attributes them at least partly to increased productivity. Several contacts report that their firms are re-evaluating their benefits structures as a way to conserve cash. No contact reports making any adjustments or even projecting any adjustments to their capital spending plans. Indeed, one contact at a semiconductor equipment maker says they are maintaining their long-term investment plans despite quarter-on-quarter sales declines on the order of 20 percent in the third quarter which are expected to continue in the fourth.\nIn general, firms remain somewhat tentative about 2013, although this is partly because they are currently engaged in their annual \"planning cycles\" for 2013. One contact in the industrial distribution business says he expects they will plan for 1 percent to 2 percent growth in 2013, in line with Q3 this year; by contrast, their 2011 plan for 2012 assumed 5 percent to 6 percent sales growth. One contact in the publishing business says that they will \"continue to thrive on low single-digit organic growth.\" Many contacts say that slow growth is the \"new normal.\"\nSelected Business Services\nConsulting and advertising contacts in the First District report a generally positive, although not exuberant, third quarter. Only one contact cites flat revenues, while the others note varying levels of growth largely determined by the prospects of their respective client bases. Marketing and advertising contacts report weaker conditions than consulting firms. They note a large degree of uncertainty in the market as well as a shift in demand towards services focused on social media and e-commerce. Demand for health care consulting services has skyrocketed due to \"unprecedented\" levels of merger and acquisition activity among health care providers and the need for improved efficiency as a result of the ACA. At the same time, firms focused on the pharmaceutical industry have experienced slow growth because their clients have been hurt by blockbuster drugs losing patent protection and cost pressures from governments. Economic consulting remains strong, reflecting high levels of complex high-stakes litigation; management and strategy consulting contacts cite a recent upswing in business.\nContacts report little to no cost increases, with the exception of higher travel costs, and are keeping their prices relatively unchanged. Most contacts record some hiring, mostly in the low single digits, although one contact in government policy consulting has increased staff by 25 percent since last year to address a large backlog and ongoing demand growth. Plans for future hiring are modest.\nMost contacts expect a continuation of current growth trends for the rest of 2012 and are more bullish about 2013. Respondents express concern about factors with the potential to slow the macro economy, such as political uncertainty, the fiscal cliff, and Europe. Several firms rely heavily on government spending and are thus especially concerned with the fiscal situation and upcoming election. Nevertheless, no respondent expects another recession and the overall tone is cautiously optimistic.\nCommercial Real Estate\nContacts across the First District report that commercial real estate fundamentals have been basically flat in recent weeks. Leasing activity is said to be down in Boston as firms say political uncertainty makes them reluctant to make leasing commitments in advance of the national election. At the same time, the credit environment remains favorable, as interest rates on commercial real estate loans remain very low by historical standards. One contact notes that the supply of high-quality commercial properties for sale has declined recently, and hypothesizes that owners have nowhere better to park their money right now. Construction activity is proceeding as expected on large commercial projects in Boston. While the multifamily sector remains strong across the region, with numerous apartment buildings under construction in Boston in particular, one contact surmises that additional apartment projects under discussion may be delayed or shelved pending rent discovery once current projects come on line.\nContacts express a mix of cautious optimism and generalized uncertainty concerning the outlook; the fiscal cliff and Europe are noted as key risks to growth. Some contacts mention a longer-run concern regarding the consequences of an inevitable eventual increase in interest rates; the risk is that net operating incomes will not increase enough to offset increased financing costs when loans currently being underwritten at very low rates require refinancing.\nResidential Real Estate\nYear-over-year sales growth continued in August in both single-family home and condominium markets throughout the First District. According to contacts, low interest rates and affordable prices contributed to improving sales figures, along with increases in residential rents. Several contacts report improving conditions for borrowers, but many contacts say that qualifying for a mortgage remains difficult. As for prices, contacts in the region report mixed movements in median sale prices, with some areas experiencing modest price appreciation and others moderate depreciation. In the Greater Boston area, contacts say a slight decline in the median sale price was unexpected in light of significant demand and dwindling inventory levels; they attribute the decline to significant increases in the sales of low to mid-tier properties. Throughout the region, inventory continues to decline. Contacts say they fear declining inventory will discourage buyers searching for homes as well as potential sellers who may not be able to find another well-kept property. Increasingly, properties in \"move-in condition\" receive multiple bids, sometimes above original asking prices.\nContacts expect sales to continue to grow on a year-over-year basis in the next several months. Nonetheless, many note that the recovery remains fragile and could be derailed by deterioration in economic conditions. Declining inventory levels also remains a concern, but several contacts expect an influx of sellers in the spring market. Median sale prices are expected to remain flat or improve modestly in the coming months.\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 10, 2012\nAggregate business activity in the Third District has continued to improve--growing modestly--since the previous Beige Book. A couple of sectors grew faster than the average, while a few declined slightly. Manufacturing activity declined somewhat, although a slight increase in new orders may presage a turnabout. Retail sales growth has continued at a modest pace since the last Beige Book, while auto sales have continued to increase at a strong pace. Lending volumes at Third District banks have continued to grow modestly, and credit quality has continued to improve. Sales of new homes have slowed since the previous Beige Book period, while brokers report strong growth in sales of existing homes (from previously low levels). Commercial real estate contacts reported less leasing activity and continued weak demand for new construction. Service-sector firms reported mixed results with stronger tourist visitation, a slowing defense sector, and modest growth across most other service sectors. Price pressures have changed little since the last Beige Book.\nThe overall outlook appears somewhat more optimistic relative to the views expressed in the last Beige Book, as contacts are beginning to look beyond the pending election and looming fiscal cliff. Expectations among manufacturers improved significantly for overall activity over the next six months, while plans for capital spending and hiring were mixed. Auto dealers and real estate firms are more optimistic, as their positive trends gain traction. Holiday sales expectations are strong among many general retailers. Financial- and service-sector contacts express a mix of views regarding the future--generally positive with varying degrees of caution.\nManufacturing\nSince the last Beige Book, Third District manufacturers have continued to report overall declines in shipments, but a slight increase in new orders. Makers of lumber and wood products; stone, clay, and glass products; fabricated metal products; and instruments have reported gains since the last Beige Book. Lower activity was reported by makers of primary metals, industrial machinery, and electronic equipment. One manufacturer summarized the broad economic climate as a summer slowdown with sequential improvement, marked by a definite increase in August.\nOptimism among Third District manufacturers that business conditions will improve during the next six months has grown significantly since the last Beige Book and is evident across most sectors. Plans were recently announced to restart the third of three District refineries that were all at risk of closing one year ago; the other two were previously rescued. Firms have raised their overall expectations of future hiring, but plans for capital spending have softened since the last Beige Book.\nRetail\nOverall, Third District retailers reported little change between the modest year-over-year sales growth in August compared with July, although one contact stated that his store experienced the strongest Labor Day weekend in years. This year's sunny weather certainly helped compared with last year's storms. One department store manager reported that back-to-school sales did well, cold-weather clothing is moving better than last year, and discretionary \"fun\" items are selling well. Retail contacts are bullish for the upcoming holiday season, speculating that people will be primed to respond to upbeat holiday advertising after the long, negative political campaign season. An expectation of greater seasonal hiring has been widely discussed. And the holiday calendar provides a 32-day shopping season--the longest possible.\nThere has also been little change in the pace of auto sales since the last Beige Book. Pennsylvania dealers reported ongoing moderate growth in August; New Jersey dealers recorded a third consecutive strong sales month in August and described September sales as \"good.\" The outlook among dealers remains positive. One contact stated \"confidence is back, credit is back, and leasing is back.\" However, dealers remain somewhat cautious through this political season regarding consumer uncertainty.\nFinance\nOverall, Third District financial firms have reported continued growth since the previous Beige Book. Loan volumes grew modestly across most categories. Contacts describe fierce competition for small business loans from large and small banks. Despite high charge-off rates and ongoing household deleveraging, credit card outstandings have been virtually flat since the last Beige Book. Most contacts report that the financial health of households, businesses, and financial institutions continues to improve. The overall outlook among lenders remains positive.\nReal Estate and Construction\nResidential builders reported a drop-off in traffic and slower sales in August and early September--a disappointing conclusion to their primary sales season. Builders lament that people are choosing to rent rather than buy even when local rents exceed the total cost of owning a home. Residential brokers reported somewhat stronger year-over-year sales growth in August than expressed in the last Beige Book and continued strength into September. Inventory levels of real estate listings remain at lower levels than one year ago with no signs of a large emerging shadow inventory. Multiple bids are reported for homes priced between $250,000 and $400,000; more very high-end listings are beginning to appear and test the market. Builders and brokers remain cautiously optimistic.\nNonresidential real estate contacts reported a big slowdown in August and a disappointingly small rebound in September. However, conditions remain better than one year ago, with more prospects, faster decision-making, and few downsizings outside of southern New Jersey. There is very little demand for new office/commercial buildings, but the industrial market remains strong, especially in the Lehigh Valley and central Pennsylvania markets. Center City Philadelphia and adjacent areas in West Philadelphia and the Navy Yard are an exception, with very busy design/build work for higher education, hotels, and multifamily apartments and condominiums. However, many professional architects and engineers--experienced and novice--remain out of work or underemployed. Nonresidential real estate contacts retain an outlook of slow, steady growth.\nServices\nThird District service-sector firms have reported mixed growth since the last Beige Book. Tourist areas along the Delaware and New Jersey shores, in the Poconos, around Philadelphia, and throughout central Pennsylvania have reported strong visitation and/or lodging numbers relative to recent years. Atlantic City casinos and some neighboring shore areas were exceptions. Jersey shore businesses expressed considerable disappointment over cautious tourist spending; Delaware shore business also noted some caution. However, the tourist season concluded on a high note as the Labor Day weekend benefited by comparison to last year when severe weather disrupted end-of-summer plans. District staffing firms reported little change in orders, hiring mix, and wages. One firm continued to report extremely busy orders for manufacturing workers--better than in recent years--but expects a seasonal decline beginning in October. Demand for professional/business and health-care staff remains slower. Defense-related firms reported that there are fewer large contracts on which to bid and that they have continued to lower their expectations for 2013 and 2014 as sequestration or an alternative budget deal nears. Overall, other service-sector firms report a modest but positive outlook for six months out.\nPrices and Wages\nPrice levels have continued to show little overall change since the previous Beige Book. Once again, cost factors have risen slightly among manufacturing firms but the increase is less than it was during the previous Beige Book; prices received by manufacturers fell. Homebuilders and retailers indicated few significant changes in their cost pressures or prices they charge. One homebuilder attempted to raise prices but couldn't make them stick. Real estate contacts continue to report that lower-cost homes have reached a price floor in most markets and are beginning to rise slightly in some neighborhoods. Leasing agents have been unable to charge higher leasing rates in nearly all markets, except for industrial space along the corridor from Carlisle, PA, to the Lehigh Valley. Contacts from all sectors report little or no wage pressures, other than for medical benefits.\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\nOctober 10, 2012\nEconomic activity in the Twelfth District grew at a modest pace during the reporting period of mid-August through late-September. Upward price pressures remained limited overall, and upward wage pressures remained muted. Sales of retail items rose slightly, and demand for most business and consumer services gained further on net. District manufacturing activity edged up. Agricultural output was mostly steady, while activity continued to trend up for providers of energy resources. Home demand in the District showed continued signs of improvement, and demand for commercial real estate was mainly stable. Financial institutions reported overall loan demand was unchanged or up somewhat on balance.\nWages and Prices\nPrice inflation remained quite limited for most final goods and services during the reporting period. Prices increased overall for some energy items including electricity, crude oil, and retail gasoline. Natural gas prices remained near historically low levels. Contacts noted high feed prices are passing through to grocery stores and restaurants. Contacts in the tech sector reported slightly lower prices of some technology-related products. For most products and services, vigorous competition among firms and cost-conscious purchasing behavior by consumers continued to keep price inflation in check.\nContacts in most sectors reported very limited upward wage pressures. Moderate wage increases in the 2 to 3 percent range were noted for employees in some manufacturing sectors, although lower levels of staffing were also reported. Contacts continued to note wage gains for workers with specialized skills in the information technology sector. Some upward pressure on wages of skilled construction workers was noted, as well. For the remainder of 2012, most contacts reported limited hiring plans, suggesting that upward wage pressures will remain subdued.\nRetail Trade and Services\nRetail sales rose further overall. Contacts reported sales were a bit stronger relative to the prior reporting period. Discount chains and online retailers continued to outperform traditional department stores. At grocery stores, consumer spending was soft as shoppers continued to shift their purchasing decisions in favor of cheaper products. Contacts reported a strong pace for auto sales, significantly above the pace from the same period last year. Demand for used vehicles also remained robust.\nDemand for most business and consumer services gained on net. Sales continued to grow for a wide variety of technology services, with expectations for further rapid growth in selected segments, such as cloud computing services. Demand for legal services was steady. For providers of health-care services, demand was largely stable. Demand picked up further for restaurants and other food-service providers. Some contacts in the District's travel and tourism sector reported improvement in conditions overall.\nManufacturing\nDistrict manufacturing activity edged up on balance during the reporting period of mid-August through late-September. Production activity remained at high levels for makers of commercial aircraft and parts. Manufacturers of wood products reported stronger than expected output and sales. New orders improved somewhat for manufacturers of semiconductors and other technology products. Demand for steel was mostly stable, albeit at low levels, while sales of processed scrap metal fell further, largely as a result of sustained weak demand abroad. For petroleum refiners, capacity utilization rates increased to the highest levels in years, as growing export sales offset relatively weak domestic demand for refined petroleum products.\nAgriculture and Resource-related Industries\nAgricultural activity was mostly stable, and extraction activity of natural resources used for energy production continued to expand. Contacts noted continued efforts by agricultural businesses to increase their productivity. Reports indicated that demand for cotton was strong. Higher grain and feed prices prompted District livestock producers to reduce herd sizes. Favorable weather conditions in some parts of the District helped stabilize production. Extraction activity for petroleum and natural gas remained at high levels or expanded a bit further on net.\nReal Estate and Construction\nHome demand in the District showed continued signs of improvement, while demand for commercial real estate was largely unchanged. Although still well below its historical average, the sales pace for new and existing homes picked up further in many areas. Contacts noted that pent-up demand may spur additional gains in coming months. Contacts reported a decrease in the inventory of available homes and a noticeable increase in construction activity. On the nonresidential side, contacts observed a reduction in commercial property vacancies in parts of the District.\nFinancial Institutions\nDistrict banking contacts reported that loan demand was unchanged or up somewhat compared with the prior reporting period. Some contacts reported that business loan demand inched up, although some of the new activity was for refinancing rather than expansion. Reports continued to highlight ample liquidity and stiff competition among lenders to provide credit to well-qualified business loan applicants. Contacts indicated that some borrowers received multiple offers to finance projects. Demand for consumer credit remained relatively strong, reflected primarily in high lending activity for automobile and home purchases.\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 10, 2012\nEconomic activity in the Seventh District continued to expand in late August and early September, but again at a slow pace. However, contacts remained guardedly optimistic that conditions would improve; noting that at least some of the uncertainty surrounding the outlook was likely to be resolved following the November election. Growth in consumer spending was little changed, while business spending increased at a slower rate. Manufacturing activity edged lower, and growth in construction moderated. Credit conditions continued to improve gradually. Cost pressures increased some, due in large part to higher food and energy prices. The drought led to an earlier start than normal for the harvest, and corn and soybean prices moved down a bit.\nConsumer Spending\nGrowth in consumer spending was little changed in late August and September following a slight pick-up in the previous reporting period. Sales of back-to-school items were somewhat below retailers' expectations despite higher store traffic volumes. Contacts noted that the rise in gasoline prices had further deterred consumers from increasing discretionary spending. Retailers lowered their expectations for the holiday shopping season, although they still expect holiday sales to match last year's pace. Auto sales increased in August before moderating some in September. Consumers responded strongly to model year-end incentives, depleting inventories of 2012 models, and also benefitted from easing auto credit conditions.\nBusiness Spending\nBusiness spending continued to increase slowly in late August and September. A number of contacts reported that firms were delaying hiring and capital expenditure decisions until they were more certain about the outlook for federal tax and spending policies. That said, some capital expenditures were proceeding as planned, particularly on software and equipment. Inventories were generally indicated to be at comfortable levels. Labor market conditions were weaker on balance. The District unemployment rate edged up and hiring remained selective. A recruiting firm indicated that overall demand for their services was effectively flat at last year's levels. Demand was greater in areas such as health care, engineering, accounting, information technology, and skilled manufacturing trades where firms are having difficulty finding qualified candidates. Several manufacturers reported stepping up training programs and increasing pay to meet staffing needs in a number of skilled trades.\nConstruction and Real Estate\nGrowth in construction moderated some from the previous reporting period. Homebuilders indicated that new single-family construction continued to rise at a slow but steady pace, while multi-family construction was stronger by comparison. Loan standards for residential development remained tight, and many homebuyers also continued to face tight lending standards. Home prices edged higher, despite a rise in short sales. Nonresidential construction increased at a slower rate. Contacts indicated that new projects were progressing at a reduced pace; some also suggested that many firms were putting off investment decisions until after the November election. Elevated vacancy rates remained a drag on new commercial construction, and contacts noted that bank lending for investment properties continued to be limited.\nManufacturing\nManufacturing production edged lower in late August and September. Contacts reported that new orders had slowed considerably from earlier in the year and that order backlogs were coming down. Nonetheless, a number of contacts also indicated that quoting activity for next year had picked up, suggesting to them that the recent slowdown may be a pause due to the upcoming election and uncertain fiscal situation. Although the level of activity remained strong, demand for heavy equipment softened over the reporting period, largely reflecting further declines in the mining sector and a slower expansion of rental fleets. Exporters generally noted weaker demand outside of North America, particularly from Europe and Asia. Capacity utilization in the steel industry was steady, while steel service center inventories increased slightly. In contrast, the auto industry continued to be a source of strength, and manufacturers of building materials reported that activity had picked up with the recent improvement in the housing sector.\nBanking and Finance\nCredit conditions continued to improve over the reporting period, with both credit spreads and market volatility decreasing. Banking contacts reported continued weak demand for business loans. While loan pricing was roughly unchanged, contacts cited greater demand for more flexible structures and longer financing terms. Standards continued to ease on C&I loans, although conventional financing remained difficult to obtain for many small businesses. Asset quality improved further, surpassing the expectations of some contacts. An exception was agricultural lending, particularly the livestock sector, where the impact of the drought on feed costs is putting stress on operators' balance sheets. Consumer loan demand was again limited with moderate increases in auto lending and mortgage refinancing, as auto loan standards continued to ease and mortgage rates moved lower.\nPrices and Costs\nCost pressures increased some in late August and September, primarily due to a rise in food and energy prices. Contacts also reported increases in the prices for construction materials like lumber and drywall, while most metals prices were steady. Wholesale food and energy price pressures rose, and retail contacts noted an increase in pass-through to consumers. Wage pressures remained moderate, although some upward pressure on wages for high skilled positions was cited. A few contacts also reported upward pressure on healthcare costs.\nAgriculture\nThe corn and soybean harvest began a few weeks earlier than normal across the District, as plants were dry due to the drought. In some areas, late rains helped produce higher- than-anticipated yields, but these made only a small dent in the large drought-related losses. Crop quality also was an issue in parts of the District. The drop in crop volume hurt grain elevators relatively more than crop farmers, as payments from crop insurance and sales at high prices offset much of the loss in farm income from the drought. However, given insurers' limited processing capacity and the large number of claims, already existing delays in crop insurance payments are likely to get worse. Corn and soybean prices eased down from their peaks, providing a bit of relief for livestock producers, though most operations remained unprofitable. Milk and cattle prices moved higher, while hog prices fell. Many hog facilities are operating below capacity, pointing to future reductions in supplies of pork.\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 10, 2012\nThe Tenth District economy expanded at slightly slower pace in late August and September compared to earlier in the summer. Consumer spending slowed somewhat, manufacturing growth was more subdued, and transportation firms reported flat conditions. Growth in commercial real estate activity slowed marginally, but remained on a positive trend. Residential sales and construction continued to grow at a solid pace. Drought conditions hurt agricultural production, though farm incomes were generally healthy due to higher crop prices and insurance programs. Energy activity remained solid, and bankers noted steady loan demand, better loan quality, and increased deposits. Prices rose moderately, but wage pressures were contained outside of a few skilled positions.\nConsumer Spending\nConsumer spending slowed modestly and contacts were less optimistic about future sales in the months ahead. Retail sales declined slightly from the previous survey, but remained above year-ago levels. Several contacts cited political uncertainty and rising gasoline prices as key reasons for the slowdown. Expectations for future sales also eased somewhat, while store inventories were largely unchanged. Growth in auto sales was less robust than previous months, and expectations for future sales weakened slightly. However, several auto dealers in Oklahoma noted higher sales due to strong energy activity in their areas. Contacts said sales were strongest for mid-sized family sedans and crossover SUVs, while sales of full-size trucks and SUVs remained weak. Auto inventories increased and most dealers anticipated levels to increase further. Restaurant sales slowed markedly and expectations also fell. Some contacts noted higher food costs, rising gasoline prices, and overall consumer uncertainty as reasons for the decline. Tourist activity edged lower, slightly more than the usual seasonal slowing, and most contacts expected further decreases in the months ahead.\nManufacturing and Other Business Activity\nManufacturing activity in the Tenth District continued to expand, although at a slower pace than in previous months. Factory orders and shipments declined, while future hiring plans generally remained positive. Machinery production fell considerably since the last survey, with some contacts citing European weakness and political uncertainty as key reasons for the slowdown. In contrast, metals and transportation production remained solid. Manufacturers' capital spending plans moderated somewhat, but firms still indicated overall plans for expansion. Transportation activity was flat, although several firms reported higher shipments of perishable food products and more firms reported an increase in capital spending plans. Expectations for future transportation activity eased slightly from the previous survey. Sales growth among high-tech firms remained somewhat sluggish, with several firms citing political uncertainty as a contributing factor. However, expectations for future activity were more positive, and capital spending plans were generally favorable.\nReal Estate and Construction\nSolid growth in residential real estate activity continued in late August and September, while expansion of commercial real estate activity slowed somewhat. Housing starts edged higher, and limited availability of workers was reported as an issue for some builders in states with low unemployment rates. Expectations for future homebuilding remained favorable, and building materials were generally available. Despite the improvement in housing starts, sales at construction supply firms were considerably slower, and many businesses were pessimistic about future sales. Home sales continued to grow at a solid pace, though slightly slower than in the previous survey. Residential realtors said mid-range homes sold well, while the luxury home market was still exceedingly slow. Several contacts noted a rise in sales to investors, as higher rental rates have increased profit potential. Expectations for future home sales flattened somewhat, but prices were generally rising and expected to increase further. Mortgage lending activity eased slightly, and one contact noted continued tightening of underwriting guidelines. Growth in commercial real estate activity slowed marginally from the previous survey, but was generally solid overall and most contacts remained optimistic about future months. Vacancy rates continued to fall, but absorption rates flattened out. Office prices and rents were also flat from the previous survey, although some increases were anticipated in coming months.\nBanking\nIn the recent survey period, bankers generally reported steady to stronger loan demand, improved loan quality, and increased deposits. Overall loan demand was favorable as most respondents reported stable demand for commercial real estate and consumer installment loans, while demand for residential real estate and commercial and industrial loans edged slightly higher. Credit standards remained largely unchanged in all major loan categories. The majority of bankers reported improved loan quality compared to a year ago, and nearly all banks expected the outlook for loan quality over the next six months to be the same or better. More institutions reported stronger deposit volume than in the previous survey.\nEnergy\nEnergy activity remained solid in late August and September. Contacts continued to report reduced activity related to natural gas exploration, but oil rig counts remained strong and were expected to stay relatively stable. Natural gas prices remained very low, although several contacts anticipated a slight increase in prices due to lower levels of exploration and winter supply concerns. Crude oil prices climbed higher from the previous survey period, which several contacts attributed to continued Middle East conflict concerns. One producer noted an increase in service activity particularly in Wyoming and North Dakota, but contacts reported minimal shortages in equipment and labor.\nAgriculture\nDrought continued to hurt agricultural conditions across the District. Dry, hot weather accelerated crop maturity, prompting an early corn harvest with below-average yields. The soybean crop was rated in mostly poor condition as harvest began. Winter wheat planting was progressing normally, but low soil moisture could delay emergence. Corn and soybean prices fell seasonally, but concerns about global production underpinned wheat prices. Despite drought conditions, high crop prices and crop insurance payments were expected to boost farm income and more than offset lower livestock profits due to higher feed costs. District bankers indicated ample funds were available for qualified borrowers to meet cash flow needs and finance carry-over debt. Demand for farm loans remained modest amidst a pull-back in capital spending. Farmland values rose further and were expected to remain at high levels.\nWages and Prices\nThe majority of prices continued to rise moderately with further increases expected, but wage pressures were mostly contained outside of a few skilled positions. Retail prices edged higher, and were anticipated to rise further in coming months. Prices of manufacturing materials continued to increase, although fewer firms planned on raising selling prices. Construction materials prices also moved higher, particularly for oil-related products such as shingles. Transportation firms reported higher input prices, and increased food costs continued to impact profit margins and selling prices for restaurants. Many contacts noted that rising gasoline prices have increased input costs and cut sales volumes. Wage pressures were still generally contained in most industries, although some firms reported continued difficulties in obtaining skilled labor, such as truck drivers, construction workers, software programmers, and engineers.\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 10, 2012\nFifth District economic activity improved modestly since our last report. Most manufacturing contacts reported activity firmed somewhat. Port activity continued to expand. Retailers reported that sales grew on balance, and non-retail firms cited marginal revenue expansion. Lending activity improved somewhat, although most applications continued to be for refinancing. Residential real estate activity continued to strengthen; however, areas of weakness remained in the District. Tourism contacts reported healthy bookings as the summer season ended. Commercial real estate reports were mixed for private-sector projects and weaker for government-related projects. Labor market reports were also mixed, with accounts of modest increases in employment along with major layoffs and hiring freezes. Price changes were generally small in the manufacturing and services sectors in recent weeks.\nManufacturing\nDistrict manufacturing activity firmed somewhat after having softened in earlier months. An auto supplier reported that his firm's sales continued to exceed expectations, which required overtime and additional hiring. A manufacturer of wallboard indicated that sales at his company rose, with the last few weeks being the busiest this year. A manufacturer of residential door frames said that demand in late summer was fairly flat, but he expected sales to improve over the next six months. In contrast, a producer of electrical components cited very weak business conditions, which resulted in layoff announcements and plans to close the factory at the end of this year. According to our latest survey, growth slowed in prices of both raw materials and finished goods over the past month.\nActivity at most District ports expanded over the last few months. Port officials reported that both import and export activity strengthened, although one official attributed some of the gain to increased market share. According to another contact, the shipping season peaked earlier than in past years, which may have been due to manufacturers and retailers moving goods in advance of a threatened labor disruption at East Coast ports. Nonetheless, imports were bolstered by continued demand for commodities and components used by manufacturers. One contact stated that exports to China of some commodities and bulk goods were holding up better than expected. In addition, exports of autos and heavy machinery to Europe remained strong.\nRetail\nRetail sales reports from our contacts were mixed, with modest improvement on balance. In Virginia, a grocer stated that customer counts were up, but shoppers were spending less, while another grocery contact commented that he will be opening several new stores by early next year. A major building supply firm reported a significant increase in the volume of wallboard sales; other inputs for major renovation work also picked up. Several small retailers said that they were preserving margins by reducing payrolls and cutting expenses. However, collections on customer accounts have become a bigger problem, according to one contact. Merchants remained somewhat guarded in their outlook for spending during the holiday season. Small retailers were conservative with inventories; they expected that their suppliers would be flexible enough to make quick shipments if reorders should be needed. To help push early purchases, several big-box retailers were advertising a return of their lay-away programs, and other merchants started offering lay-away for the first time. In addition, a number of internet retailers were offering an online lay-away program. District automobile sales varied, according to dealers. A contact at a large dealership reported high foot traffic, observing that buyers gravitated to \"the deals,\" such as substantial rebates. Retail prices rose at a somewhat slower pace in recent weeks, according to our latest survey.\nServices\nNon-retail services providers reported slight gains overall since our last report. Business activity strengthened for professional, scientific, and technical services firms; a contact at a Maryland telecommunications firm noted that demand was strong for tech-related security services. However, there were also reports that the possibility of government spending cuts associated with sequestration caused firms to delay business decisions. One industry executive commented, \"We are hoarding cash.\" Healthcare firms continued to restructure to accommodate the post-reform environment in that sector. According to a contact at a private healthcare group, that organization had begun shifting away from low margin, basic services. A Virginia airport executive noted that increased passenger traffic in recent weeks had recovered from a drop earlier in the summer. Prices moved up more slowly at services firms.\nFinance\nLending activity improved marginally from weak levels since our last report. One banker reported continued strength in refinancing demand, which accounted for three out of four commercial loan applications. A North Carolina banker noted that, while most home mortgages were for refinancing, applications were fifty percent above normal levels and over one third were for either purchasing or building a home. Demand for commercial loans across the District was mixed, according to several contacts, with modest improvements coming from the medical, legal, and other services-related segments of the market. An official at a large bank described consumer demand as remaining weak, with the notable exception of auto loans, while business loans for capital equipment improved slightly. Several bankers stated that credit standards remained tight for consumer loans, but some easing had occurred in order to capture attractive commercial loan applications. A commercial banker said that uncertainty about whether a successful SBA program would be renewed had curtailed his ability to get approval of several viable small business loans.\nReal Estate\nResidential real estate activity improved since our last report. A Realtor in the Richmond area said that closings were up double digits over last year and prices were rising slightly. Properties below the $200,000 range, in particular, were selling more quickly. However, an agent in the D.C. area indicated that housing sales in the $800,000-plus range were rising relatively quickly, adding that the lowest inventory for housing in eight years was pushing up prices. A Realtor in the Fredericksburg area reported that her agency was extremely busy for this time of year and indicated that sales were up forty percent over last year; she expected the stronger market to continue. Moreover, a Maryland contact mentioned that foreclosures in central Maryland had fallen thirty percent from the previous quarter, which bolstered housing prices. In contrast, a report described the housing market in North Carolina as mostly unchanged, with the exception of an improvement in the Research Triangle. Also, a source stated that there had been a slowdown in housing in the Hagerstown area.\nCommercial real estate and construction activity remained mixed since our last assessment. A Realtor in North Carolina stated that both leasing and sales activity had slowed since June, with some tenants switching to shorter leases. Another agent reported moderate increases in office leasing, especially in suburban locations. Several contacts in Virginia and West Virginia noted increased interest from clients but few closings. A Virginia Realtor said that retail leasing had improved, but it was \"still a bumpy road\" and that leases were \"taking forever to close.\" Both leasing and construction-related activity in the industrial sector was sluggish. Several contractors reported that government-related projects continued to weaken or decline. New private sector projects also started to decline in recent weeks. A large contractor in Maryland expected that few new projects would emerge until after the election. However, a banker noted that small developers were joining together to buy and renovate low-priced B and C Class properties, in anticipation of an improved real estate environment next year.\nLabor Markets\nWe received mixed signals on labor market activity over the last few weeks. A source from West Virginia reported that the state experienced several major layoffs related to mine closings and bankruptcies. A contact in Hagerstown said that the local labor market continued to recover, but at a slow pace, and that the area would lose a major manufacturer later this year. Moreover, an auto supplier in Virginia stated that his firm had frozen hiring and would reduce staff through attrition. In contrast, several employment agencies cited an increase in demand for workers, particularly among goods-producing industries. At a North Carolina staffing agency specializing in finance, companies were actively hiring staff and senior level accounting and finance professionals. In the retail sector, an industry representative mentioned that many small retailers expected to add hours for permanent employees during the upcoming holidays, rather than hire seasonal workers. According to our recent surveys, average wages in both the manufacturing and services sectors were growing at a slightly quicker pace than a month ago.\nTourism\nHoteliers, restaurateurs, and other tourism contacts reported stable but solid leisure business going into the autumn season. In addition, their outlook was upbeat for late fall and early winter. An hotelier in western Virginia stated that business was solid, with a trend toward more last-minute leisure bookings. A tourism contact in Washington, D.C. reported seeing \"tour buses galore\" and crowds on the mall. Tourist activity on the outer banks of North Carolina was steady, and good attendance was expected for upcoming music and food festivals. Hotel and rental rates were not being discounted, although incentives were offered for time slots that were difficult to fill. In contrast, hotels that depend heavily on government-sponsored bookings reported a significant drop in business.\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 10, 2012\nSixth District business contacts described economic activity as expanding slowly in September, and most expect little change in the near term.\nMost retailers cited slow sales growth while auto dealers continued to experience strong results. Hospitality reports remained largely positive, with the exception of cruise-lines. Residential brokers and builders signaled that housing conditions continued to improve in many parts of the District as sales and prices of new and existing homes slightly increased compared with a year ago. Commercial development continued to improve, led by multifamily construction. Manufacturers indicated that new orders had softened while production levels only mildly increased. Bankers saw improvements in demand for overall loans, particularly those for housing purchases and refinances. Payrolls expanded modestly on net, and firms noted some deceleration in input prices, while wages remained relatively unchanged.\nConsumer Spending and Tourism\nMost District merchants reported that sales growth remained slow in September. Discount retail operations outperformed traditional department stores. Most retailers projected continued soft growth in sales through the end of 2012. Contacts in the auto industry reported that strong sales levels were maintained in September.\nLeisure and business travel contacts continued to report strong activity and an optimistic outlook for the remainder of the year. Occupancy and room rates as well as convention bookings were solid. While there has been some drop in traffic from Europe, this was largely offset by strong visitor numbers from Canada and Latin America. Cruise-line bookings and onboard spending remained below expectations, but the industry anticipates some improvement next year.\nReal Estate and Construction\nDistrict residential brokers indicated that recent existing home sales were up slightly compared with year-earlier levels. Buyer traffic also remained ahead of year-ago levels. Brokers again noted declining inventories, which continued to put upward pressure on home prices in many markets. Contacts anticipate modest home price gains over the next year; however, it is expected that neighborhoods hard hit by foreclosures will continue to experience home price weakness for some time. The short-term outlook for home sales remained positive overall, with the majority of contacts anticipating modest gains.\nReports from District homebuilders remained positive, as well. Builders indicated that recent new home sales and construction activity were up slightly from year-earlier levels and new home inventories remained below year-earlier levels. Construction remained mostly limited to more desirable locations, such as those in highly regarded school districts. Southeastern builders also reported that finished lot inventories varied across the region, but most anticipate a decline in those inventories over the next six months. Many indicated that financing terms remain prohibitive for acquisition and development. New home prices were slightly up compared with a year earlier. Homebuilders also witnessed stronger buyer traffic. The outlook for construction activity and new home sales remained positive.\nCommercial contractors indicated that the pace of construction continued to expand and backlogs were slightly up from earlier in the year. Apartment development continued to dominate the District's commercial real estate market. Multifamily rent growth remained positive but has slowed somewhat in recent months. Contacts indicated that the District's office and industrial markets continued to make small improvements, while the retail sector was described as sluggish. Many contractors reported that clients remain hesitant to move ahead on new projects. However, most anticipate that construction activity will be flat to slightly up in 2013 compared with 2012.\nManufacturing and Transportation\nWhile noting that new orders continued to slow, manufacturing contacts reported mild increases in production, employment, and finished inventory levels in September. Regional auto and auto parts producers, as well as firms that supply materials to the energy exploration and extraction sector, continued to report strong levels of production, but most other durables manufacturers noted a slight deceleration in output. Nondurables output, with the exception of food and chemicals, remained soft.\nA Southeast port contact reported record-setting cargo volumes in fiscal year 2012, with increases across all categories. Despite the underlying increase in demand tied to replacement of aging truck fleets and the benefits of increased fuel-efficiency, new orders for heavy-duty trucks have stalled recently. Rail contacts reported that lumber shipments have increased. Air cargo companies saw an increase in cargo volume tied to the launch of various smartphones and computer tablets, which favor shipment by air over other modalities.\nBanking and Finance\nBanking contacts reported an increase in demand for mortgage loans for both purchases and refinances, although some contacts noted fewer than half of the applications actually were approved. The improvement in demand for purchase loans was driven by activity in entry-level homes. Demand for auto loans remained strong. Business lending had increased slightly; however, contacts noted most of the increase was not organic loan growth but was primarily from customers switching from other lenders or credit cards.\nEmployment and Prices\nRegional employment growth picked up slightly in September, but remained muted. Reports indicated that sectors related to energy, autos, and housing were experiencing most of the hiring activity. Reports also cited deepening ties between private employers, education representatives, and government officials in an effort to address training deficiencies for in-demand positions. The majority of contacts reported that stagnant demand is the major reason behind sluggish employment trends, although uncertainty related to fiscal policy continued to weigh on some firms' hiring plans.\nThe majority of businesses contacted reported relief for some input prices and little change in wage plans. Firms responding to our Business Inflation Expectations survey reported that unit costs were up 1.3 percent in September over the past year, which is 0.3 percentage points lower than the August reading. Looking forward, businesses' expectations for inflation also moderated somewhat. On average, firms expected unit costs to rise 1.7 percent over the next 12 months. Though that number was down from August, survey contacts noted that rising materials costs could be a source of moderate upward price pressure going forward. Along those lines, several manufacturing contacts indicated that some input prices have increased recently, causing concern of additional margin pressure.\nSurveyed firms reported that sales levels were 7.6 percent below \"normal\" times, though assessments varied widely by the size of the firm. In particular, small and medium-sized businesses reported experiencing about twice as much slack as their larger counterparts, a finding that is consistent with anecdotal insights gathered from our business contacts.\nNatural Resources and Agriculture\nAfter brief, precautionary shut downs related to Hurricane Isaac, regional refiners fully restored operations with very little damage from the storm. Energy industry contacts continued to report that Gulf Coast refineries were undertaking investments to increase production capacity following refinery closures elsewhere in the country. Natural gas prices continued to experience downward price pressures. Contacts continued to note that inexpensive natural gas had prompted downstream manufacturers to relocate overseas operations to the U.S., prioritizing locations near refining operations.\nAgriculture contacts said that the rise in some crop prices, resulting from the drought in the Midwest, had led to increased crop production in the Southeast where soil conditions were more favorable, but the overall rise in feed prices was putting pressure on livestock producers. Compared with the same time last year, prices paid to farmers for corn, rice, soybeans, beef, and broilers were up while cotton prices were down.\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\nAugust 29, 2012\nReports from Sixth District business contacts indicated that economic activity expanded at a modest pace in July through mid-August. The majority of contacts described their short-term outlook for future business activity as restrained.\nMost retailers indicated that sales growth had slowed with the exception of autos, which remained quite positive. Tourism contacts continued to report strong activity in all segments except cruise lines. Residential brokers and builders noted improvement in home sales and construction. New and existing home sales prices were reported to be modestly higher than year-ago levels. Commercial builders continued to note improvement, driven by the multifamily sector. Manufacturers reported a pullback in new orders and production levels. According to banking contacts, loan demand remained low but some improvements were registered in home mortgages, and auto lending was brisk. Hiring activity remained muted across the District. The trend of using temporary workers to fill labor needs continued to be cited by many firms. Some contacts said that they had experienced lower overall input prices, but rising food prices was a concern. Wage pressures remained in check.\nConsumer Spending and Tourism\nMost contacts in the retail sector reported generally slower sales. Contacts in the restaurant industry in particular were less positive in July. Discount retail operations performed somewhat better than traditional department stores, while luxury goods merchants remained largely positive, although their reports were more mixed than earlier in the year. Sales expectations for most retailers remained conservative. Auto sales continued to grow at a solid pace and dealers anticipated continued strong results.\nHospitality contacts reported strong hotel occupancy and room rates for July through mid-August. Convention bookings showed continued strength. Cruise line results remained below expectations. However, contacts in that sector anticipate stronger business in 2013. Florida contacts noted a drop off in tourism activity from Europe, but that was being offset by the increase in visitors from South and Central America.\nReal Estate and Construction\nDistrict residential brokers reported that sales were up slightly compared with year-ago levels. Brokers continued to note declining inventories, which has put some upward pressure on home prices in many markets. Contacts indicated that buying interest continued to improve from earlier in the year. The outlook for home sales over the next several months remained positive, with the majority of contacts anticipating modest gains.\nReports from District homebuilders remained positive as well. Most said that recent activity had met or exceeded their expectations. New home sales were up notably from year-earlier levels and construction exceeded last year's levels. Most builders reported that new home inventories declined further. Several builders also noted that finished lots were scarce and development of new lots would not be financially feasible until home prices increased significantly. Most builders indicated that new home prices were flat to slightly up compared with a year earlier. The strongest gains were again reported by Florida builders. Homebuilders witnessed strong buyer traffic and the outlook for construction activity and new home sales remained positive.\nApartment sector gains continued to drive improvements in the District's commercial real estate markets. Occupancy levels were described as high and rental rates rose further. Contacts indicated that the region's office market continued to make small improvements, while the industrial and retail sectors cited some weakening in demand from earlier in the year. Commercial contractors indicated that the pace of construction improved somewhat from earlier in the year, while backlogs have also risen in many areas. Most anticipated that construction activity will likely mirror last year's levels through the end of the year. Some contacts suggested that 2012 would be the bottom of the market, with improvements expected next year.\nManufacturing and Transportation\nManufacturing contacts noted a contraction in new orders and production levels since the last report. Roughly one quarter of manufacturing contacts still expect production to improve from current levels over the next three-to-six months, but an equal number anticipate additional declines. Half see output levels near current readings. Despite falling non-labor input costs, a slump in new orders is keeping margins thin. Construction-related manufacturing firms cited a bit more optimism since the last report, crediting recent improvements in several housing market indicators.\nTrucking contacts indicated that freight demand and capacity remained closely in balance. Regulatory issues, increasing costs, and a tight driver market continue to put pressures on bottom lines. District air cargo contacts cited continued positive growth, however at a slightly slower pace than earlier in the year. Sharp volume declines with Asia and Europe have been offset by increases in other regions. Rail contacts reported continued increases in intermodal shipments, which have helped to moderate declines in car loads of coal and agricultural products. Shipments of construction-related materials continued to be mixed; lumber remained positive, while aggregates and chemicals declined.\nBanking and Finance\nBanking contacts continued to note margin and profit pressures. Competition among banks and credit unions for high-quality loans remained intense, further driving down margins. A few bankers cited positive loan growth, but overall loan demand remained low. Some contacts noted pockets of improvement in residential real estate lending, driven mostly by refinancing. Contacts also reported robust auto lending. Community banks looked to fee-related services in an effort to become less dependent on the pricing spread between loans and deposits. Some contacts cited increased consumer credit card use.\nEmployment and Prices\nRegional employment growth remained very tepid. Few firms reported their intention to add to current staffing levels, but there were only scattered reports of firms planning layoffs. Companies that rely on contracts with the Department of Defense were not yet cutting back on staff or otherwise changing their business plans because the timing and focus of defense spending cutbacks is highly uncertain. Many firms continued to note increased hiring of temporary or contract workers. Several companies have also reported large capital investments which reduced the need for labor. Meanwhile, contacts also continued to note difficulty filling highly skilled positions. Several firms continued to report that weak demand and uncertainty surrounding fiscal and regulatory policy weighed on decision-making processes.\nBusinesses reported some relief on input prices and little change in wage plans, although some employers noted that they were increasing starting pay for workers with specialty skills. The potential impact of higher food prices was noted by many companies across several sectors. Paired with the recent rise in gasoline prices, higher food costs will have a negative impact on lower and middle-income constituents according to community development contacts. Firms responding to our Business Inflation Expectations survey reported steady unit cost expectations in July. On average, they expect unit costs to rise 1.7 percent over the next 12 months. While similar to June's reading, the number was down slightly from 1.8 percent in May.\nNatural Resources and Agriculture\nContacts reported a renewed increase in production at Gulf Coast refineries because of recent closures along the East Coast. An increase in demand for crude oil and oil products, along with the Gulf Coast seeing particularly high demand for diesel fuels and other distillates, has helped to support refined product prices.\nRecent rains improved conditions in many parts of the District. Compared with the same time last year, prices paid to farmers for soybeans, corn, oranges, beef, hogs, and broilers were up while cotton was down. Although beef prices have increased over the last year, contacts reported that both the drought and high feed prices have resulted in lower prices paid to farmers on a month-over-month basis.\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\nAugust 29, 2012\nEconomic activity in the Twelfth District continued to expand at a modest pace during the reporting period of July through mid-August. Price inflation was limited for most final goods and services, and upward wage pressures were quite contained. Sales of retail items rose a bit further on net, and demand for most business and consumer services continued to expand. District manufacturing activity appeared to inch up on balance. Agricultural output expanded, while activity continued to trend up for providers of energy resources. Home demand in the District strengthened a bit further, and demand for commercial real estate was largely stable. Contacts from financial institutions reported that overall loan demand was unchanged or weakened slightly on balance.\nWages and Prices\nPrice inflation was limited for most final goods and services during the reporting period. Prices increased for some energy items, mainly crude oil, retail gasoline, and electricity, but natural gas prices remained near historic lows. Contacts also noted price increases for assorted food commodities, particularly grains, although meat prices reportedly have leveled off for the time being. For most products and services, vigorous competition among firms and cost-conscious purchasing behavior by consumers kept price inflation in check.\nUpward wage pressures were quite limited overall. Wage increases were noted for employees in some manufacturing sectors where wages had been flat for several years; the reported increases were moderate, in the 2 to 3 percent range. Wage gains also remained significant for workers with specialized skills in the application of information technology. Contacts in general reported very limited hiring plans for the balance of the year, suggesting that upward wage pressures will remain muted.\nRetail Trade and Services\nRetail sales expanded a bit further overall. Respondents in general indicated that sales strengthened somewhat in July compared with softness in May and June. Performance was stronger for discount chains than traditional department stores, particularly for online sales. At grocery stores, extensive bargain hunting by shoppers caused sales revenues to weaken a bit. The pace of auto sales slowed somewhat compared with the prior reporting period, although it remained significantly above the pace from the same period last year. Used vehicles have been in short supply, raising their trade-in values and helping to spur sales of new vehicles.\nDemand for most business and consumer services expanded further. Sales continued to grow for a wide variety of technology services, with expectations for further rapid growth in selected segments, such as cloud computing services. Advertising revenues remained at high levels for radio and television broadcasters in the District, but the slow drift of television production activities away from District locales such as Los Angeles continued. Providers of health-care services noted a drop in the demand for discretionary medical services and a consequent reduction in capacity utilization at medical care facilities. Demand picked up further for restaurants and other food-service providers. Contacts in the District's travel and tourism sector reported additional gains for business and leisure travel, although the pace of growth has slowed of late in some areas such as Las Vegas.\nManufacturing\nDistrict manufacturing activity was mixed but appeared to inch up on balance during the reporting period of July through mid-August. Production activity remained at high levels for makers of commercial aircraft and parts. Demand continued to grow for pharmaceutical manufacturers. Output and sales strengthened a bit further for manufacturers of wood products. By contrast, the slowdown continued for makers of information technology equipment, with sales declines reported for some equipment categories in recent months. Demand for steel was mostly stable at low levels, while sales of processed scrap metal fell, largely as a result of a decline in overseas demand. For petroleum refiners, capacity utilization rates increased somewhat, as growth in export sales for a range of refined products offset weakness in domestic 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. Orders and sales grew for many crop and livestock products, and one report indicated that demand for cotton was particularly strong. The persistent drought in parts of the country has raised grain and feed prices, prompting District cattle ranchers to reduce herd sizes. Extraction activity for petroleum and natural gas remained at high levels or expanded a bit further on net, although some producers have been shifting operations away from natural gas in response to continued high inventories and the consequent low price.\nReal Estate and Construction\nHome demand in the District continued to improve, while demand for commercial real estate was largely stable. Although it is still well below its historical average, the sales pace for new and existing homes picked up further in many areas, and some contacts pointed to pent-up demand that may spur additional gains. Contacts also reported that the share of foreclosures and short sales in overall home sales has been declining, and the quality of the inventory of available homes has improved. In some parts of the District, a shortage of lower-priced homes and rental units has led to an ongoing increase in construction activity, particularly for multifamily rental projects. Demand for nonresidential space was largely stable overall, with construction activity largely limited to various public projects and remodeling of commercial and industrial space.\nFinancial Institutions\nDistrict banking contacts reported that loan demand was unchanged or down slightly on balance compared with the prior reporting period. Business loan demand appeared to drop a bit, amid growing reluctance by many firms to commit to expansion plans under current economic conditions. At the same time, the reports continued to highlight ample liquidity and stiff competition among lenders to provide credit to well-qualified business loan applicants. Demand for consumer credit remained relatively strong, reflected primarily in high lending activity for automobile and home purchases.\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\nAugust 29, 2012\nPrepared at the Federal Reserve Bank of Boston and based on information collected on or before August 20, 2012. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts suggest economic activity continued to expand gradually in July and early August across most regions and sectors. Six Districts indicated the local economy continued to expand at a modest pace and another three cited moderate growth; among the latter, Chicago noted that the pace of growth had slowed from the prior period. The Philadelphia and Richmond Districts reported slow growth in most sectors and declines in manufacturing, while Boston cited mixed reports from business contacts and some slowdown since the previous report.\nMost Districts indicated that retail activity, including auto sales, had increased since the last Beige Book report, although Cleveland, Chicago, St. Louis, Dallas, and San Francisco noted the retail improvements were small. Atlanta said that retail growth had slowed, while Philadelphia indicated growth in retail sales was somewhat faster than in the previous report. Boston, New York, Richmond, Atlanta, Minneapolis, and San Francisco recorded strong performance in tourism. Many Districts reported some softening in manufacturing, either a slowdown in the rate of growth or a decline in the level of sales, output, or orders; among those with declining shipments and orders, Philadelphia noted that the rate of decline was tempering.\nDistricts mentioning nonfinancial services noted increased activity, although at a slowing pace in Boston, softening in New York, and \"flattening\" in Philadelphia; Kansas City reported that sales of high-tech services declined slightly. Several Districts cited declining demand for staffing services. According to District reports, bankers in New York, Philadelphia, Cleveland, Atlanta, Chicago, and Kansas City saw increases in demand for most loan types in recent months; by contrast, St. Louis, Dallas, and San Francisco indicated that loan demand was mixed, softening, or slightly weaker.\nReal estate markets were generally said to be improving. On the residential side, all 12 Districts cited increases in home sales, home prices, or housing construction. Reports on commercial real estate markets were also generally positive, although San Francisco noted stable demand, Boston indicated conditions were not much changed since the last report, and Richmond, Chicago, and St. Louis said commercial real estate conditions were mixed.\nDistrict reports indicated that energy and mining activity was generally high and increasing. However, Cleveland noted softening demand for coal, while Minneapolis and Kansas City had some energy sectors up and some down. The Midwest drought has reduced actual and expected farm output, especially cotton, soybean, and/or corn crops in the Chicago, Kansas City, and St. Louis Districts.\nMost Districts reported that the selling prices of manufacturing and retail products were largely stable. By exception, several Districts noted concerns about rising agricultural commodity prices, and Richmond mentioned a small uptick in retail prices. Hiring was said to be modest across the Districts, and wage pressures were characterized as contained.\nConsumer Spending and Tourism\nMost Districts reported that retail spending in July and early August was up compared with the previous Beige Book. New York and San Francisco noted strengthening sales compared with a softer May and June, although in San Francisco's case, the rise was only \"a bit further.\" Philadelphia, Richmond, Minneapolis, and Kansas City reported stronger retail sales, while Cleveland, Chicago, St. Louis, and Dallas all said that sales were up \"slightly.\" In the Atlanta District, most retail contacts reported slower sales, while Boston's retail contacts provided a mixed assessment. The Atlanta and San Francisco reports noted that discount retailers performed better than traditional department stores, while the Chicago report attributed the pace of growth in consumer spending to heavy discounting by retailers clearing space for back-to-school items. Boston and Chicago reported continuing weakness in furniture sales; Boston also reported weak sales of electronics, but Chicago noted some improvement in this category. Adult clothing sold well in Boston, Chicago, and Dallas. The Atlanta District said that luxury goods merchants, while still largely positive, provided more mixed reports compared with earlier this year; Kansas City cited weaker sales for high-end jewelry. For the remainder of 2012, Boston retailers have mixed sales expectations, Philadelphia retailers are cautiously optimistic, and those in Atlanta are conservative; retail contacts in Minneapolis, Kansas City, and Dallas expect sales to rise through the end of the year.\nAutomobile sales are up in the New York, Philadelphia, Atlanta, St. Louis, Minneapolis, and Kansas City Districts, flat in Cleveland, Chicago, and Dallas, and a bit slower paced in Richmond and San Francisco; nonetheless, vehicle demand in the latter two Districts is still strong, especially for used cars. The New York District reported that new car sales are \"particularly robust\" and Kansas City cited a sharp increase in new vehicle sales. Atlanta, St. Louis, and Kansas City indicated that car dealers in their Districts expected these strong automobile sales to continue, while the Philadelphia and Dallas Districts reported concerns that consumer uncertainty might depress vehicle sales in coming months.\nRespondents in the Boston, New York, Richmond, Atlanta, Minneapolis, and San Francisco Districts reported that tourist industry performance remains strong. The Atlanta District mentioned that Florida contacts reported a drop in European travelers, but said this decline was offset by an increase in business from Central and South America. Contacts in Boston noted some concern that weakness in Europe could soften tourist activity and that rising gas prices could affect leisure travel. The San Francisco District reported that the pace of growth had slowed in Las Vegas and other areas.\nManufacturing and Related Services\nThe picture in manufacturing was mixed. The Boston, Chicago, Kansas City and San Francisco Districts reported increasing demand and sales since the previous Beige Book, although the improvement was generally small and uneven, with two of these four Districts reporting that demand growth, while positive, was slowing. Six Districts reported that demand for manufactured goods was actually falling, although none reported a dramatic fall. The outlook was somewhat more positive, with six Districts reporting that manufacturers expected increasing demand and only two reporting the opposite.\nAreas of strength were varied. The Cleveland and Philadelphia Districts both pointed to the revolution in natural gas production in the United States as a driver of demand, but the Chicago District said that a contact blamed cheap natural gas for weakness in demand for coal. Several Districts noted that improvements in residential construction boosted demand for products such as lumber, PVC, cement, and home goods. The Chicago and Philadelphia Districts said that auto production was positive, but Richmond said the opposite.\nWeakness overseas remains a problem for U.S. manufacturing. Reports from the Boston, Atlanta, and Chicago Districts explicitly mentioned it. Although Europe represented one notable problem, several Districts also mentioned weakness in demand in Asia as an issue. In general, District reports indicate that the cost and availability of raw materials has not been an issue for manufacturers recently, especially as compared with the situation in previous years. Four Districts reported lower input costs, but contacts in New York reported a slight increase.\nOn the employment front, there was little movement. Across all Districts, few manufacturing firms reported any major hiring or layoffs, and the ones that did usually attributed it to idiosyncratic factors like new products or restructuring related to a merger. The Cleveland District reported that firms continued to have trouble finding skilled workers. Capital spending also showed little change; in addition, several Districts reported that contacted manufacturers had not revised their investment plans.\nNonfinancial Services\nActivity in nonfinancial services generally picked up since the previous report, although results were mixed across Districts and service industries. New York and Philadelphia reported that overall service-sector activity was flat to down slightly, whereas Minneapolis and San Francisco noted expanding activity. Several Districts, including Boston, Richmond, and San Francisco, reported steady to increasing demand for information technology services; Kansas City, by contrast, cited decreased sales at high-tech services firms. Reports from the healthcare sector were also somewhat mixed, with Philadelphia and St. Louis reporting positive results and San Francisco noting a drop in the frequency of elective procedures. Advertisers in the Philadelphia and San Francisco Districts continued to report strong revenues. In the Dallas District, legal firms reported continued increases in demand for services, while accounting firms cited seasonal slowness. Demand for staffing services was generally lower than expected, with decreases reported by Boston, New York, Richmond, and Dallas. Even so, demand remained strong for highly skilled IT personnel in the Boston and Richmond Districts.\nReports on transportation services were generally positive. Rail contacts reported continued increases in intermodal shipments in the Atlanta District and increased cargo volumes in the Dallas District, with both Districts recognizing gains in lumber shipments. Atlanta and Dallas also reported steady to increasing demand for trucking services, whereas logistics firms and carriers in the Philadelphia District reported a relatively sluggish start to the traditional \"freight season.\"\nBanking and Financial Services\nCredit conditions have improved over the reporting period according to District reports. Credit spreads were lower and competition for high-quality borrowers among lending institutions has increased. The New York District noted that shrinking spreads were observed particularly in commercial and industrial loans as well as in commercial mortgages. Some bankers in the Cleveland District mentioned a moderate loosening of lending guidelines. The New York, St. Louis, and Kansas City Districts reported unchanged credit standards; New York and Cleveland cited declining delinquency rates.\nThe direction and magnitude of changes in loan demand varied among the Districts and also with respect to type of loan. The Richmond and Atlanta Districts reported generally low demand for loans, but some pockets of growth. The Chicago District noted that growth in business loan demand was generated mostly from small and mid-size firms and for the purpose of refinancing rather than financing capital expenditures. Cleveland, St. Louis, and San Francisco mentioned small positive or negative changes in business credit demand, and relatively strong demand for consumer credit. The Kansas City District reported stable demand for commercial and industrial loans and commercial real estate loans, while Dallas noted softer demand for loans overall; however, both Districts cited increases in demand for residential real estate loans. The New York and Philadelphia Districts observed growth in most lending categories.\nReal Estate and Construction\nHousing markets across most Districts exhibited signs of improvement, with sales and construction continuing to increase. Dallas reported significant levels of buyer traffic, Richmond noted strong pending sales, and Minneapolis and St. Louis mentioned increases in building permits. New York, Philadelphia, and Chicago indicated improvements as well, but characterized the progress as slow and modest. Declines in inventory levels were reported in Boston, New York, Philadelphia, Atlanta, Dallas, and San Francisco; these declining inventories put some upward pressure on prices according to Boston, Atlanta, and Dallas. A reduction in the stock of distressed properties was mentioned in New York, Richmond, and San Francisco. In Philadelphia and Kansas City, the possibility of shadow inventory entering the market remains a concern. In general, outlooks were positive, with continued increases in activity expected, although the projected gains were more modest in Boston, Cleveland, and Kansas City.\nCommercial real estate market conditions held steady or improved in nearly all Districts in recent weeks. New York, Philadelphia, Minneapolis, and Kansas City all reported that commercial leasing increased and vacancy rates fell. New York and Kansas City reported increases in office rents as well; Kansas City also cited a rise in commercial construction. Commercial building permits were up significantly from one year ago in portions of the Minneapolis District. Chicago's report was mixed: office vacancy rates remained high, restraining demand for new office construction, but office leasing demand improved modestly and industrial construction picked up. Atlanta reported rising apartment rents and small gains in office leasing, with weakness in the retail and industrial sectors. Boston reported that office fundamentals were flat on average, with rising rents in portions of Boston proper and muted but steady activity elsewhere in the District. Nonresidential construction picked up in the Boston and Cleveland Districts. Office and industrial real estate markets remained healthy in Dallas. The St. Louis report noted an increase in commercial construction across much of the District and varied reports on leasing across areas within the District. In San Francisco, demand for commercial property was stable while commercial construction was limited. Richmond reported a decline in office leasing volume in Washington, D.C., but some portions of the District recorded increasing sales and construction. Multifamily real estate remained a strong submarket and a key driver of construction in many Districts, including Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco.\nAgriculture and Natural Resources\nAccording to District reports, agricultural conditions were mixed largely because of severe drought conditions that affected the Midwest more than the rest of the country. Producers in the Chicago, St. Louis, and Kansas City Districts were all severely affected by the drought, with cotton, soybean, and corn crops particularly damaged. Cotton production in the Dallas District was also badly damaged, while the northern part of the Minneapolis District reported good corn, soybean, and wheat crops, and the San Francisco and Richmond Districts reported strong demand for their healthy cotton crops. Although nearly all agricultural commodity prices rose, higher feed costs led to reduced herd sizes and lower livestock prices in nearly all Districts reporting on livestock. Reports from the Richmond and Kansas City Districts indicated that farmland values have continued to rise, although contacts in the Kansas City District expected them to hold steady for the rest of the year. Farm incomes generally rose or stayed the same in the Minneapolis District.\nOil and gas activity continued to be robust across most Districts. Extraction of natural gas and petroleum remained at high levels in the Dallas and Minneapolis Districts and expanded in the Cleveland and Richmond Districts, partly because of increased demand from electrical utilities. Production increased in Gulf Coast oil refineries in the Atlanta District as a result of closures along the East Coast, while higher demand for crude oil, diesel, and other distillates supported prices. However, natural gas producers in the Cleveland, Richmond, Minneapolis, and Dallas Districts reported a decline in exploration and drilling of new wells on account of high inventories and low prices. Coal demand was unchanged from 2011 in the St. Louis District but was expected to fall below 2011 levels in the Cleveland District due to reduced demand for thermal coal from domestic utilities and metallurgical coal from Europe and Asia. Iron ore, taconite, and sand mines in the Minneapolis District continued to operate at high capacity.\nEmployment, Wages, and Prices\nMost Districts reported that employment was holding steady or growing only slightly. Several Districts including Boston, New York, Philadelphia, and Richmond noted a softening in employment relative to expectations; upcoming layoffs were reported by a defense contractor in the Boston District and by firms in sectors such as air transportation, appliances, and business support services in the St Louis District. Almost all Districts indicated that manufacturers were continuing to hire, albeit modestly. Demand has been strongest for skilled manufacturing and engineering positions, as well as for IT services. Contacts in the Cleveland, Richmond, Atlanta, Kansas City, and Dallas Districts all reported some difficulty meeting demand for truck drivers.\nOverall, upward wage pressure was reported to be very contained across Districts. The Philadelphia and Chicago Districts both noted that despite little wage pressure, some contacts reported upward pressures for medical benefits. Sources from Boston and Atlanta mentioned that continuing demand was putting some upward pressure on wages for highly-skilled positions in software, engineering, and information technology. The San Francisco District also noted specialized IT positions as an exception to generally limited wage growth. The Dallas District reported upward wage pressure for truck drivers and construction workers, and the Minneapolis District noted wage increases in areas with increased oil drilling.\nMost Districts reported that overall prices for finished goods were relatively stable despite somewhat increased input prices. Higher prices for grain and other food commodities were cited by many Districts, primarily due to the drought. The Cleveland District noted increased upward pressure on lumber prices, while contacts in Boston, Philadelphia, and Minneapolis reported higher gasoline prices as a potential concern. Chicago mentioned some pass-through of higher crop prices to wholesale prices, while contacts in the Kansas City and Richmond Districts expected to raise future prices in response to more expensive raw materials.\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\nAugust 29, 2012\nThe Eleventh District economy grew at a moderate pace over the past six weeks. Manufacturing activity continued to expand, demand for business services remained solid, and transportation services activity increased. Respondents said retail sales edged up, while automobile sales held steady. The housing and commercial real estate markets remained healthy. Financial firms noted softening loan demand. Energy activity remained robust, and agricultural conditions improved slightly. Employment levels were steady to slightly higher. Wage and price pressures were modest. Most contacts noted that European debt issues and the upcoming national elections added uncertainty to their outlooks.\nPrices\nMost contacts said prices held steady, although some construction-related and vehicle manufacturers noted slight increases, and accounting and staffing firms reported a modest rise in billing rates. Paper product manufacturers and shipping firms noted plans to implement price increases in the near term. Overall, input costs were flat to up during the reporting period. Prices for scrap metal, steel and grains rose. Contacts reported that the rising cost of labor and land prices have increased builders' costs, and some were raising prices on new homes.\nThe price of WTI rose from $85 in early July to $94 in mid-August. Natural gas prices remained depressed. The price of diesel and gasoline climbed about 30 cents, and prices of petrochemical products were flat to up over the reporting period.\nLabor Market\nEmployment levels edged up or held steady at most responding firms. Staffing firms reported demand softened slightly from high levels and noted rising demand for mortgage refinance specialists, sales professionals and plastic product manufacturing workers. Reports of slight employment increases came from some automobile dealers, construction-related products manufacturers, transportation equipment producers and transportation service firms. A few respondents noted difficulty filling vacant positions because of employment opportunities available in the energy sector, and contacts reported delays in housing starts because of labor shortages. Wage pressures remained minimal, although upward pressure was reported for construction workers, truck drivers and accountants.\nManufacturing\nOverall demand for construction-related products held steady or edged up since the last report, but outlooks were cautious. A cement producer noted that increased residential construction activity, particularly in South Texas, had improved demand. Fabricated metals producers noted an uptick in orders, largely stemming from both public infrastructure projects and private construction activity such as high rise residential buildings and warehouse facilities. Demand for primary metals was steady over the past six weeks, and expectations were for business to remain flat through year-end.\nHigh-tech manufacturers said orders were flat to slightly up over the reporting period. Contacts reported that conditions in the semiconductor industry were better in the U.S. than in other parts of the world. This is largely because U.S. production centers on logic devices that are experiencing stronger demand than memory devices, which are primarily produced outside of the U.S. Most respondents noted that increased uncertainty will likely be a drag on demand through year-end.\nDemand for paper products remained steady, although contacts were uncertain about what will happen over the next few months, particularly with regard to potential tax changes after the November election. Food producers said demand experienced a seasonal increase over the past month, but sales were lower than a year ago. Overall, transportation equipment manufacturers said demand was flat to up over the past six weeks. Demand for aviation equipment held steady at low levels. Outlooks were less optimistic compared with the last report partly due to continued weakness in demand for parts and repair of existing aircraft. A producer of recreational vehicles noted a pickup in sales, and an emergency vehicle manufacturer reported continued strong demand.\nPetrochemicals producers reported steady demand. Demand for PVC, tied to residential construction, improved domestically, and exports continued to be a major source of sales. Exports of caustic soda remained strong as U.S. prices are very competitive due to lower electricity costs. Chlorine demand edged up, while demand for propylene weakened. Gulf Coast refiners said operating rates remained high at 90 percent. Robust export demand for gasoline and distillates kept inventories low, and refiners' margins remained healthy.\nRetail Sales\nRetail sales grew slightly over the reporting period and were up from a year ago. Particular strength was seen in sales of accessories, cosmetics and women's and children's apparel. Sales growth in the Eleventh District remained stronger than the nation, on average, according to two large retailers. Retailers expect a seasonal pickup in demand in the fourth quarter, although sales will likely be down from last year.\nAutomobile sales were mostly flat since the last report, but were up from year ago levels. Inventories were lighter than desired. Contacts said political uncertainty was hampering consumer confidence, and outlooks were cautious.\nServices\nStaffing firms said demand slowed slightly over the past six weeks. Still, activity remained at high levels and business was stronger compared with last year. Outlooks remained positive, yet there was concern among contacts about uncertainty stemming from the upcoming presidential election. Accounting firms noted continued seasonal weakness in overall demand but said activity related to the energy industry remained a bright spot, and outlooks for energy-focused areas were particularly upbeat. Legal firms reported a continued pickup in demand, with sustained strength in intellectual property litigation, energy and real estate-related services.\nReports from transportation service firms suggested a slight increase in activity. Trucking firms said cargo volumes increased over the reporting period, partly due to more oil and gas-related business. Railroads said volumes increased since the last report. Contacts noted shipments of two of the largest categories for rail cargo--grain and coal--declined, while volumes for lumber, petroleum products and motor vehicles increased. Container volumes and small parcel shipments picked up during the reporting period, while air freight activity declined in part due to a slowdown in international cargo volumes.\nAirlines noted slight softening in passenger demand in part due to seasonality and a decline in travel to Europe. Demand for travel to Mexico picked up, while travel to Latin America and Asia held steady. Domestic demand remained strong for both leisure and business travel. Contacts expect weaker passenger demand over the next few months but noted it will likely remain near last year's levels.\nConstruction and Real Estate\nHousing activity remained strong since the last report. Contacts said sales of new and existing homes continued at a good pace and were well above expectations. Builders noted strong traffic and reported rising backlogs, while realtors said shrinking inventories had led to price gains. Apartment demand remained strong, and contacts noted rising construction activity as investors continue to be attracted to the market. Housing outlooks remain positive.\nOffice and industrial real estate fundamentals remained healthy over the past six weeks. Leasing activity continued at a good pace and some contacts noted a pick-up in property sales. Outlooks were optimistic but cautious. Since the last report, there were a few signs that investors were becoming less aggressive in pursuing commercial real estate deals, outside of multifamily.\nFinancial Services\nOverall, loan demand softened somewhat during the reporting period. Corporate lending activity remained weak, while residential real estate loan demand rose strongly. Loan pricing remained competitive and deposits continued to grow. The quality of outstanding loans continued to improve slowly as nonperforming loans declined. Outlooks were positive, but contacts expressed concern about European debt issues, new regulations for community banks and the upcoming national elections.\nEnergy\nRespondents at energy-related firms said overall activity remained at high levels, with long lead times and growing backlogs. Drilling activity continued to shift from dry natural gas to oil and natural gas liquids. While the shift has not affected overall activity levels, contacts expect a plateau in the growth of rig activity through year-end, in part due to recent weakness in the price of natural gas liquids. Oil-related activity continues to be strong, and contacts expect continued improvement in offshore drilling.\nAgriculture\nDrought conditions improved slightly due to scattered rainfall in July. Crops remained mostly in fair to good shape, with the exception of dryland cotton crop in the Texas High Plains region which suffered due to lack of moisture. Overall, crop conditions were much better than a year ago. Drought in the Midwest has caused grain prices to climb sharply, squeezing margins for ranchers by driving up feed costs for livestock.\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\nAugust 29, 2012\nThe Tenth District economy continued to expand at a moderate pace in July and early August. Retailers and auto dealers reported higher sales and expected increased activity in the months ahead. Manufacturing activity expanded slightly, with additional gains expected over the next six months. Transportation activity grew moderately, while sales in the high-tech services sector declined slightly. Residential and commercial real estate markets continued to improve with increased sales, construction, and prices. Banking contacts reported slightly higher loan demand and improved loan quality. Agricultural conditions deteriorated under extreme drought conditions leading to higher crop prices and strained profit margins for livestock producers. The energy sector held steady as growth in crude oil drilling continued to offset the decrease in drilling for natural gas. Most sectors reported higher input prices, but final goods prices and wage pressures remained stable.\nConsumer Spending\nConsumer spending continued to increase in July and early August and was expected to rise further over the next three months. Retailers reported higher sales, though gains were a bit less than expected. Home furnishings, clothing and back-to-school items sold well, while sales of high-end jewelry were weaker. Auto sales increased sharply as more incentives were offered and access to credit improved slightly. Demand for small and mid-sized crossovers, SUVs and cars was strong, while demand for larger SUVs and minivans remained weak. Most auto dealers expected sales to strengthen further in the months ahead. Restaurant sales increased, and several contacts expected higher menu prices in coming months in response to rising food costs. After strong gains in June, hotel occupancy fell slightly in July and early August, but average room rates continued to rise. In terms of tourism, the number of visitors at local attractions grew slightly, and modest gains were expected in the months ahead.\nManufacturing and Other Business Activity\nTransportation activity continued to grow moderately, manufacturing activity expanded slightly, and sales at high-tech services firms declined slightly. Transportation activity continued to rise, with an increase in sales and backlog activity. Input prices and prices charged for transportation services increased with higher fuel costs. Capital spending plans at transportation firms remained largely unchanged, with firms continuing to expect a modest increase in capital spending in coming months. Manufacturing production and hiring rose modestly, though the volume of new orders, volume of shipments, and backlogs declined since the last survey. Manufacturers expected activity to expand in coming months. Sales at high-tech services firms decreased slightly, and capital spending grew modestly. High-tech contacts expected improved sales in the months ahead and a strong rise in capital spending.\nReal Estate and Construction\nResidential and commercial real estate activity continued to improve in July and early August, and construction activity strengthened. Residential home sales and prices rose, and home inventories fell. Contacts reported multiple offers on homes and expected continued housing market improvements in coming months. Homes under $300,000 sold particularly well, while homes priced over $500,000 and condos were slow to sell in some markets. Several contacts reported that a large inventory of homes in foreclosure has been held back and could put downward pressure on prices when the homes come onto the market. Builders reported an increase in housing starts and a rise in new home prices as well as improvement in the traffic of potential buyers. Land prices and the cost of building materials rose during the survey period as demand improved. Commercial real estate conditions also improved. Construction and sales of commercial real estate properties rose, real estate prices and rents increased, and vacancy rates continued to fall. Several commercial real estate contacts expected uncertainty surrounding the presidential election to slow activity until late in the year. Developers reported that access to credit remained unchanged.\nBanking\nIn the recent survey period, bankers generally reported slightly stronger loan demand, improving loan quality, and little change in deposits. Overall loan demand improved slightly as most respondents reported stable loan demand for commercial and industrial loans, commercial real estate loans, and consumer installment loans, while demand for residential real estate loans improved. Credit standards remained largely unchanged in all major loan categories, and the majority of respondents reported stable deposits. The majority of bankers reported improved loan quality compared to a year ago, and nearly all banks expected loan quality over the next six months to remain steady or improve.\nAgriculture\nAgricultural conditions deteriorated as crops withered under extreme drought. The majority of the corn and soybean crops were rated in fair or poor condition, cutting production estimates and sending crop prices to record highs. Drought strained profit margins for livestock producers as feed costs rose and further herd liquidations dampened cattle prices. Escalating production costs were expected to boost farm loan demand in the coming months. Agricultural bankers indicated ample funds were available for farm loans at historically low interest rates. Loan repayment rates were expected to hold near year-ago levels due in large part to crop insurance and higher land lease revenues for mineral rights. While still well above year-ago levels, farmland values rose less rapidly and were expected to hold steady during the rest of the growing season.\nEnergy\nDistrict energy activity remained fairly stable at high levels in July and early August. Drilling activity rose as growth in the number of active crude oil rigs offset declines in natural gas drilling. Most contacts expected drilling activity to slow in coming months due to local and national regulatory obstacles and low natural gas prices. Stable demand growth and ample supply of crude oil were expected to limit further increases in crude oil prices in coming months. Contacts expected the slowdown in natural gas drilling to put upward pressure on natural gas prices over the next three months. Shortages were reported for equipment and labor, particularly for oil and natural gas operators and drilling engineers. Several contacts also reported that the drought has affected drilling operations by limiting water availability needed for hydraulic fracturing.\nWages and Prices\nFinished goods prices remained stable despite an increase in raw material prices, and wage pressures remained low. Manufacturers reported higher raw material prices, and finished goods prices remained flat. However, both raw material prices and finished goods prices were expected to increase over the next six months in the manufacturing sector, especially for food manufacturers. Retail prices increased slightly, and additional price increases were expected to remain modest. Restaurant menu prices remained flat, but many contacts expected to raise prices in the months ahead in response to higher food costs. Builders and construction supply firms also reported higher prices, especially for roofing materials, lumber and concrete. Wage pressures remained subdued, and only a few contacts expected to raise wages more than normal to attract or retain workers. However, many firms continued to report some difficulty filling skilled positions including drivers, technicians, engineers, computer programmers, and sales representatives.\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\nAugust 29, 2012\nThe Ninth District economy grew at a modest pace since the last report. Increased activity was noted in consumer spending, tourism, professional services, construction and real estate, while activity slowed slightly in the manufacturing and energy sectors. Agriculture was mixed, while mining was steady at high levels. Overall labor market conditions were steady since the last report, and wage increases were modest. Prices were relatively stable.\nConsumer Spending and Tourism\nConsumer spending grew since the last report. Same-store sales at a Minnesota-based retailer increased 3 percent in July compared with a year ago; a company representative noted that back-to-school shopping activity has been positive. July same-store sales at a Montana mall increased slightly compared with a year ago. Recent same-store sales at a Minnesota-based restaurant chain were up about 7 percent compared with a year ago. New car and light truck registrations in Minnesota were more than 10 percent higher recently compared with last year. However, a higher-end retailer announced plans to close a Minnesota store next year.\nSummer tourism activity increased from last year. Fishing license sales and visits to campgrounds and outdoor state parks and recreation areas in South Dakota were on a record pace. A resort in northwestern Wisconsin reported solid bookings. Tourism activity in the Upper Peninsula of Michigan was up 10 percent to 20 percent. Visits to Glacier National Park and Yellowstone National Park increased 20 percent and 10 percent, respectively. Activity at several other Montana tourism attractions was also tracking ahead of last year. Meanwhile, strong attendance levels were reported at the North Dakota State Fair in late July.\nConstruction and Real Estate\nCommercial construction activity increased since the last report. The value of commercial building permits in the Billings, Mont., area in July more than doubled from the same period last year. Commercial permits in the Sioux Falls, S.D., area more than doubled in value in July from a year earlier. New industrial and warehouse building projects were in progress in the Minneapolis area. Residential construction increased from a year ago. The value of residential building permits in the Sioux Falls area in July was up 39 percent from the same period last year. Residential permits increased in value and number in the Minneapolis-St. Paul area in July; both single-family and multifamily permits increased. Several counties in Montana reported large increases in home building in 2012 compared with 2011, and the value of residential permits issued in July more than doubled in Billings.\nCommercial real estate markets continued to expand. Vacancy rates for Minneapolis office and industrial properties declined over the past year and were expected to decline further, according to a real estate consulting firm. Several large transactions were announced since the last report. Residential real estate market activity was brisk. Home sales in early August 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 30 percent. In the Sioux Falls area, July home sales were up 29 percent, inventory was down 14 percent and the median sales price rose 6 percent relative to a year earlier.\nServices\nActivity at professional business services firms grew somewhat since the last report. According to a mid-August Minneapolis Fed ad hoc survey, District professional business services firms noted gains in revenue and profits over the past three months and expect this to continue over the next three months.\nManufacturing\nManufacturing activity slowed. Surprisingly, a July survey of purchasing managers by Creighton University (Omaha, Neb.) showed a decrease in manufacturing activity in Minnesota and South Dakota for the first time in three years; activity in North Dakota increased, but at a slower pace than in recent months. However, most respondents to a Minneapolis Fed ad hoc survey of manufacturers conducted in mid-August had a mildly optimistic outlook for the near term. Several contacts indicated that orders dropped in early July, but have returned to previous levels. A long-planned beef-packing plant in South Dakota was put on hold following reports that it would open soon. A Minnesota manufacturer that makes equipment for the scrap metal industry will reduce production due to a stagnant scrap metal market and a glut of new steel.\nEnergy and Mining\nThe energy sector moderated somewhat. Oil and gas exploration in North Dakota decreased in early August, while it increased slightly in Montana; production remained at record levels. Producers of wind-energy components reported slow demand attributed to uncertainty over the renewal of a tax credit. A Minnesota ethanol plant was idled because of high corn input costs. A coal-fired power plant in South Dakota was also shut down. Mining activity remained steady at high levels. Minnesota iron ore mines and taconite producers continued to operate at high capacity, although some operations were idled for standard annual maintenance. Sand mines in western Wisconsin remained very busy due to strong demand from oil and gas producers.\nAgriculture\nThe agriculture sector was mixed. Preliminary results from the Minneapolis Fed's second-quarter (July) survey of agricultural credit conditions showed that nearly 90 percent of lenders said farm incomes increased or stayed the same in the past three months, with similar results for household and capital spending. While severe drought hit the Midwest, much of the District has been spared relative to other areas. Most of the corn, soybean and spring wheat crops in Minnesota and North Dakota were in good or excellent condition. South Dakota and Wisconsin fared somewhat worse. District cattle producers have been selling more animals because of high feed costs. Margins also tightened for dairy producers. Prices received by farmers in July increased from a year earlier for corn, wheat, soybeans, hay, dry beans, poultry, eggs, cattle and hogs; prices decreased for potatoes and dairy products.\nEmployment, Wages, and Prices\nOverall labor market conditions were steady since the last report, but tightening continued for some regions and occupations. Bank directors noted that many District companies have not adjusted their hiring plans for the second half of 2012. Manufacturers throughout the District continued to have a number of welding positions open. A business process outsourcing firm recently announced plans to locate up to 400 jobs in Minnesota. A Minnesota manufacturer hired 250 workers over the past seven months. In contrast, a Minnesota food retailer plans to lay off 50 workers, and two North Dakota manufacturers are holding back on hiring plans.\nWage increases were modest, with some exceptions. Wage rates in the oil-drilling area of western North Dakota and eastern Montana continued to climb. A Minnesota manufacturer noted that workers with higher skills were getting some increases in wages, while wages for lower-skilled workers were flat.\nPrices were relatively stable. Metals prices were down somewhat since the last report. However, mid-August Minnesota gasoline prices were up about 30 cents per gallon from early July.\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\nAugust 29, 2012\nThe economy of the Eighth District has continued to expand at a modest pace since our previous survey. Retail and auto sales in July and early August increased over year-earlier levels. Residential real estate market conditions have continued to improve moderately. However, commercial and industrial real estate conditions have been mixed. Recent reports of planned activity from services firms have been positive. In contrast, reports from manufacturing contacts have been mixed. Reports of lending activity at a sample of large District banks during the second quarter of 2012 were somewhat mixed.\nConsumer Spending\nContacts reported that retail sales in July and early August were up slightly, on average, over year-earlier levels. About 42 percent of the retailers reported increases in sales, while 33 percent saw decreases and 25 percent saw no changes. Half of the retailers noted that sales levels met their expectations and half noted that sales were below expectations. About 13 percent of the retailers noted that their inventories were too high, while 8 percent reported that their inventories were too low. The sales outlook through the fall was generally optimistic: 70 percent of the retailers expect sales to increase over 2011 levels, 17 percent expect sales to decrease, and 13 percent expect sales to be similar to last year's sales.\nCar dealers in the District reported that sales in July and early August were up, on average, compared with last year's sales. About 67 percent of the car dealers surveyed saw increases in sales, while 8 percent saw decreases and 25 percent saw no changes. A third of the car dealers surveyed noted that new car sales had increased relative to used car sales, while 13 percent reported the opposite. Roughly 29 percent of contacts reported an increase in sales of low-end vehicles relative to high-end vehicles, while about 13 percent reported the opposite. Twenty-five percent of the car dealers surveyed reported that their inventories were too low, while 17 percent reported that their inventories were too high. The sales outlook for September and October was generally optimistic: 67 percent of the car dealers expect sales to increase over 2011 levels, 16 percent expect sales to decrease, and 17 percent expect sales to be similar to last year's sales.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been mixed since our previous report. Several manufacturers reported plans to expand operations and hire new workers, while fewer manufacturers reported plans to lay off workers. However, the reported plans for layoffs usually involved a greater number of workers relative to the reported hiring plans. Firms in automobile, medical technology products, carbon and graphite products, air purification equipment, electrical equipment, automobile parts, metal can, nanotechnology, lifting equipment, and industrial machinery manufacturing reported plans to expand operations and hire new workers. In contrast, firms in air transportation, chemical, appliance, wind turbine, and aluminum manufacturing reported plans to lay off workers and close plants.\nReports of planned activity in the District's service sector have been positive since our previous report. Firms in financial, medical, information technology, business support, transportation, home healthcare, and environmental consulting services reported plans to open new facilities, expand operations, and hire new employees. In contrast, firms in information and education services reported plans to reduce operations and decrease employment.\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, June 2012 year-to-date home sales were up 13 percent in Louisville, 7 percent in Little Rock, 10 percent in Memphis, and 16 percent in St. Louis. Residential construction increased in the majority of the District. June 2012 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2011. Permits increased 42 percent in Louisville, 14 percent in Little Rock, 46 percent in Memphis, and 23 percent in St. Louis.\nCommercial and industrial real estate conditions were mixed throughout most of the District. A contact in northeast Arkansas reported that except for Jonesboro and Paragould, overall commercial real estate activity remains weak in the region. A contact in Louisville noted that compared with the first five months of 2012, the growth of office leasing activity has slowed. A contact in St. Louis reported moderate improvement in office real estate activity and strong demand in the industrial real estate market. Commercial and industrial construction activity improved throughout most of the District. Contacts reported several commercial construction projects in Jonesboro, Arkansas, and in Bowling Green, Kentucky, while contacts in Louisville noted new speculative construction plans in nearby Jeffersonville, Indiana.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks indicated moderate changes in overall lending activity in the second quarter of 2012 compared with the first quarter of 2012. During this period, credit standards for commercial and industrial loans remained largely unchanged, while demand for such loans increased moderately. Credit standards for commercial real estate loans remained generally unchanged, while demand ranged from moderately weaker to moderately stronger. Credit standards for prime residential mortgage loans also remained generally unchanged, while demand ranged from unchanged to moderately stronger. Credit standards for consumer loans ranged from basically unchanged to somewhat eased, while demand was moderately stronger, especially for auto loans.\nAgriculture and Natural Resources\nSevere drought conditions have caused downgrades to forecasted crop production. Annual 2012 production of cotton, soybean, and corn in the District states is expected to fall from 2011 levels by 12 percent, 18 percent, and 24 percent, respectively. In contrast, annual production of rice and sorghum in the District states is expected to increase by at least 12 percent. The fraction of all crops rated in fair or better condition has fallen in all District states since the previous report. Similarly, the fraction of pasture rated in fair or better condition declined in all District states. The District states' year-to-date coal production for the end of July was 3.4 percent higher compared with the same period last year. Meanwhile, the District states' coal production for July 2012 was approximately on par with July 2011.\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\nAugust 29, 2012\nThe economy in the Fourth District grew at a modest pace since our last report. On balance, manufacturing output moved slightly lower, while residential and nonresidential construction picked up. Retailers saw a modest rise in sales during July, and motor vehicle purchases held steady. Natural gas producers increased production, though the demand for coal has softened. The slowdown in freight transport volume, which began in the second quarter, has leveled off. And the demand for business credit showed a modest increase.\nLittle net hiring was reported across industry sectors. Staffing-firm representatives said that the number of job openings has declined during the past six weeks. Open positions were found primarily in engineering, healthcare, and manufacturing. Wage pressures are contained. Input prices were generally stable, although concerns exist about the recent rise in agricultural commodity prices.\nManufacturing\nRepresentatives from District factories reported that new orders and production were flat or down slightly during the past six weeks, with inventories showing a slight uptick. Relative to year-ago levels, output was mainly higher. The outlook by manufacturers was mixed. While many contacts are less certain about growth prospects than they had been a few months earlier, others believe that the abundance of lower-priced energy, especially natural gas, will boost manufacturing activity in the District. A weakening in shipping volume by steel producers and service centers was attributed to seasonal factors, rising imports, and uncertainty. Demand for steel from the energy sector remained solid, while demand from the transportation sector softened. Most of our steel contacts do not expect market conditions to change appreciably in the upcoming months. Steel producers reported lowering their 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, production figures were unchanged for domestic producers, while showing a sizeable increase for foreign nameplates. The latter is attributable to the abatement of supply chain issues.\nMany of our contacts reported reduced capacity utilization rates, which they attributed to weakening demand. Capital spending remains on track; however, some respondents intend to cut back outlays during the upcoming months. Raw material prices were either stable or declined. Several manufacturers and steel producers reported reducing their prices to match the lower material prices. Little change in payrolls was noted, although attracting skilled workers remains difficult. Wage pressures are contained.\nReal Estate\nReports from home-builders on single-family housing starts during July were mixed, although all of our contacts said that activity had improved compared to a year ago. Sales contracts were in all price-point categories. Homebuilders anticipate only a modest increase in the construction of single-family homes in the near term; however, opportunities for rehabilitating old buildings into apartments and constructing new apartments and special-needs housing are viewed as strong. Selling prices of new single-family homes were up slightly during the past six months, and rents increased in the low to mid-single digits. The volatility seen in building material prices over the past five months is beginning to subside, although there is still upward pressure on lumber prices. In the eastern third of the District, existing home sales (number of units, average sales price, and volume) showed a modest to moderate increase year-to-date relative to the same period in 2011. Similar results were seen in the southwest region of the District.\nNonresidential contractors described current business conditions as improving and better when compared to a year ago. However, construction activity for small to medium-size builders is still substantially below pre-recession levels, and profit margins are tight. Project work is broad based, driven by industrial (manufacturing and distribution), education, and healthcare clients and multi-family housing. The short-term outlook is fairly positive, but builders are concerned about the domestic political climate, events in Europe, and potential defense cutbacks. Building material prices were stable. Even with the pickup in work, residential and nonresidential builders are reluctant to hire additional workers. Wage pressures are contained. Some residential and commercial subcontractors have attempted to raise their billing rates but were largely unsuccessful.\nConsumer Spending\nRetailers reported slightly higher sales figures for July relative to results seen in June. However, several reports indicated that consumers, including those in higher-income brackets, are becoming more cautious when buying and are looking for value. One executive commented that retailers are pushing back orders for the upcoming holiday season. Retailers anticipate modest growth at best through the end of the third quarter. Vendor prices were fairly stable, and little change was noted in store prices. There is growing concern about the rise in agricultural commodity prices and the resulting impact on the cost of food products. Inventories continued to rise modestly, but they were described as manageable. Capital spending for the year remains on target, with little change anticipated during the next 12 months. Outlays are mainly for new store construction and technology upgrades. No hiring is expected, other than at new stores, and wage pressures are contained.\nLittle change was seen in the number of new-vehicle purchases during June and July when compared with the same time period a year ago. Dealers reported that sales of fuel-efficient vehicles and SUVs are doing particularly well. New-vehicle inventories are on the light side, which was attributed in part to model changeovers and tight control by manufacturers. The outlook by dealers for the remainder of 2012 is mixed, although none of our contacts are expecting a substantial drop-off. Purchases of used vehicles improved slightly during July relative to June levels. Capital spending is limited to OEM-mandated remodeling and image programs. Hiring for sales and service positions remains at a very slow pace. Dealers have become more efficient at managing labor needs since prior to the recession resulting in leaner payrolls.\nBanking\nBankers reported a modest increase in the demand for business credit, mainly for refinancings and acquisitions. A few contacts cited rising demand for industrial loans and financing multifamily housing developments. Little change in consumer credit was observed. Auto lending remains the bright spot on the consumer side, although a few bankers observed some softening since our last report. In the residential mortgage market, demand was described as stable to very strong, with a high percentage of applicants looking to refinance. Several bankers expressed concern about the low interest rate environment and compliance costs related to new regulations and their effect on profitability. We heard a few reports about a moderate loosening of lending guidelines. Delinquencies were steady or improved. Core deposits rose. Bankers project little change in payrolls for the remainder of this year.\nEnergy\nConventional oil and natural gas production increased since our last report, with higher production expected to continue in the upcoming months. Some of the increase was attributed to rising demand from electric utilities. Low wellhead prices for natural gas were cited as a reason for a decline in drilling conventional wells. Additional drilling rigs are being moved to Ohio from Pennsylvania to take advantage of the higher-priced wet gas found in the Utica shale. Coal production this year is expected to fall below 2011 levels due to reduced demand for thermal coal from domestic utilities and slowing markets for metallurgical coal in Europe and Asia. Spot prices for steam coal have increased slightly, while prices for export metallurgical coal declined further. Production equipment and materials prices were flat in most categories, and capital outlays remain at projected levels. Moderate layoffs were announced by several coal producers, and conventional oil and gas companies have trimmed back their payrolls.\nTransportation\nMost reports on freight volume indicated that the slowdown which began mid way through the second quarter has stabilized or started to turn around. The outlook for the remainder of 2012 remains positive, but growth is not expected to be as strong as had been forecasted at the beginning of the year. Apart from fluctuating diesel prices, costs associated with truck maintenance held steady. Some carriers are maintaining their fuel surcharges and successfully negotiated rate increases when contracts came up for renewal. Capital spending for 2012 remained on plan. Outlays are allocated for the replacement of aging units and adding capacity. A few executives reported that rising prices for new trucks combined with difficulty in obtaining credit is limiting growth opportunities, especially for small carriers. Driver recruitment remains difficult, resulting in some wage pressure.\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\nAugust 29, 2012\nAggregate business activity in the Third District has continued to grow slowly since the previous Beige Book, although the pace of growth has shifted in a few sectors. Manufacturing activity declined further, but the rate of decline is tempering. Retail sales have grown somewhat faster than was the case at the time of the last Beige Book, while auto sales have continued to increase at a consistent pace. Lending volumes at Third District banks have continued to grow steadily, and credit quality has continued to improve since the last Beige Book. Demand for new home construction grew at a slightly faster pace than during the previous Beige Book period, and brokers report steady growth in sales of existing homes. Commercial real estate contacts report more widespread growth, but overall demand remains modest. On average, service-sector firms report more flattening of growth. Price pressures have changed little in most sectors since the last Beige Book.\nThe overall outlook appears slightly less optimistic relative to the views expressed in the last Beige Book, as contacts expressed uncertainty about the presidential election and the fiscal policy decisions to follow. Expectations among manufacturers, while still positive, have fallen further for overall activity, anticipated hiring, and capital spending plans over the next six months. Retailers, auto dealers, financial firms, and other service-sector firms remain positive about the near-term outlook but are increasingly cautious due to their customers' rising uncertainty. Real estate firms remain slightly more optimistic with broader participation.\nManufacturing\nSince the last Beige Book, Third District manufacturers have continued to report overall declines in shipments and new orders; however, the weak demand was less widespread. Makers of lumber and wood products; stone, clay, and glass products; and fabricated metal products have reported gains--some seasonal--since the last Beige Book. Lower activity was reported by makers of food products, primary metals, industrial machinery, electronic equipment, and instruments. Contacts report that many customers are delaying purchases due to uncertainty stemming from the European crisis and domestic fiscal policy.\nOptimism among Third District manufacturers that business conditions will improve or stay the same during the next six months remains widespread, though slightly less pervasive than reported in the last Beige Book. Among the major sectors cited above, contacts at firms in the food and lumber industries expect some growth, while contacts at fabricated metals and industrial machinery firms expect some decline. Other major sectors expect no significant change over the next six months. Firms have slightly lowered their overall expectations of future capital spending and future hiring since the last Beige Book. Contacts mentioned ongoing demand for autos, power generation utilities, and Marcellus shale gas as sources of growth and optimism.\nRetail\nThird District retailers reported a pickup in year-over-year sales for July compared with June. In early August, a retail outlet operator reported stronger sales but softer traffic counts. One contact noted that Olympic viewership numbers were very strong and may have dampened traffic. Another contact relayed the theory that the pervasive negative political advertising will dampen sales until after the election by displacing product ads and by creating a negative sales climate. According to some contacts, children's clothing is typically the last retail category to experience declining sales in a downturn. Sales of children's clothing did not improve in July after a surprising year-over-year decline in June. Despite these various headwinds, retail contacts remain cautiously optimistic.\nAuto sales remained moderate in Pennsylvania in July as in June, while New Jersey dealers tended to report a repeat of their strong June sales in July and early August. Strong demand and lean inventories are helping to support dealer profits despite weak demand for dealer services, parts, and repairs. The longer-term outlook for sales remains positive. Contacts point out that the average age of cars has risen to 11 years, generating strong pent-up demand. However, dealers remain concerned that rising consumer uncertainty will dampen sales for the second half of the year.\nFinance\nContacts from the Third District's financial sector have reported ongoing growth since the previous Beige Book. Larger lenders reported loan growth in mortgages, personal loans, small business loans, and C&I loans. Smaller lenders continue to report increases primarily as gains in market share in various lending segments from other banks--large and small. Several small lenders reported increased activity in mortgages and home refinancings. Most contacts report that the financial health of households, businesses, and financial institutions continues to improve. Although the overall outlook among lenders was positive, there is an expectation of tempered growth until after the election, and there are concerns about the impacts of the fiscal decisions that will follow.\nReal Estate and Construction\nResidential builders reported a modest increase in sales and a stronger increase in traffic--an improvement since the last Beige Book--as they near the end of their primary sales season. Large builders are shifting their portfolios toward more multifamily products and more urban locations. Some small builders are shifting into home renovation work. Residential brokers reported continued improvement in the sales of existing homes through July. Inventory levels are also falling. As the traditional sales season draws to a close, an anticipated surge of listings from the shadow inventory is not expected until spring 2013, assuming existing home sales remain relatively strong. Builders and brokers share a cautiously optimistic outlook.\nOverall, nonresidential real estate activity has continued to grow slowly since the last Beige Book. As Center City Philadelphia attracts more apartments and condos--new construction and conversions--the remaining supply of office and retail space has tightened somewhat. Moreover, the increased population is attracting the interest of outside retailers. Contacts also indicated some increased interest in commercial properties in southern New Jersey. The overall outlook for nonresidential real estate remains one of slow growth, but it has solidified and broadened throughout the Third District since the last Beige Book.\nServices\nThird District service-sector firms have reported little to no growth since the last Beige Book. Several contacts reported that orders and activity have flattened out. Logistics firms and carriers reported a relatively flat start to the traditional \"freight season,\" which should have ramped up in June. One contact reported that reduced crop yields from widespread drought-stricken areas have generated an excess supply of drivers and trucks, which may have siphoned normal business from other firms. Staffing firms report no net new orders. One large firm that had been extending temp contracts has begun letting them expire. Hospitals report some growth, which may reflect demand for elective procedures that were deferred during the recession. Additional growth may reflect expansions that garner greater market share. Advertising is a rare bright spot. Revenue from the Olympics and election-year advertising has surpassed expectations, on top of a positive underlying trend. Overall, service-sector firms' positive outlook for growth over the next six months has been somewhat tempered.\nPrices and Wages\nPrice levels changed little overall, although gas prices have risen a little since the previous Beige Book. Cost factors have risen slightly among manufacturing firms since the last Beige Book. One manufacturer reported that the drought and heat conditions have contributed to relatively lower diesel prices and to higher peak energy prices, respectively. Homebuilders and retailers continue to report tight margins but little additional escalation of the prices that they face. Contacts from all sectors report little or no wage pressures, other than for medical benefits. Many contacts report stabilized house prices for lower-cost homes. Now, some contacts report that the prices of homes in a few affluent areas are beginning to stabilize as well.\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\nAugust 29, 2012\nEconomic activity in the Seventh District expanded at a moderate pace in July and early August, with the pace of growth once again slowing from the prior reporting period. Contacts reported heightened concern regarding the risks to the economic outlook, notably the U.S. fiscal situation and weaker growth in Europe and Asia. Business spending increased at a slower pace, while consumer spending growth picked up some. Growth in manufacturing production moderated further, while construction activity continued to slowly increase. Credit conditions were again slightly improved. Smaller anticipated corn and soybean harvests due to the ongoing drought pushed crop prices higher and raised the cost of feeding livestock, with some pass-through to wholesale prices already taking place.\nConsumer Spending\nThe pace of growth in consumer spending increased slightly in July and early August due in large part to heavy discounting by retailers to clear inventory space for back-to-school items. Store traffic was similar to last year at this time; however, retail contacts noted that the recent increases in gas prices were leading to less discretionary spending. Sales of summer clothing and other seasonal items remained strong. Sales of big-ticket items such as furniture again were weak, although sales of electronics improved some. Auto sales were little changed from the prior reporting period and dealers reported that inventories were beginning to creep up.\nBusiness Spending\nGrowth in business spending slowed from the prior reporting period. Inventories were generally reported to be at comfortable levels. However, retailers remained cautious in their back-to-school and holiday season ordering and manufacturers also expressed a desire to tightly manage their inventories. Capital expenditures on software and equipment were proceeding as planned, but contacts cited a greater degree of restraint in new spending projects. Labor market conditions were little changed on balance. Hiring remained selective in most industries, with demand comparatively stronger for skilled manufacturing and construction workers, information technology specialists, and engineers. Several manufacturers reported transitioning temporary employees into permanent positions, and a staffing firm reported an increase in demand from the manufacturing sector.\nConstruction and Real Estate\nConstruction activity continued to increase at a slow but steady pace in July and early August. Multi-family construction remained an area of strength, and residential single-family construction increased slightly. Homebuilders noted that credit was still tight for residential projects, with lenders continuing to require large equity commitments before extending financing. Demand for nonresidential construction also continued to gradually increase. Industrial building and highway projects rose further. Elevated office and retail vacancy rates remained a drag on new commercial construction, but contacts indicated that demand for office space was slowly improving. That said, a commercial real estate broker noted that companies lack the confidence to make long-term real estate commitments, as many continue to negotiate for contracts with opt-out provisions after two to three years into their lease agreements.\nManufacturing\nGrowth in manufacturing production slowed further over the course of July and early August, with contacts expecting this slower rate of growth to persist throughout the second half of the year. In the steel industry, capacity utilization fluctuated some during the reporting period, but was roughly unchanged on balance. Metals manufacturers noted continued volatility in their customers' orders, as many were closely monitoring their inventory levels. The auto industry continued to be a source of strength for manufacturing. Demand for heavy equipment also remained solid, with rental fleets continuing to expand. Manufacturers of household goods and building materials reported that activity had picked up some, although it remained at low levels. The coal mining industry, however, was a notable exception, as the low price of natural gas has resulted in the substitution of natural gas for coal in electricity production. Exporters noted weaker demand from Europe and Asia, but continued strength from other parts of the world like Mexico.\nBanking and Finance\nCredit conditions gradually improved over the reporting period. Credit spreads and volatility moved lower and increased competition led to downward pricing pressure on small business loans. Business loan demand continued to be mostly from small and middle market firms and for the purpose of refinancing existing debt as opposed to financing capital expenditures. Banking contacts reported that many of their customers are waiting to assess the impact of the upcoming election on tax and healthcare policies. Consumer loan demand was steady. Mortgage refinancing continued to increase and contacts noted the greater availability of sub-prime loans for used autos. With overall loan growth flattening out in recent months, a banking industry contact noted that some banks are investing in municipal bonds as a way to increase their earnings.\nPrices and Costs\nCost pressures were mixed in July and early August. Prices fell for a number of commodities but rose for materials like steel and lumber. Gasoline prices moved higher and shipping costs were also noted to have risen. Retailers reported that the spike in agricultural commodity prices resulting from the drought, particularly its impact on higher feed costs, was already starting to be passed through to wholesale prices. Wage pressures continued to be moderate, although several contacts cited upward pressure on healthcare costs.\nAgriculture\nThe drought has substantially reduced expected yields for corn and soybeans, although the impact varied considerably across the District. Scattered rains near the end of the reporting period helped revive soybeans to some degree; however, with the exception of some late-plantings, the precipitation was too late to improve yields for most of the corn crop. Crop insurance and higher prices will partially offset lost revenue. However, some farmers face the prospect of having to buy corn at market prices after selling ahead more than they will likely harvest. Livestock pastures are in poor shape as well, and fields with low corn yields were being chopped for silage to feed livestock. With feed costs high, livestock operations cannot cover their costs of production, and operators have reduced their herds accordingly. Hog and cattle prices were down from the prior reporting period, while dairy prices were up as milk production dipped.\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\nAugust 29, 2012\nReports from business contacts in the First District are somewhat mixed. Tourism contacts and some retailers cite strong results, but other merchants are more downbeat. Manufacturers mostly report solid performance, but a couple have seen sales fall compared with a year earlier. Software and IT services firms indicate business is good, but somewhat slower than three months ago, while staffing firms say recent results are below expectations. Commercial real estate conditions are not much changed, with the Boston market said to be stronger than the rest of New England; gradual recovery continues in most residential real estate markets around the region. Business contacts say they are hiring only modestly; prices are generally reported to be stable. Outlooks remain uncertain.\nRetail and Tourism\nFirst District retail contacts offer a very mixed take on economic conditions in the region. Demand remains strong for adult clothing, but spending on durable items such as furniture and electronics continues to be lower than earlier in the year. Some companies cite disappointing sales during the last six weeks, while others report some upside surprises. Sales results range from low single-digit declines to high single-digit increases compared with a year earlier. Some contacts say that consumer sentiment has become more negative, while others observe that consumers are \"coming back.\" Retailers note wholesale prices remain flat so they are holding selling prices steady. Respondents still express uncertainty about the direction of the U.S. economy and say they expect little improvement over the next six to eight months.\nThe tourism industry continues to see growth. Contacts expect that overall 2012 performance will be strong, but express concern that performance will weaken over the last few months of the year. While a rebound in business travel has fueled 2012 performance to date, weakness in Europe might slow this down. Moreover, rising gas prices could have negative repercussions for leisure travel.\nManufacturing and Related Services\nThe general manufacturing picture in the First District continues to be mixed, although contacts seem to be slightly more upbeat than earlier this summer. Of 12 contacted firms, only two report lower overall sales than a year earlier: A manufacturer of semiconductors attributes the decline largely to industry-specific cycles and a software company that sells mostly into the defense business says slower sales reflect fears about impending sequestration. All other responding firms report flat or rising sales.\nOn the employment front, while most contacts say they are hiring, none reports any significant additions. A major defense contractor expects significant layoffs in the coming months but attributes them largely to rationalization of operations in the wake of a merger. A tool manufacturer blames weak demand for a 5 percent headcount reduction but says they will concentrate most of the layoffs in Europe. On the plus side, a luxury goods manufacturer reports that, for the first time since 2008, workers are quitting to take better jobs with other firms. A firm in the chemical industry indicates it is exceptionally profitable but is still hiring only \"selectively\" to replace outgoing workers and fill specific needs.\nFew manufacturers report revising their investment plans in recent months; several note that they have plenty of cash available but don't yet feel confident or see the need for additional capital spending. Several firms mention that merger and acquisition activity is heating up. Some say they hope to pick up bargains but others say that prices are too high. A contact in the chemical industry says that he has done due diligence on several potential targets and each time he was outbid. A respondent in the semiconductor industry reports that they were the target of acquisition interest and a medical device supplier was recently acquired by Japanese firm.\nContacts say the pricing picture is much more benign than it has been in recent years. A dairy business is the only respondent complaining of high input prices, which are specifically related to the drought in the Midwest. A contact in the chemical business reports that pricing of inputs to his processes is exceptionally good, which he attributes to weakness in China, Brazil, and India.\nFew manufacturing contacts have significantly revised their outlooks. The main concerns remain the so-called \"fiscal cliff\" and the situation in Europe. Europe does not seem to be as much of an issue as it has been in recent cycles, however, with only four contacts specifically mentioning it and only one identifying it as a major problem. Two respondents independently note that firms are paying bills on time, which they say is a good sign about the state of the economy.\nSoftware and Information Technology Services\nNew England software and information technology services contacts report flat to favorable results in the second quarter of 2012, with year-over-year revenue increases generally between 5 percent and 10 percent. Contacts report strong demand in the banking and medical sectors as well as some new activity in the automotive, telecommunications, and manufacturing sectors. However, these upticks in demand are, for many contacts, tempered by the strong dollar and economic uncertainties, particularly in Europe, which are having an increasingly negative effect on revenues. Indeed, one contact reports that revenues from Europe fell more than 50 percent over the four quarters ended in Q2, as many clients delayed execution of big license agreements. Most respondents continue to add to their headcounts, although a few have slowed the rate at which they are hiring. Capital and technology spending and selling prices have gone largely unchanged since February.\nThe outlook among software and IT services contacts is not appreciably different from that of three months ago. Most are cautiously optimistic and expect current growth rates to continue into 2013.\nStaffing Services\nNew England staffing firms generally report lighter-than-expected volumes through mid-August, with most contacts characterizing business as \"slow\" or \"flat.\" The May-to-August dip reportedly reflects a softening of demand for office and clerical assistants and light industrial workers. Nevertheless, year-over-year revenue changes in the second quarter remained largely positive, bolstered by steady demand from the engineering, legal, and IT sectors. The number of permanent and temporary-to-permanent placements continues to grow slowly, with one contact noting that clients are \"definitely more willing to commit.\" Labor supply has gone largely unchanged since May. Contacts continue to have difficulty finding candidates with high-end skill sets such as mechanical and electrical engineers, software developers, and IT personnel; two contacts report that this shortage of qualified labor is putting upward pressure on pay rates and recruiting costs. Looking forward, staffing contacts are slightly less upbeat than they were 3 months ago. Most expect only modest growth until 2013.\nCommercial Real Estate\nCommercial real estate fundamentals held roughly steady in recent weeks across the First District. Boston continues to enjoy strong leasing demand in pockets of the city and comparatively slow but steady activity in the Financial District. Leasing activity remains light in Hartford, where the retail sector is seen as a weak point. Activity in Providence is mixed across sectors and year-to-date has fallen short of expectations as a result of vacancy shocks. In Portland, office leasing activity is up from earlier in the year, but rents have stayed roughly flat. Across the District, a few contacts note that traditional downtown tenant types, such as law firms and large financial firms, continue to reduce square footage of office space per worker. These reductions are viewed as structural and suggest that future employment growth in professional services may lead to less absorption than previous norms of office space would imply.\nInvestor interest in Greater Boston commercial real estate remains high, especially for multifamily rental properties, and interest rate spreads are lower than a year earlier for comparable deals. Apartment construction extended its recent boom in the city and some large build-to-suit office projects have broken ground in recent months. One Boston-based bank lender notes an increase in small-scale (under $10M) loan demand in recent months in the office and retail sectors. Outside of Boston, construction and investment sales activity remain limited. A few contacts remark that political uncertainty is putting a damper on business sentiment. In particular, the threat of tax hikes (at all levels of government) is seen as a possible restraint on economic activity in the coming months. By contrast, no contacts cite significant upside risks to growth in the commercial property sector, although Boston is expected to remain a magnet for investors.\nResidential Real Estate\nSales of single-family homes and condominiums continued to grow year-over-year in June and July throughout most of the First District. However, in Connecticut, June sales increased marginally in the single-family home market and declined year-over-year in the condo market, but the latest reports for July suggest more substantial increases in Connecticut home sales. Similar to previous reports, contacts cite low interest rates and prices, in addition to pent-up demand, as significant factors in improving sales activity. According to a contact in Greater Boston, rising residential rents continue to spur interest in home ownership. Reports for July suggest the median sales price of homes rose in five of the six New England states; the exception was Rhode Island, where prices continue to decline. Contacts outside of Rhode Island cite declining inventory as the cause for modest price appreciation. Several contacts in areas with low inventory levels note some potential sellers are waiting for their homes to appreciate in value before listing them. Falling inventories in Greater Boston have prompted concern among local real estate professionals that potential homebuyers will be discouraged by an insufficient variety of homes.\nConsecutive months of year-over-year growth in sales have made contacts feel more confident about recovery in the housing market. In areas where inventory levels have been high for the past few years, concerns have been calmed by declining inventory and increasing home prices. Most contacts predict year-over-year growth in sales, albeit at a slower pace than recently, and anticipate modest increases in the median sale price of homes in coming months.\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\nAugust 29, 2012\nFifth District economic activity improved somewhat in most sectors since our last report, although manufacturing and employment weakened. Retail sales improved, and non-retail services providers reported a moderate increase in demand. Tourism contacts generally indicated that summer business was strong, and they anticipated a busy autumn season. Widespread precipitation in July and August brought relief from drought conditions, boosting expected crop yields. Residential real estate activity inched up, while commercial real estate reports were mixed. Lending activity also varied, and most mortgage lending was for refinancing. Manufacturing activity softened as orders declined. Weaker District hiring was led by a slowdown in requests for temp workers, although demand for highly skilled employees persisted. Price changes generally slowed in both the manufacturing and services sectors, with the exception of a small uptick in retail.\nManufacturing\nDistrict manufacturing activity continued to decline since our last report. A manufacturer reported that demand fell sharply for heating equipment components, with domestic and European customers both reducing their orders. An auto supplier also reported a significant drop in new orders in the past two months. Another auto parts manufacturer stated that earlier in the year, demand for his components was growing, but now orders were \"treading water.\" He added that inventories were rising and he expected to cut production. A food manufacturer reported that power outages from recent storms resulted in a one-week shutdown, and production did not return to normal for over three weeks. According to our latest manufacturing survey, growth in raw materials prices slowed over the past month, while finished goods prices edged downward.\nRetail\nRetailers reported improved sales since our last report. Merchants in several states had a successful \"tax free weekend\" in early August. In addition, some department store contacts said they were able to clear inventories of patio furniture and other seasonal items. Several jewelry retailers also reported increased sales. Record heat this summer helped to push air conditioner sales, with one big-box store depleting its entire inventory. An auto industry contact reported that District sales grew at a somewhat slower pace in recent weeks, although demand remained especially strong for mid-size vehicles. Used cars remained in short supply, putting upward pressure on prices and improving trade-in values. A number of apparel and furniture contacts noted that inventories for the upcoming holiday shopping season will be kept tight, since they expect to be able to easily reorder as needed. Grocery executives expected price increases in meat and dairy products, due to rising feed costs caused by drought. The pace of retail price change rose moderately, according to our most recent survey.\nServices\nAccounts from non-retail services firms were generally positive in recent weeks. An executive at a North Carolina healthcare system reported that demand for services had been steady, adding that there were a few \"sparks\" from the arrival of new businesses in an otherwise stagnant local economy. Contacts at healthcare organizations expressed concern about potential Medicare reimbursement cuts that will come with the change to value-based metrics under the new healthcare legislation. Ground freight firms reported solid demand and higher shipping rates. A freight service executive reported that retailers increasingly have moved to an online presence in addition to in-store sales, contributing to growth in direct shipping to customers through internet sales. Technology services continued to be in strong demand, particularly for developing websites, mobile services, and cloud computing. On balance, responses to our recent survey were that price increases at services firms moderated since our last report.\nFinance\nBanking activity was little changed from the weak, but somewhat mixed conditions that prevailed in our last report. Most bankers said that very few new loans were made recently and the number of loans in the pipeline was shrinking. An often-cited exception was mortgage refinancing, as well as business loans that were captured from other banks by offers of better terms. However, several mortgage lenders noted some increase in new home loans, especially in the mid-priced range, and one official reported a modest increase in single-home construction loans. A Maryland banker cited a sharp increase in small business loans, but several other bankers stated that many small business loan applications did not meet lending standards. A lending officer in northern Virginia reported a slowdown in industrial loans due to rising economic uncertainty. A banker in West Virginia noted strength in industrial loans going into the state's energy sector, although he expected lending to decline after the completion of current mining projects. While margins continued to be squeezed, most bankers described loan quality as stable following several quarters of steady improvement.\nReal Estate\nResidential real estate activity continued to improve since our last report. A Realtor in the Richmond area said that sales were up double digits over last year and pending sales had increased sharply from a year ago. Moreover, his company had seen a marked increase in prices. An agent in the D.C. area also reported strong sales \"inside the Beltway.\" A Realtor in the Fredericksburg area indicated that sales had increased and traffic was very active for this time of year, noting that the average sales price had risen by about $40,000 over last year. She mentioned that her firm had seen virtually no listings of foreclosed properties in July, and she saw fewer short sales. A West Virginia developer, who specializes in second homes in the mountains, stated that there had been an increase in inquiries and contracts for homes after four years without any sales. Similarly, a contractor reported a solid increase in home sales in the Charleston, South Carolina area, with the average price of new homes sold rising slightly as well.\nCommercial real estate activity remained mixed over the last few weeks. A few Realtors pointed to companies that were downsizing their space requirements as a cause for limited new construction and high vacancy rates. An agent in the D.C. area reported a recent drop in office leasing activity by as much as half from year-ago levels. However, several Realtors noted that, due to the lack of office construction, landlords had been offering fewer incentives to capture or retain tenants at existing properties. Retail leasing activity was mostly described as weak, especially among small, locally owned businesses. A contact in northern Virginia noted weakness in many segments of the market, but notable exceptions included car dealerships, gas stations and doctors' offices. A North Carolina real estate agent reported that purchasing activity had picked up markedly among his investment clients, which he attributed to national firms being increasingly attracted to the region. A few pockets of improvement in both leasing and construction activity were noted in eastern South Carolina, which has benefited from an expansion in the aerospace industry, and in northern West Virginia, where gains were driven by natural gas drilling.\nLabor Markets\nLabor market activity weakened since our last report. Contacts at several employment agencies described demand for workers as softening in the past six weeks. In Richmond, several small retailers said that they did not hire summer workers and they were not planning additional hiring for the year-end holiday selling season.\u00c2\u00a0 One agent noted that demand was slightly below normal for this time of year, but he hoped to see a rebound similar to the one that occurred late last summer. However, a few pockets of strength persisted. For example, most employment agencies continued to report strong demand for highly skilled IT employees, as jobs created by new technologies drove the market for those workers. Additionally, several contacts noted an increase in demand for truck drivers. According to our recent surveys, wages in both the manufacturing and service sectors were growing at a slightly slower pace than a month ago.\nTourism\nDistrict resorts reported a very good summer season, with rentals and hotel bookings up from a year ago. Local restaurants and shops have been busy, and a contact on the Outer Banks of North Carolina said that new businesses were opening to serve vacationers. Cruise ships leaving the Port of Baltimore have been fully booked, according to a contact there. In Washington, D.C., a contact observed more tour buses in recent weeks and bigger weekend crowds on the National Mall. However, according to a couple of Baltimore hotel managers, bookings for conferences and leisure stays were mixed. Additionally, a hotel contact in the Virginia Beach area said that bookings were making \"no great strides,\" primarily as a result of government travel cuts. Despite the lack of momentum in government travel, most hoteliers said that they were able to raise rates slightly. Looking ahead to late autumn, executives were optimistic about bookings, as localities planned historical commemorations, music programs, food festivals, marathons, and other social events. In South Carolina, a hotel manager anticipated that a new carrier at a nearby airport would provide solid bookings in the months ahead.\nAgriculture\nWidespread precipitation since our last report helped revitalize crops and pastureland in many areas of the District. Rain in early August aided late summer peaches in Maryland and West Virginia, and soybeans were responding to improved weather conditions in Virginia. Cotton and peanut growers in the District are also having a great year. In South Carolina, the cantaloupe and watermelon harvest was virtually complete by early August. Results of our recent agricultural credit survey indicated that farmland values were above both the previous quarter and year-ago levels.\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\nAugust 29, 2012\nThe Second District's economy has continued to expand at a modest pace since the last report. Despite some pickup in commodity price pressures, prices of finished goods and services have generally been stable. There have been scattered signs of softening in the labor market: while manufacturers continue to add workers, firms in other industries have scaled back hiring. A growing number of contacts in both manufacturing and other sectors report some softening in business conditions. Retailers, however, report generally favorable results: auto dealers note that sales remain fairly strong, and non-auto retailers report some recent improvement. Tourism activity has remained strong. Residential real estate markets have shown signs of improvement, and Manhattan's office market picked up slightly. Finally, bankers report increased loan demand, no change in credit standards, and further declines in delinquency rates.\nConsumer Spending\nRetailers report that sales activity has firmed somewhat since the last report. Two major retail chains report that sales in the region were on plan in July and ahead of plan in early August. Similarly a major retail mall in upstate New York reports some firming in sales, as well as shopper traffic, in July and early August, following lackluster business in May and June. Retail prices continue to be described as steady--including apparel prices, which had previously been expected to drift down with the retreat in cotton prices earlier this year. Stores in New York City have performed on par or modestly better than those in the rest of the region. Inventories are generally said to be at or slightly above desired levels.\nAuto dealers in upstate New York continue to report strong sales. New vehicle sales are characterized as particularly robust--up 14 percent from a year earlier--in the Rochester area. Buffalo-area dealers are seeing gains of about 7 percent. Sales of used cars and business at dealers' service departments are also described as fairly robust. Wholesale and retail credit conditions remain favorable.\nTourism activity has been mixed but generally strong since the last report. Hotels occupancy rates in the Albany and Buffalo areas have climbed and are well ahead of year-earlier levels. New York City hotels indicate that revenues per room were up roughly 6 percent from a year ago in June but up by a more modest 2 percent in July, as growth in room rates slowed and occupancy rates leveled off at close to 90 percent. With a 2-3 percent increase in the total number of hotel rooms in the city, this suggests continued fairly brisk growth in tourism activity. Attendance at Broadway theatres picked up in July and remained robust in early August, running 4-5 percent ahead of a year earlier, while revenue was up roughly 10 percent, reflecting higher ticket prices.\nConstruction and Real Estate\nHousing markets across the District have shown further signs of modest improvement since the last report. The housing market in the Buffalo area continued to show strength through mid-July, though activity has dropped off in recent weeks--to a greater extent than the seasonal norm. Northern New Jersey's housing market has bottomed and is showing scattered signs of improvement, according to an industry expert. This contact also maintains that internal market fundamentals are favorable: low and declining inventories, pent up demand, high affordability and a steady reduction in the foreclosure pipeline Manhattan's co-op and condo market has been fairly active since mid-year, relative to the normal seasonal pattern of slowing. In particular, there has been strong activity at the very high end (for \"trophy properties\") and also for entry-level apartments, driven in part by low mortgage rates. There has been more significant improvement reported in Brooklyn and especially in Queens, where an inventory glut has evaporated surprisingly quickly, according to one contact. New York City apartment rents have continued to rise across all segments, and Albany's rental market has strengthened noticeably, with rents running 7 percent higher than a year ago.\nManhattan's office market strengthened somewhat in July, as leasing activity picked up and vacancy rates edged down. Asking rents for Class A office space rose modestly and continued to run more than 10 percent ahead of a year earlier. A real estate contact also reports that retailers have started leasing more ground-floor space in apartment buildings that have recently reached full occupancy.\nOther Business Activity\nBusinesses across the District indicate some softening in general conditions since the last report. A rising number of contacts in both manufacturing and other sectors indicate a recent pullback in business activity. While some pickup in input price pressures has been noted in recent weeks and further increases are anticipated in the months ahead, most report steady selling prices.\nLabor market conditions across the District have been mixed, but somewhat weaker, on balance, since the last report. While manufacturers report that they continue to add workers, on net, firms in other sectors indicate that they have cut back on hiring. Moreover, both manufacturers and non-manufacturing firms recently scaled back their near term hiring plans. Separately, a major New York City employment agency specializing in office jobs reports that hiring activity was even more sluggish in July and early August than is usual for the this time of year. A contact in the securities industry reports that there has been neither any significant increase in layoffs nor much hiring.\nFinancial Developments\nSmall- to medium-sized banks in the District report a noticeable pickup in overall loan demand. Particularly widespread increases in demand were reported for both residential and commercial mortgage loans, while demand for consumer loans was little changed. As was the case in the last report, demand for commercial & industrial loans decreased. Bankers also indicate steady demand for refinancing. Virtually all contacts report no change in credit standards across all loan categories. Respondents indicate continued decreases in spreads of loan rates over costs of funds for all loan categories--particularly commercial & industrial loans and commercial mortgages. Respondents also note continued declines in the average deposit rate. Finally, bankers report declining delinquency rates, particularly on commercial & industrial loans and residential mortgages.\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 18, 2012\nTwelfth District economic activity expanded at a modest pace during the reporting period of June through the beginning of July. Upward price pressures eased somewhat and remained quite contained overall, and upward wage pressures were limited. Sales of retail items rose a bit, and demand grew for most business and consumer services. District manufacturing activity increased slightly on balance. Demand continued to expand for agricultural producers, while activity was largely unchanged for providers of energy resources. Sales and construction activity edged up in District housing markets, and demand strengthened slightly for commercial real estate. Contacts from financial institutions reported a small increase in overall loan demand and slight improvements in credit quality and availability.\nWages and Prices\nUpward price pressures were very modest during the reporting period. Price declines were noted for selected raw materials and energy inputs, especially gasoline. The declines in selected input costs combined with robust competition among firms in most sectors to hold down final prices for a wide range of retail goods and services. Looking ahead, most contacts expect prices for their products to remain largely unchanged through the balance of the year.\nUpward wage pressures were limited to a few worker groups, although some contacts pointed to more general increases in the costs of pension plans and other employee benefits. Wage gains continued to be held down by high levels of unemployment and tepid demand for new workers. The most pronounced gains were reported for workers with specialized skills in the application of information technologies, along with selected narrow groups of skilled manufacturing workers.\nRetail Trade and Services\nRetail sales expanded a bit further overall. Modest sales gains were reported for discount chains as well as traditional department stores, and inventories generally were at or near desired levels given the pace of sales. However, some contacts reported growing concern about a softening of demand in the high-end segment of the market. Demand remained largely flat for retailers of home furnishings and major appliances, as declines in television sales offset increases for flooring and appliances. Similarly, demand stayed largely stable for grocers as consumers remained focused on necessities. The sales pace for new automobiles stayed high, bolstered in part by pent-up demand for Japanese brands whose inventories have returned to normal after being constrained by last year's natural disaster in that country.\nDemand for most business and consumer services grew further. Activity continued to expand at a solid pace for transportation services such as trucking, although contacts noted that the pace of growth has slowed somewhat in recent months. Sales grew modestly for providers of technology services, as continued weakness in demand from Europe partly offset growth elsewhere. Advertising revenues rose for radio and television broadcasters, with additional gains expected in the second half of the year. By contrast, providers of professional services such as legal and accounting reported that activity was flat. Demand picked up a bit for restaurants and other food-service providers and continued to trend up in the travel and tourism industry: contacts in Hawaii and Southern California reported further gains in visitor volumes and hotel occupancy rates and decreased reliance on price discounting.\nManufacturing\u00c2\nDistrict manufacturing activity rose a bit further on balance during the reporting period of June through the beginning of July. Manufacturers of semiconductors and other technology products noted continued high rates of capacity utilization and sales but also some emerging softness in demand. For makers of commercial aircraft and parts, an extensive order backlog and additional new orders kept production rates near capacity. Demand for steel was mostly stable at somewhat low levels, and activity weakened a bit for processed scrap metal as a result of a decline in overseas demand. Conditions remained robust in the pharmaceutical manufacturing sector. For petroleum refiners, capacity utilization rates were largely stable, as growing export sales offset subdued domestic demand.\nAgriculture and Resource-related Industries\nDemand for agricultural products expanded further, while extraction activity for energy resources was mostly unchanged. Final sales and orders grew for many crop and livestock products. This was stimulated in part by continued growth in overseas exports, although the reports suggested that this source of growth is on the wane. Contacts noted modest declines for input costs, particularly for energy and other petroleum-based products. For energy resources, contacts reported little change in extraction activity for oil and natural gas.\nReal Estate and Construction\nHome demand in the District improved modestly overall, and demand for commercial real estate ticked up on net. The sales pace for new and existing homes grew a bit further in many areas, although it stayed well below its historical average. Improvements in the pace of sales helped to reduce the inventory of available homes, prompting additional modest expansion of home construction activity. Similarly, strong demand for rental space spurred further increases in construction of multifamily units. Looking ahead, most contacts expect home sales and prices to improve a bit further during the second half of the year. Demand for commercial real estate inched up, as reflected in slight declines in office and industrial vacancy rates in some parts of the District. Growth in the technology sector continued to support improving demand for nonresidential real estate in the San Francisco Bay Area and Seattle markets, although the pace of improvement has slowed of late, with contacts noting a recent decline in rental inquiries for vacant properties.\nFinancial Institutions\nDistrict banking contacts reported that loan demand grew a bit during the reporting period. Although most businesses remained highly cautious in their capital spending plans and attitudes toward debt financing, the volume of new commercial and industrial loans expanded further. Demand for consumer credit grew on net, especially for auto loans. Reports continued to indicate stiff competition among lenders to provide credit to well-qualified small and medium-sized businesses, placing downward pressure on rates and fees. Contacts also noted additional improvements in overall credit quality and availability, although lending standards remained somewhat restrictive for most business and consumer loans.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

/beige-book-reports/2012/2012-07-ny

"Beige Book Report: New York\nJuly 18, 2012\nGrowth in the Second District's economy has slowed since the last report, though labor market conditions have continued to improve. Price pressures have receded further in both manufacturing and other industry sectors, and retail prices have been stable. Non-manufacturing contacts generally report that conditions have held steady in recent weeks, while manufacturers report flat to weaker activity. Retailers generally report weaker results for May and June, but auto dealers indicate that sales activity was fairly robust; tourism activity has continued to be steady and strong. Home sales markets have shown signs of improvement, while rental markets have remained firm; however, commercial real estate markets have slowed modestly. Finally, bankers report a leveling off in loan demand, no change in credit standards, and further declines in delinquency rates on commercial loans and mortgages.\nConsumer Spending\nRetailers report that sales activity has been somewhat softer since the last report. One major retail chain indicates that sales were down noticeably from a year earlier, with home goods sales especially weak. Another major chain reports that sales slowed in June and were running somewhat below plan but still up marginally from a year earlier; however, some improvement was noted during the first few days of July. Retail contacts in upstate New York report that sales were mixed in May but picked up in June, again buoyed by Canadian shoppers. Retail prices continue to be described as steady. Inventories are generally said to be at or slightly above desired levels.\nAuto dealers in upstate New York report positive results. Sales of new vehicles were up noticeably from a year ago in May and are projected to be up modestly in June. Leasing activity and business at dealers' service departments have been robust since the last report. Dealers also report strong sales and elevated prices for used vehicles. Wholesale and retail credit conditions remain favorable, though one contact reports that banks have reined in lending for used vehicles.\nTourism activity has remained robust since the last report. New York City hotels indicate that revenues per room were up 6-7 percent from a year ago in May and that very preliminary figures for June suggest similar gains. This gain reflects increased occupancy rates, which have been running above 90 percent, as well as 3-4 percent increases in average room rates. Attendance at Broadway theatres was generally steady in May and June and up slightly from a year earlier, while revenue was up more than 10 percent, due to rising ticket prices.\nConstruction and Real Estate\nHousing markets across much of the District have improved somewhat since the last report, while rental markets have continued to strengthen. Both the volume of Manhattan apartment sales and selling prices were steady in the second quarter; sales of smaller apartments have picked up and account for a growing share of the market. Foreign buyers continue to be a fairly big component of demand at the higher end of New York City's market. Housing markets in Long Island and Westchester County are reported to have improved in the second quarter: sales activity has picked up, prices have stabilized, and the inventory of available homes, though high, has begun to decline. Existing home sales and prices in northern New Jersey have been flat, hampered by a glut of distressed properties on the market; but there has been a modest pickup in new home sales, as well as construction starts. Real estate contacts in Western New York continue to report robust sales activity and rising prices, despite \"tough\" mortgage conditions. New York City's apartment rental market continued to strengthen in the second quarter, with inventories tight and rents increasing--most notably on smaller and lower priced apartments.\nCommercial real estate markets in and around New York City have shown some signs of softening since the last report. Office vacancy rates in Manhattan, though steady for the second quarter overall, rose in June; new leasing activity slowed, as renewals have accounted for a growing share of leases. A major brokerage firm notes strong demand from tech firms--largely in Manhattan's Midtown South district--but sluggish demand from the financial sector. Office vacancy rates in the areas around Manhattan--Long Island, Westchester, and northern New Jersey--edged up in the 2nd\u00c2\u00a0quarter. Retail vacancy rates in New York City and northern New Jersey rose slightly in the second quarter. Industrial vacancy rates also edged up in most markets.\nOther Business Activity\u00c2\nContacts across the District indicate that business activity has leveled off since the last report. Business contacts in both manufacturing and other sectors indicate little change in general conditions, but manufacturing contacts in New York State report a pullback in both new and unfilled orders. In addition, business contacts in manufacturing and other sectors note a leveling off in input prices and steady to declining selling prices.\nStill, labor market conditions across the District have been steady to slightly improved since the last report. Both manufacturers and business contacts in other sectors say that they are adding workers, on net. A major New York City employment agency specializing in office jobs reports that hiring activity remains fairly subdued and is little changed from the spring; however, this contact also notes that the pool of qualified workers is limited and appears to be dwindling gradually. Similarly, a trucking industry contact notes that firms are having a difficult time finding qualified drivers.\nFinancial Developments\u00c2\nResponses from small- to medium-sized banks in the District suggest no change in loan demand overall. For specific loan categories, bankers report increased demand for home mortgage loans, but decreased demand for commercial & industrial loans. Bankers also indicate steady to increasing demand for refinancing. The vast majority of contacts report no change in credit standards across all loan categories. Respondents indicate continued decreases in spreads of loan rates over costs of funds for all loan categories--particularly commercial & industrial loans and commercial mortgages. Respondents also note increasingly widespread declines in the average deposit rate. Finally, bankers report a decrease in delinquency rates on commercial loans and mortgages but steady rates on loans to the household sector.\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 18, 2012\nPrepared at the Federal Reserve Bank of Atlanta and based on information collected before July 9, 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.\nReports from most of the twelve Federal Reserve Districts indicated that overall economic activity continued to expand at a modest to moderate pace in June and early July. The Atlanta, St. Louis, and San Francisco Districts reported modest growth, while Boston, Chicago, Minneapolis, Kansas City, and Dallas described economic activity as advancing moderately. The New York, Philadelphia, and Cleveland Districts noted that activity continued to expand, but at a slower pace since the last report, while Richmond cited mixed activity.\nRetail sales increased slightly in all reporting Districts except Boston and Cleveland, where sales were categorized as flat, and New York, where sales softened. Of the Districts that saw an increase in activity, most noted strength in auto sales. In particular, auto dealers noted that demand for fuel-efficient vehicles continued to support sales. Tourism activity remained strong according to contacts in the New York, Richmond, Atlanta, Minneapolis, and San Francisco Districts.\nAll District housing market reports were largely positive as sales and construction levels increased and home inventories declined. Rental markets continued to strengthen with rising rents being reported in Boston, New York, Atlanta, Chicago, and Dallas. Commercial real estate leasing and construction continued to improve as demand for multifamily units increased in Atlanta, Chicago, and San Francisco. However, both New York and Richmond noted a slowdown in commercial activity, while Philadelphia and Dallas held steady.\nManufacturing activity continued to expand slowly in most Districts, and Cleveland, Atlanta, Chicago, and Kansas City cited slight increases in production levels. However, several Districts reported a deceleration in new orders, and the Philadelphia and Richmond Districts reported declines in shipments and orders. Demand for nonfinancial services remained generally stable in most regions. Richmond noted strong sales among professional, scientific, and technical firms, while Dallas noted strength in energy, legal, and audit-related services. Transportation reports were generally positive, with Kansas City noting an uptick in trucking activity, while Richmond reported increased port activity.\nDemand for loans, particularly those related to real estate, grew modestly in most Districts. However, both Cleveland and Richmond noted some weakness in loan activity. Credit standards remained unchanged in New York, Richmond, and Kansas City, while credit quality improved in Philadelphia, Kansas City, Dallas, and San Francisco. Agricultural production and pricing reports were mixed. While drought conditions have affected production in some Districts, others noted favorable conditions. Chicago and Kansas City reported a significant deterioration of corn crops, which has pushed up prices since the end of June.\nAll Districts conveyed that input prices had stabilized in recent months. Price pressures were described as easing in New York, Philadelphia, Atlanta, and San Francisco as energy costs declined. Wage pressures remained modest, except for highly skilled workers in information technology, health care, transportation, and manufacturing. Employment levels improved at a tepid pace for most Districts. Overall, Districts reported that their contacts remained cautiously optimistic about future business conditions.\nConsumer Spending and Tourism\nMost Districts reported modest increases in retail spending on a year-over-year basis, but many reported slower growth in recent months compared with earlier in the year; however, Boston and Cleveland reported sales as flat, and New York cited softer sales. There were a few reports that high summer temperatures negatively affected sales. Sales of big-ticket household goods were strong in the Richmond, Chicago, Kansas City, and Dallas Districts, while sales were reportedly flat for home furnishings and major appliances in the San Francisco District. Boston reported that sales for furniture and electronics had slowed, and retailers in the New York District reported that home goods sales were weak. Reports from luxury-goods retailers were mixed. Firms in the Philadelphia, Atlanta, and Chicago Districts reported that sales of high-end goods remained strong, while retailers in the Kansas City and San Francisco Districts indicated demand had softened, and those in the Cleveland District noted that sales of luxury goods had slowed. Most Districts reported that vehicle sales remained robust. Demand was high for fuel-efficient vehicles in particular. Looking forward, merchants in the Boston and Philadelphia Districts were concerned that economic uncertainty could result in restrained sales growth, while retailers in the Cleveland District anticipated that the third quarter will be higher compared with year-ago levels. Kansas City noted that merchants there expected further strengthening in the coming months.\nTravel and tourism activity was reported as strong across several Districts. Hotel occupancy rates and revenue per room were robust in many areas according to reports from New York, Richmond, Atlanta, Chicago, and San Francisco. Attendance numbers were solid at attractions in various Districts, including theme parks in Florida and New York's Broadway theaters. Richmond, Minneapolis, and San Francisco reported that natural disasters had negatively affected bookings in some parts of their Districts. Dallas reported that demand for international travel was strongest for South America and Mexico destinations. Atlanta shared their contacts' concerns about the potential impact of economic and financial stress abroad and the effect it could have on international travel. That said, several Districts reported that the outlook among the majority of hospitality contacts for the remainder of the summer is good as hotel and convention bookings continued to exceed last year's pace.\nReal Estate and Construction\nReports on residential housing markets remained largely positive. Sales were characterized as improving in Philadelphia, New York, Richmond, Chicago, St. Louis, and Minneapolis, while home sales increased in Boston, Cleveland, Atlanta, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. However, reports on sales were mixed in the New York District, and gains in the Boston District eased from earlier in the year. New home sales were described as disappointing in the Philadelphia District. Construction increased in the New York, Atlanta, St. Louis, Minneapolis, Dallas, and San Francisco Districts, while reports from the Cleveland District said construction slowed. Most Districts reported declines in home inventories. Homes prices have begun to stabilize in some markets and price increases were noted in select markets. Boston and Atlanta noted that appraisals were coming in below market prices.\nRental markets continued to strengthen by most accounts. Rising apartment rents were reported in the Boston, New York, Atlanta, Chicago, and Dallas Districts. Strong demand for rental units spurred increases in multifamily construction in the San Francisco District. Multifamily construction was described as strong in the Atlanta and Chicago Districts. Apartment construction is expected to pick up over the next several months in the Dallas District.\nRecent activity in commercial real estate markets has been mixed. Modest improvements were noted in Boston, Atlanta, and St. Louis and demand strengthened in the San Francisco District. Softer conditions were reported in the New York and Richmond Districts, while demand held steady in the Philadelphia and Dallas Districts. Nonresidential construction activity varied as well. Construction activity increased modestly in the Minneapolis and Kansas City Districts, while construction continued to gain momentum in the Boston District. Demand for commercial construction rose in Chicago, while activity was described as much improved from a year earlier in the Cleveland District. Construction was flat in the Atlanta District on a year-over-year basis, while activity had softened in recent months in the Richmond District. Overall, the outlook among commercial real estate contacts and contractors was slightly positive.\nManufacturing\nManufacturing continued to expand in June and early July in most Districts, but at a more modest pace compared with earlier in the year. Several Districts reported that new orders had moderated since the last report, but the Philadelphia, St. Louis, and Kansas City Districts were more optimistic that new orders would rebound. The Philadelphia and Richmond Districts however, reported declines in shipments and orders. The passing of a transportation bill through Congress led contacts in the Philadelphia District to express interest in increasing their capital spending. Capacity utilization rates at refineries and petrochemical manufacturing facilities held steady in the San Francisco District, with weaker domestic demand being offset by growing exports. Meanwhile, manufacturers in the Dallas District reported operating at above 90 percent utilization rates to catch up with below-normal inventory levels.\nThe San Francisco District noted continued strength in semiconductor production, while the Dallas District said sales at high-tech manufacturing had decreased since the last report. Expectations from high-tech manufacturers in the Dallas District were that growth would remain flat to slightly weaker through year's end, a change from earlier in the year when most contacts anticipated a pick-up in the second half. Overall, most Districts reported a moderation of expectations among their manufacturing contacts.\nHiring at manufacturing firms continued to vary by District. Kansas City said that fewer plant managers were planning to hire, while the St. Louis District reported plans for plant expansions later in the year. The Dallas District cited particular strength in food production, citing contacts who said they planned to add several new workers. However, makers of food products in the Philadelphia District noted a falloff in demand. Cleveland and Chicago noted that automobile production remained a source of strength, with contacts from the Chicago District reporting that there was an increase in research and development activity.\nNonfinancial Services\nDemand for nonfinancial services was generally stable to slightly stronger since the previous report. Richmond noted that revenue improvement was strong among professional, scientific, and technical firms. Strength in energy, legal, and audit-related services was noted in the Dallas District. Advertisers in the Philadelphia and San Francisco Districts reported strong revenues, and consulting and advertising contacts in the Boston District noted steady activity. Richmond and San Francisco reported that restaurants were busy, while food service contacts in Atlanta reported that demand had softened a bit.\nTransportation contacts reported that activity was generally positive. In the Atlanta and Dallas Districts, rail contacts reported strong shipments of petroleum and motor vehicles and equipment. The Richmond District reported increases in port activity with container volumes and tonnage at or near record levels. Input from logistics and trucking contacts was mixed. The Cleveland and Atlanta Districts noted softening volumes and less-robust forecasts for the remainder of the year. Kansas City's report cited an uptick in trucking activity, while San Francisco's report cited moderating growth in trucking.\nBanking and Financial Services\nOverall loan demand grew modestly in most Districts. New York indicated no change, while Richmond observed flat-to-weakening loan demand. Chicago, Kansas City, Dallas, and San Francisco noted increased commercial and industrial lending, but lending in that sector decreased somewhat in the New York District and was characterized as soft in Cleveland and Atlanta. Most Districts reported an increase in mortgage lending, with Dallas noting especially strong demand and a healthy backlog of loans. Refinancing of mortgage loans was steady or increasing in New York, Cleveland, Richmond, and Chicago, but Philadelphia noted a recent slowdown. Kansas City and Dallas noted some improvement in lending for agriculture and commercial real estate. The Atlanta, Chicago, Dallas, and San Francisco Districts observed steady-to-increasing demand for consumer credit, especially for auto loans, while consumer loan demand was somewhat weaker in Kansas City and little changed in Cleveland.\nContacts in the New York, Richmond and Kansas City Districts reported that credit standards remained largely unchanged. Cleveland reported some loosening of auto lending guidelines, while San Francisco indicated credit standards were somewhat restrictive for businesses and consumer loans. Philadelphia, Kansas City, Dallas, and San Francisco noted general improvements in credit quality. Delinquency rates held steady or declined in the New York and Cleveland Districts. Banking contacts in the Cleveland, Atlanta, Dallas, and San Francisco Districts noted stiff competition for quality loan customers. The Chicago District noted uncertainty over the effects of U.S. fiscal policy actions was reducing their customers' demand for credit. Likewise, Dallas reported a slightly more pessimistic outlook than the previous Beige Book due in part to European debt issues and regulatory and political uncertainty.\nAgriculture and Natural Resources\nAgricultural conditions were mixed since the previous report. Several Districts noted areas of increased drought resulting in stress to crops and livestock, while rainfall provided needed moisture to parts of the Atlanta District. With high heat and drought cited as the cause, the Chicago and Kansas City Districts reported concerns for their corn and soybean crops, while the Minneapolis District reported that favorable weather conditions contributed to their corn and soybean crops doing well. The Kansas City and Dallas Districts reported drought-stressed pasture conditions, although the Dallas District noted much better crop conditions than this time last year. The St. Louis and Kansas City Districts reported better-than-expected yields for the winter wheat crop nearing completion. The San Francisco District noted further sales growth for many crop and livestock products, attributed in part to overseas growth, but suggested that this source of growth was decreasing. The Kansas City District cited rising export demand as the reason some hog producers expanded production. Agricultural price reports were mixed. While June corn prices were reported down on a year-over-year basis, reports of corn crop deterioration was noted by the Chicago and Kansas City Districts as having pushed corn prices sharply higher since the end of June.\nSeveral Districts reported that energy exploration activity had increased, with offshore prospects being aided by recent lease sales. Regions where coal production is prevalent noted that extraction had decreased over the last year with electricity generation shifting to natural gas. Contacts in many Districts shared expectations that natural gas prices will remain low in the near future. Corn producing regions reported that ethanol processing had decreased in response to the higher corn prices.\nEmployment, Wages, and Prices\nEmployment levels grew at a tepid pace for most Districts since the last report. The Boston, Cleveland, Atlanta, Chicago, and Dallas Districts said employment levels were flat to up slightly, with most contacts citing U.S. fiscal policy uncertainty or weak demand for their conservative approach to hiring. Kansas City said employers were reluctant to increase wages or hire full-time staff until economic uncertainty diminishes. A Richmond District employment agency contact noted an increase in temporary employment turning into permanent positions since the last report. The Atlanta District noted some smaller chain stores with low price points were expanding and hiring at a significant pace. Several Districts noted that employers were having difficulty filling highly skilled positions.\nMany Districts noted that wage pressures were minimal since the last report. Wage increases were mostly concentrated in highly skilled workers in information technology, health care, transportation, some professional services, and highly skilled manufacturing workers, according to reports from the Atlanta, Chicago, Minneapolis, Kansas City, and Dallas Districts.\nPrice inflation was modest across most areas of the country. Lower input prices for various commodities were mentioned across most Districts and resulted in expectations of stable input prices in the coming months. Retailers and manufacturers in the Richmond, Chicago, and Dallas Districts noted a decline in cotton prices. Manufacturers in the Cleveland, Chicago, Kansas City, and Dallas Districts mentioned that steel and scrap metal prices have moderated. The decline in energy prices was mentioned in the Atlanta, Chicago, and Dallas reports as contributing to lower cost expectations. However, contractors and building contacts in the Philadelphia, Richmond, and Kansas City Districts noted increases in the cost of building supply materials. Richmond contractors said they were able to pass these costs through, but homebuilders in Philadelphia mentioned limited ability to do so.\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 18, 2012\nReports from Sixth District business contacts indicated that economic activity expanded at a modest pacein June and early July. The outlook among most firms remained cautiously optimistic, although the majority of contacts acknowledged that risks were weighted to the downside.\nRetailers noted that sales improved slightly, but cautioned that consumers appeared to be conservative in their purchases. Auto dealerships reported continued strong sales. The hospitality sector continued to experience steady growth as occupancy and room rates continued to rise. Most brokers and homebuilders reported modest increases in sales and prices from very low levels of activity, while contractors stated that the apartment sector remained strong. Manufacturing firms indicated that production continued to expand, but at a much more moderate pace than earlier in the year. Bank lending activity increased slightly for residential real estate, while auto loan activity remained robust. Employment growth for the District was subdued and employers remained cautious about future hiring. Lower energy prices have eased pricing pressures for many firms and wage pressures remained modest.\nConsumer Spending and Tourism\nDistrict retail sales activity improved slightly in June and early July, but merchants reported that consumers remained very conservative. Several discount retailers and auto dealers signaled strong sales, while most department stores conveyed more modest activity. Restaurant and food service contacts reported that demand had softened a bit, but sales at higher-end establishments remained strong.\nTourism activity and business travel remained strong and the outlook among contacts was positive for the rest of the year. Occupancy and room rates were up in many parts of the District. Recent reports on convention bookings and theme park attendance were also solid. Concerns shared earlier in the year regarding rising fuel costs and the potential impact on travel and spending had abated. However, concerns were shared about the potential impact of economic and financial stress abroad and the effect that would have on international travel, especially to Florida. There continued to be a drop off in cruise line bookings compared with earlier in the year.\nReal Estate and Construction\nDistrict residential brokers indicated that home sales were flat to slightly up compared with year-ago levels. Reports indicated strong sales at the middle price points, while several brokers noted that declining inventories of foreclosed homes were limiting investor-driven sales. Brokers also reported that the decline in inventories has helped stabilize home prices in many areas. Most brokers reported that home prices were flat to slightly up compared with a year earlier. However, contacts continued to note some downward pressure on home prices resulting from low purchase offers and appraisals that were coming in well-below asking and offering prices. The sales outlook among brokers remained positive with most anticipating continued modest year-over-year home sales gains.\nDistrict homebuilders reported that new home sales and construction rose modestly compared with year-ago levels. The majority indicated that new home inventories declined further on a monthly and an annual basis. Most builders reported that new home prices were flat to slightly up compared with a year earlier. Price gains were strongest among Florida builders. Contacts noted that multi-family construction remained robust. In the near-term, homebuilders expect sales and construction to post modest gains compared with a year earlier.\nApartment sector gains drove improvements in the District's commercial real estate markets as occupancies rose and rental rates increased. The region's office and industrial sectors saw small improvements as vacancy rates moderated somewhat; however, reports on District retail real estate continued to be more mixed. The majority of commercial contractors said that construction activity was flat on a year-over-year basis. The majority of contacts anticipate a modest increase in private commercial construction activity through the remainder of the year, while public works projects are expected to decelerate.\nManufacturing and Transportation\nManufacturing contacts indicated that the pace of new orders and production growth remained positive, but had moderated. A major European-based aircraft manufacturer announced it will locate its first American manufacturing facility in Alabama. A Florida manufacturer, closely tied to the construction industry, reported improved but volatile business conditions based on increases in construction of multi-family dwellings, healthcare facilities, and construction at ports.\nAccording to railroad contacts, intermodal activity continued to strengthen. Double-digit increases in shipments of petroleum products, motor vehicles, and equipment were reported; however, movement of grain, metallic ores, and nonmetallic minerals declined. A logistics contact indicated slowing activity, particularly in the retail sector, and had lowered projections slightly for the remainder of the year. Trucking contacts reported softening volumes, and forecasts for the upcoming shipping season were slightly less robust than earlier in the year.\nBanking and Finance\nBanking contacts noted some improvement in residential mortgage lending. Auto loans continued to be a source of strength, while commercial and industrial lending remained soft. Contacts reported significant competition among lenders for credit-worthy customers. Bankers indicated that low interest rates, coupled with a limited number of qualified borrowers, continued to squeeze bank margins.\nEmployment and Prices\nRegional employment growth remained positive, but muted. Employers continued to cite uncertainty regarding future economic conditions as a reason for limiting hiring and recent economic volatility appears to have exacerbated these anxieties. Small stores with very low price points reported doing well and were expanding with significant hiring plans across the District. Contacts continued to note difficulty in finding qualified applicants for many highly-technical positions, and some reported problems finding candidates for some lower-skilled positions. Many manufacturing and trucking contacts continued to note challenges in attracting applicants with necessary skills. The skills mismatch problem has been especially hard on low-wage individuals, according to community and economic development contacts.\nFirms responding in June to the Atlanta Fed's Business Inflation Expectations survey reported a decline in unit cost expectations for the second consecutive month. Survey respondents indicated that, on average, they expect labor and material costs to rise 1.7 percent over the next 12 months. That number is down from 1.8 percent in May and 2.1 percent in April. Firms also reported that their unit costs had risen 1.6 percent compared with this time last year, which is unchanged from their assessment in May. Business contacts reported that lower prices for natural gas and refined oil products were reportedly providing some cost relief. Wage pressures remained modest, although some employers noted that they were increasing starting pay for workers with high-demand skill sets.\nNatural Resources and Agriculture\nContacts continued to report that investment in expanding and maintaining existing transportation infrastructure would be necessary to accommodate increases in domestic oil and natural gas production. Contacts have noted a steady increase in capital expenditures on refineries for upgrades and expansions. Deep-water permits for offshore drilling have increased. Varying levels of drought conditions had expanded through much of the District resulting in stress to some crops. However, the June tropical storm helped some areas. Compared with last year, June's prices paid to farmers were down for cotton and corn while prices for oranges, beef, and soybeans 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\nJuly 18, 2012\nOverall, business activity in the Third District has continued to improve since the previous Beige Book, although results were mixed. Manufacturing activity slowed somewhat. Retail sales and auto sales continued to increase, but at paces that varied across sectors and states. Third District banks have reported steady growth in lending and stronger credit quality since the last Beige Book. Demand for new home construction held steady, and brokers report improving sales of existing homes. Commercial real estate contacts report little change in current demand, while on average service-sector firms report modest continued growth. Price pressures have eased further in many sectors since the last Beige Book.\nThe overall outlook appears somewhat more optimistic relative to the views expressed in the last Beige Book, due in part to the slowdown experienced then and the subsequent positive announcements regarding major new projects. Manufacturers' expectations for the next six months remain positive, while anticipated hiring and capital spending has increased further since the previous Beige Book. Retailers, auto dealers, and financial firms remain positive, but somewhat more cautious because of ongoing consumer uncertainty. Real estate and service-sector firms are slightly more optimistic but continue to plan for slow growth through the remainder of 2012. In general, business plans reflect caution, and business contacts express perspectives based on a \"new normal\" of steady growth at a slower pace than previous expansions.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported declines in shipments and new orders. Gains \u00e2\u20ac\u201c some seasonal \u00e2\u20ac\u201c continued among the makers of industrial machinery. Makers of food products, lumber and wood products, primary metals, fabricated metals, electronic equipment, and instruments reported a falloff in demand. A few contacts mentioned a slowdown of Marcellus shale activity as a factor in weaker demand.\nAbout eight out of 10 Third District manufacturers expect business conditions to improve or stay the same during the next six months \u00e2\u20ac\u201c reflecting a similar level of optimism as reported in the last Beige Book. Optimism is represented in the major sectors cited above, except lumber and fabricated metals. Furthermore, makers of lumber products specifically cited seasonal declines for their weaker six-month expectation. Firms expressed greater expectations of future capital spending and future hiring since the last Beige Book. Several contacts mentioned the need for a new transportation authorization bill \u00e2\u20ac\u201c subsequently passed by Congress after a three-year delay. That and recent announcements of deals to maintain and restart District refinery operations will likely add to the general optimism.\nRetail\nThird District retailers at major malls reported stronger year-over-year sales in May than in April, while outlet centers reported lower growth in May and June than in previous months. At malls, high-end goods, including Apple products and jewelry, did especially well. Sales of children's clothing were down year-over-year at outlet centers for the first time since 2007; typically a negative signal, this time it may reflect a delay in deep discounting of back-to-school items that had already been discounted by this time last year. Retail contacts remain cautiously optimistic.\nAuto sales moderated in Pennsylvania in June following strong sales in April and May, which followed an unusually strong first quarter throughout the Third District. New Jersey reported stronger auto sales in June after more modest growth in April and May. Industry contacts report that fluctuating gas prices are delaying some purchases by elevating uncertainty among buyers weighing their options between trucks and SUVs versus high-efficiency automobiles. Very low borrowing costs for inventories continue to support dealers' profitability, while demand for dealer services and repairs remains low. The outlook for auto sales remains generally positive, although dealers are concerned that increased consumer uncertainty will not support further growth in sales through the third quarter.\nFinance\nContacts from the Third District's financial sector report continued slow improvement since the previous Beige Book. The very slow increase in demand is reflected in uneven reports, with some lenders reporting increases primarily as gains in market share, while others are shifting into and out of various lending segments. Bank contacts report frequent requests from business borrowers for loan modifications, while home refinancings have slowed recently. Most contacts report strong, improving credit quality as households and businesses pay down debt early and build cash reserves. Many contacts report that businesses have adjusted to the \"new normal\" and anticipate little new growth \"through the election and after.\"\nReal Estate and Construction\nResidential builders report little change in their level of activity since the last Beige Book. Traffic remained relatively strong, but contract signings remained elusive and weaker than in the first quarter. While uncertainty remains and recent sales were disappointing, high levels of interest continue to encourage builders on their prospects over the next few months. Contacts report a few new developments in select markets and limited hiring to facilitate strategic growth objectives. Residential brokers reported improving year-over-year home sales in May, and inventory has fallen significantly over the past two years in most markets. Bidding wars reported in a few markets for low-end homes signal that prices in those markets have likely found a bottom. The outlook among builders and brokers remains cautiously positive.\nNonresidential real estate activity has changed little since the last Beige Book, with most contacts indicating continued slow growth in demand for lease and new construction. Bidding for the design and construction of new projects remains \"cut-throat,\" and margins remain tight for most lease negotiations. Three significant groups of announcements \u00e2\u20ac\u201c passage of the two-year federal transportation bill, the various District refinery deals, and a new funding agreement for construction of an urban development project in downtown Allentown \u00e2\u20ac\u201c have raised expectations for stronger growth of nonresidential construction activity in the near future. The overall outlook for nonresidential real estate has brightened somewhat since the last Beige Book.\nServices\nMost Third District service-sector firms continue to report little change from the slow but positive growth reported in the last Beige Book. One contact captured the thoughts of many by describing the economy as \"orderly, functioning, nothing exciting.\" Staffing firms report some seasonal uptick in hiring, but little change in overall demand or expectations. A few firms report opportunistic investments to capture market share, enter new markets, or take advantage of growth in emerging economies, such as Brazil. Election-year advertising has been a boon for some firms. However, election-year uncertainty and the slowdown in Europe and China have sidelined investment plans for many firms for the remainder of the year. Overall, service-sector firms retain a positive, but cautious, outlook for growth.\nPrices and Wages\nPrice levels have eased further since the previous Beige Book and remain generally constrained. Falling gas prices have contributed to the recent broader price easing. Manufacturing firms have reported lower cost factors since the last Beige Book. Home builders continue to report rising cost pressures for materials and limited ability to pass these costs along. Retailers also continue to report tight margins. Nearly all contacts report an ongoing lack of wage pressures, other than for medical benefits. House prices have stabilized in many areas for low-end homes but continue to fall for high-end homes.\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 18, 2012\nFifth District contacts provided mixed reports on economic activity since our last assessment. Retailers reported strengthening in consumer spending over the last month, and non-retail firms cited increased activity, despite end-of-June power outages caused by severe storms. Bookings remained solid according to tourism contacts, even as vacationers continued to hunt for bargains. Residential real estate was described as slightly improved overall, although many areas continued to experience weakness. Additionally, contacts at District ports noted some improvement in both import and export volumes in recent months. In contrast, manufacturers reported a marked weakening in orders and shipments in June, following strengthening earlier this year. Employment agencies cited a slight slowdown in demand for workers, with the notable exception of high-skill occupations. Some softening also occurred in commercial construction in recent months, mostly concentrated on the government side of the market, with private demand remaining generally unchanged. Most lenders reported flat or weakening demand for loans; however, a few bankers noted a pickup in mortgage and small business lending. Price change was modest, although retail prices increased somewhat more rapidly than earlier.\nManufacturing\nDistrict manufacturing weakened in June, following six months of moderate expansion. A manufacturer of industrial machinery reported that business had slowed during the last month and that major customers were withholding payments. A producer of gas turbines said that economic problems in Europe had reduced his company's exports by fifty percent. A textile producer noted that his company had reduced capacity at a District plant by approximately twenty percent due to decreased demand from domestic customers. Backlogs of orders had gone from four weeks to day-by-day, according to a modular home manufacturer. He added that his company was not in a position to raise prices to keep up with costs. A producer of electrical equipment mentioned that orders had decreased noticeably during the last month, and that several large customers had scaled back their order projections due to recent economic uncertainty. In addition, several aerospace manufacturers said that airlines were making money but were not adding capacity. Our latest manufacturing survey indicated that prices of raw materials and finished goods grew more slowly over the past month.\nPort activity in the District has continued to improve. Several contacts reported that both the number of containers and total tonnage were at or near record levels. One official stated that recent import growth, led by autos and paper products, has been closing the gap with the solid pace of export growth at his port. Imports of auto parts and assembled autos were also helping push some ports to record levels. Port officials noted that imports of machinery had increased, and exports of agricultural equipment were showing unusual strength for this time of year. One port official noted a slight softening in May's trade activity, which was not expected to continue. A contact reported that freight carriers were having limited success sustaining recently announced rate hikes, due to excess shipping capacity in the industry.\nRetail\nSales among District retailers strengthened since our last report, buttressed by big-ticket purchases. Spending picked up for construction-related items, computers, and big-ticket items at home and garden stores. Sales of automobiles also rose, according most dealers we contacted. However, shopper traffic generally waned, according to our most recent survey, and inventory accumulation picked up. Distributors of non-durable goods and building materials merchants reported improved revenues since our last report. Grocery wholesalers also saw revenue gains. The store manager of a large sporting goods establishment noted that sales were up, even with less traffic. He commented that cotton prices had declined, although freight shippers continued to apply gas surcharges. Large areas of the mid-Atlantic lost power for up to a week following strong storms at the end of June; a retailer in the Richmond area reported having to place extra orders for generators as his stock depleted. He noted that bottled water sold out quickly, and sales of battery operated lights and flashlights rose sharply. Retail prices increased at a somewhat faster pace since our last report.\nServices\nNon-retail services providers reported stable to slightly greater revenue gains in recent weeks. In our most recent survey, revenue improvement was strongest among professional, scientific, and technical firms. A financial services broker in central Virginia cited stable demand, but also noted a general nervousness among his clients regarding \"the European situation.\" Healthcare services providers generally reported little change in demand. Following the Supreme Court's healthcare decision, organizations continued to prepare for upcoming changes. A restaurant owner stated that the recent power outage cost him \"some product,\" and reservations dropped because his phones were down for several days. Price increases at services-providing firms slowed in recent weeks.\nFinance\nWe received varied reports on loan demand since our last assessment. Characteristic of many anecdotes, a Maryland banker described his lending activity as \"very slow, very flat,\" with most loans going to refinancing. A loan officer in North Carolina indicated that, while his pipeline was slowing, real estate loan applications for construction projects had improved and even mortgage applications were beginning to \"show some life.\" An official for a large bank noted modest growth in new loans that were mostly from home buyers and small businesses, while consumer installment loans were down. A banker in western Virginia stated that loan demand for capital improvements from local governments was increasing as federal stimulus funds run out. Finally, an official for a midsize commercial bank reported that his market area seemed to be \"moving sideways,\" with borrowers shifting among local banks to get refinancing at lower rates. Most bankers described their lending standards as unchanged, although one lender noted that competitive pressures for commercial loans had caused some easing in standards to capture high-quality loans.\nReal Estate\nResidential real estate activity improved slightly since our last report. A Realtor in the Charlotte area said that homes in the mid-price range were selling quickly in her area and that prices were rising. An agent in the D.C. area indicated that properties in the $800,000-plus range were selling somewhat more quickly, and added that continuing low inventory and low interest rates should contribute to strong sales throughout the summer. Moreover, a Maryland contact noted that trends in the housing sector were generally showing some improvement, with sales and prices rising and active inventory declining. However, a South Carolina Realtor reported that housing in coastal areas was not doing well, which he attributed, in part, to an inventory overhang that was placing downward pressure on prices. A North Carolina housing agent mentioned that the state had proposed a cut in unemployment benefits, which threatened to put more stress on the slowing housing market.\nCommercial construction and real estate activity softened in recent months. While most construction contacts reported little change in private sector activity, a solid majority noted a decline in government demand. A Virginia developer described the industry as \"sliding into a trough\" over the last few months and expected demand to remain weak through the summer and fall. Several contacts said that retailers who were new to the area were most often opting to renovate existing sites rather than to build new stores. A contractor in the D.C. area noted that both large and small chains were expanding and, in some cases, building new stores. Several District Realtors noted that medical office buildings were an exception to the overall weakness in their markets. A West Virginia Realtor noted a sharp increase in interest in commercial buildings, but so far has had little success closing any deals. Contractors reported that the cost of materials had increased, but they were able to pass through most of the increases.\nLabor Markets\nFifth District labor market activity was slightly weaker since our last report. Several contacts at employment agencies characterized demand as somewhat slower, compared to a year ago, with one agent noting that the \"hiring surge\" earlier in the year had slowed. Other employment agents cited strong demand for workers with high-end IT and manufacturing skills. For example, a Hagerstown agent said that, while overall demand for entry-level workers had tapered off, clients were still looking for middle-management, supervisors and highly skilled workers. Similarly, a furniture manufacturer reported difficulty finding skilled employees through temp agencies, which he attributed to potential workers dropping out of the work force or signing up for unemployment. However, a contact for an employment agency in North Carolina noted some improvement in hiring activity, with an increase in temp-to-permanent status. According to our latest survey, wage gains in both the manufacturing and service sectors were a bit more widespread than a month ago.\nTourism\nHoteliers reported solid summer bookings since our last report. A contact on the outer banks of North Carolina said tourist activity remained strong following an early \"jump-start\" to the vacation season. She noted that restaurants in that location were busy, but that tips were a bit lower than usual as families tried to vacation on a smaller budget. Hotel managers said vacationers continued to seek bargains, and corporate and military travel had softened in part because of pending government actions affecting spending decisions. A Virginia hotel contact reported a massive increase in bookings following severe storms at the end of June, which caused local power outages that lasted past the July 4th holiday.\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 18, 2012\nThe Ninth District economy grew moderately since the last report. Increased activity was noted in consumer spending, tourism, professional services, construction, real estate, and agriculture. Growth was also positive, but slightly slower than in the previous reporting period, in the manufacturing, energy, and mining sectors. Some tightening was noted in labor markets, and wage increases were moderate. Price increases were modest, and some decreases were noted.\nConsumer Spending and Tourism\nConsumer spending grew moderately. Same-store sales at a Minnesota-based retailer increased 2 percent in June compared with a year ago. Sales at a North Dakota mall during June were up over 5 percent compared with a year earlier. A number of new retail store and restaurant openings were reported in North Dakota. Recent new car and truck sales were up at dealerships in Montana, according to a representative of an auto dealers association. However, recent same-store sales at a Minnesota-based women's apparel retailer were down 15 percent from a year earlier.\nTourism activity increased from a year ago. Tourism officials in the Upper Peninsula of Michigan predicted that summer activity will surpass last year's levels. In northwestern Wisconsin, resorts were full and sales at other tourism-related businesses posted strong increases. Visits to the Minnesota Zoo for the 12-month period ended in June reached record levels, according to officials. A Minnesota-based travel agency noted that leisure travel was down somewhat, while corporate travel was steady; overall revenue was up. However, restaurant and hotel owners in the Duluth, Minn., area noted a decrease in visits following a major flood in the region.\nConstruction and Real Estate\nCommercial construction activity increased since the last report. The value of new commercial building permits issued in Fargo, N.D., so far in 2012 increased compared with the same period in 2011. Commercial permits in the Sioux Falls, S.D., area were up substantially in value in June from a year earlier. Numerous new commercial building projects were in early stages in the Minneapolis area, including a new headquarters for a large utility and a major expansion at an area hospital. Residential construction increased from a year ago. The value of residential building permits in the Sioux Falls area in June more than doubled from a year earlier. Residential permits increased in value and number in the Minneapolis-St. Paul area in June; the single-family sector saw a surprising rebound. Several large multifamily housing projects were under way in Fargo.\nCommercial real estate markets saw continued strength. A Minneapolis property on which a mixed-use development has been stalled since 2003 recently sold to a new investor. Prices for commercial property in the oil boom areas of the District continued to increase. Residential real estate market activity increased as well. Home sales in May were up 27 percent from the same period a year ago in the Minneapolis-St. Paul area; the inventory of homes for sale was down 31 percent, and the median sales price rose by 11 percent. In the Sioux Falls area, May home sales were up 32 percent, inventory was down, and the median sales price rose nearly 3 percent relative to a year earlier.\nServices\nActivity at professional business services firms grew somewhat since the last report. According to a Minneapolis Fed ad hoc survey, District professional business services firms noted gains in revenue and profits over the past three months, while the amount of space occupied held relatively steady. Respondents were mildly optimistic about the upcoming three months regarding revenue and profits. Some contacts noted that competition in the sector has lowered prices and driven down margins, yet projects were more complex and customer expectations were higher than five to 10 years ago.\nManufacturing\nGrowth in the District manufacturing sector moderated slightly from the last report. A June survey of purchasing managers by Creighton University (Omaha, Neb.) found that manufacturing activity expanded in Minnesota and the Dakotas, but at a slightly slower pace than in recent months. A medical equipment maker near Minneapolis announced an expansion into a previously idle facility. A pipe producer announced plans to build a new plant in South Dakota. Plans moved ahead for a potential $1 billion fertilizer plant in North Dakota that would make use of natural gas from the state's oil patch.\nEnergy and mining\nActivity in the energy and mining sectors slowed slightly. Oil and gas exploration activity decreased in North Dakota and Montana since the last report, but oil production was at record levels. Reports surfaced of ethanol producers idling plants in response to sharp increases in corn prices in late June and early July, along with declining gasoline prices. District coal-mining operations also saw reductions in demand as electricity generation shifted toward natural gas. A mining company suspended its involvement in a joint project to develop a copper, zinc, and gold mine in Michigan's Upper Peninsula. However, hard rock mines in Montana and iron ore producers in northern Minnesota remained busy.\nAgriculture\nDistrict farmers mostly continued to benefit from favorable weather conditions. Drought that was threatening corn and soybean production throughout the Midwest has not had much effect on Minnesota and North Dakota, where most of those crops were rated in good or excellent condition. However, crop quality was somewhat weaker in Wisconsin and in South Dakota, where drought conditions were more prevalent. Prices received by farmers in June--prior to drought damage in other parts of the Midwest--increased from a year earlier for soybeans, hay, dry beans, poultry, and cattle; prices decreased for corn, wheat, hogs, and dairy products.\nEmployment, Wages, and Prices\nSome tightening in labor markets was noted since the last report. Across the District, some health care organizations indicated they were planning to hire more workers, a number of retailers noted difficulty finding sales associates to fill open positions, and manufacturers continued to struggle to find skilled welders. According to the aforementioned ad hoc survey of professional business services firms, 28 percent expect to increase hiring over the next three months, while 8 percent expect decreases in staff levels. However, in Minnesota an electronics retailer will lay off an unspecified number of store and technical support workers in the state, a paper company laid off about 260 workers following an explosion at the plant, and a cable company laid off almost 70 salespeople.\nWage increases were moderate. Some contacts noted that compensation increases were now similar to prerecession levels as wages and benefits generally held steady during the past few years. Unionized grocery workers in Montana reached labor agreements that include about a 2.5 percent pay increase and added contributions to health and pension plans. Meanwhile, a nearly year-long lockout continued at a sugar beet processing plant after union workers recently voted to reject the management's offer for a third time. Wages for truck drivers posted larger increases.\nOverall price increases were modest, and some decreases were noted. Early July Minnesota gasoline prices decreased more than 10 cents per gallon since the end of May. Metals prices, as well as several other input costs, remained relatively level. One exception was a substantial increase in the price of tires for mining machinery.\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 18, 2012\nEconomic activity in the First District continues to expand at a moderate pace. Residential real estate sales increased relative to last year and commercial construction activity continues to gain momentum.. Sales in the retail sector remain about flat, while the manufacturing and business services sectors continue slow growth. Contacts report that their costs and prices are increasing very moderately, if at all. Firms are generally not laying off workers, but most are also not engaged in substantial hiring. Many contacts cite uncertainty regarding future macroeconomic conditions as impinging on their outlook, and some contacts cite this as a reason for postponing investment or other decisions.\nRetail\nFirst District retail contacts report that sales range from slightly below to slightly above year-ago levels. Consumer spending continues to be strong for adult clothing and shoes, but spending on furniture and electronics has recently slowed relative to the pace earlier in the year.\nAll of the contacts report that prices seem to be holding steady, and they do not anticipate much inflation or price volatility in the near future. The contacts continue to expect low positive single digit percentage sales increases for 2012, although the final results will depend on holiday shopping. Many contacts feel that there is a lot of macroeconomic uncertainty and expect aggregate growth to be sluggish through the rest of 2012 and into early 2013.\nManufacturing and Related Services\nAccording to our contacts, the manufacturing sector in the First District continues to grow. However, virtually all of the contacts express some concern about the outlook.\nOf the 8 firms contacted in this round, 2 report an actual fall in sales relative to year-ago levels, 2 report an increase in growth and the remaining four report slower growth. The firm that reports the largest increase in growth, a manufacturer of fitness equipment, said that sales grew 20 percent in the first quarter overall but there was a sharp slowdown in March and April followed by a partial recovery in May and June. A manufacturer of electrical equipment said that one area of notable growth is residential real estate, in which they recorded multiple months of double digit growth. Of course, sales in that business line are 65 percent off their peak during the housing boom.\nNone of the contacts report any major revisions to their hiring plans. Five of the contacts said they are either not hiring or not hiring much; one said they are hiring and another said it would all depend on the evolution of sales growth. A producer of semiconductor manufacturing equipment reports that it had limited merit pay increases to very high performing employees.\nSix of our contacts report no revisions to their capital plans and two report that they plan to hold off of previously planned increases. A fitness equipment manufacturer reports that their original plan had been to increase investment by 5 percent, but now they plan to keep it at last year's levels. A contact at an electrical equipment manufacturer notes that they plan to hold off on capital expenditures despite their strong balance sheet and considerable liquidity.\nThe key word for the overall outlook is uncertainty. In general, our contacts use phrases such as \"sitting on the sidelines\" and \"waiting for the uncertainty to play out.\" Not everyone is completely downbeat. One contact, from the toy industry, reports a \"better feeling\" than a year ago. There is uncertainty about domestic policy, including the \"fiscal cliff\" and health care, as well as uncertainty about macroeconomic performance in Europe and China\nCommercial Real Estate\nContacts in the First District report that conditions continue to slowly improve in the commercial property market. All contacts, especially those in Boston, note that financing conditions are very favorable for high quality projects. The office market in New England remains flat. Contacts in Boston report difficulty attracting tenants to lower-quality office space and expect vacancy rates to remain steady in the coming months. Contacts believe that the office market is unlikely to improve until the national economy begins to experience robust growth. Construction activity throughout the First District continues to gather momentum, but is mostly limited to the multifamily housing, medical, and higher education sectors. According to contacts, the retail sector is in a holding pattern throughout the First District. Overall, contacts believe that conditions in the New England commercial real estate market are somewhat improved in the last year and, barring a macroeconomic disruption, expect this tepid improvement to continue for the rest of the year.\nResidential Real Estate\nHome and condo sales in the First District showed significant year-over-year increases in May, continuing the trend of the last several months. Contacts attribute the gains to low interest rates, affordable prices, and pent-up demand. A contact from the Greater Boston area adds that improving economic conditions and raising rents in the area have also contributed to sales activity. The consecutive months of growth have improved confidence in the market, but contacts note a recent decrease in momentum compared to previous months. According to most contacts, the pace of market activity has declined slightly, which may be revealed by sales figures in the coming months. Some contacts note that an unseasonably warm winter and spring provided an early boost to sales in the first half of the year, which may account for some softening in activity during the past month. Meanwhile, price changes are mixed across the region. Maine experienced an increase of approximately 7 percent relative to last year while the median sale price in Rhode Island slipped at least 8 percent. Other states in the region experienced relatively modest changes in price levels from a year ago. Some contacts express concern over appraisal practices, claiming banks appraisers are underestimating home values. Inventory levels declined throughout much of the region, particularly in the Greater Boston area.\nAs the number of months of consecutive growth continues, contacts have become more optimistic about the direction of the market. Nonetheless, contacts remain cautious about recovery and believe it could be easily derailed by deterioration in economic conditions. Contacts predict continued year-over-year growth in sales for the next several months, but possibly at a slower rate than in previous months while prices are expected to stabilize.\nSelected Business Services\nConsulting and advertising contacts in the First District report a steady but generally positive second quarter of 2012. No firm had a bad quarter, but few of the contacts are particularly excited about their results. Contacts report that potential clients are unwilling to commit to projects and instead choose to hold their cash and wait for clearer signals regarding the direction of the economy and the resolution of political and policy questions. Some contacts report a strong second quarter, generally due to factors specific to the industries they primarily serve.\nContacts report little to no inflationary pressure and were generally not concerned about their rate of cost growth (primarily salaries). Firms report cost growth ranging from zero to \"in line with inflation,\" and only a few firms report any change in the prices they charge. Of those that did increase their rates, increases range from 2 to 4 percent relative to last year.\nEmployment growth is weak as many firms report wanting to wait for more demand before hiring, although no firm reports downsizing. Half of all firms report no change in payrolls, while the other half report increases ranging from 2 to 5 percent year-over-year. Firms that report hiring during the second quarter generally expect to continue hiring at a modest pace, while those that did not hire in the second quarter plan to leave employment levels unchanged for the remainder of 2012.\nMost contacts are cautiously optimistic about the rest of 2012, and more bullish about 2013. An overarching theme of the contacts' comments is uncertainty. Contacts are primarily concerned with uncertainty regarding general macroeconomic conditions, the European debt crisis, and politics and the upcoming election.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

/beige-book-reports/2012/2012-07-kc

"Beige Book Report: Kansas City\nJuly 18, 2012\nThe Tenth District economy expanded moderately in June. Consumer spending was stronger than expected due to stronger automobile sales and a solid start to summer tourism. Commercial and residential real estate prices rose with stronger sales, and District contacts were optimistic regarding future sales and construction activity. Led by mortgage loan activity, some District banks reported improvements in loan demand and quality. District manufacturing activity edged up and additional gains in production, orders, and capital spending were expected in the coming months. Expanding drought conditions hindered crop development and drove crop prices higher. District oil and natural gas drilling activity held at peak levels but was expected to ease with lower global demand. The price of raw materials for manufacturing rose at a slower pace compared to previous surveys and finished goods prices generally held steady. Wage pressures were subdued except for positions in transportation, high-tech and energy industries.\nConsumer Spending\nConsumer spending improved with stronger than expected sales in June and was expected to strengthen further in the coming months. District retailers reported increased sales, particularly for seasonal items, mid-priced appliances, apparel, and fashion accessories. Several high-end retailers, however, commented that economic uncertainty had slowed demand for luxury items. Auto sales climbed sharply and were expected to remain solid for the next few months with more dealers offering sales incentives and discounts. Fuel-efficient cars sold well, while demand for large, expensive cars and trucks remained weak. Restaurant sales increased more than expected as both the number of diners and average check amounts edged up in June. Tourism activity ramped up with the start of the summer vacation season, though wildfires in Colorado hurt traffic in the Rocky Mountain region. District hotel owners reported a sharp rise in occupancy at higher average room rates and expected bookings to remain strong during the next three months.\nManufacturing and Other Business Activity\nManufacturing and transportation activity edged up in June and sales at high-tech service firms rose modestly. Following a moderate rebound in May, District factory activity edged higher in June and remained well above year-ago levels, with stronger production at food processing and aircraft manufacturers. The volume of new orders fell in June but was expected to rebound and provide a moderate boost to production during the next six months. A rise in the volume of shipments reduced order backlogs and trimmed finished goods inventories. Capital spending held steady, but fewer plant managers were hiring as the average work week declined. Most manufacturers indicated that the economic situation in Europe indirectly affected business activity by increasing the uncertainty surrounding global economic conditions and future demand. After easing in the last survey period, transportation activity picked up, particularly in the trucking industry. A modest rise in sales at high-tech firms fell short of expectations but several companies anticipated stronger sales in the months ahead.\nReal Estate and Construction\nStronger residential home sales reduced home inventories and commercial construction activity grew in June.A sharp increase in home sales reduced home inventories, particularly for low- and mid-priced houses. Stronger sales supported a moderate increase in home prices and real estate contacts expected additional sales and price gains during the next three months. Residential mortgage lenders saw an upswing in loan applications for home purchases while home loan refinancing activity was stable. Sales at construction supply firms remained solid and some building materials were in short supply. Builders, however, reported a lull in new home starts following the spring construction rush, but building activity was expected to pick up during the next three months. After climbing during the last survey period, new commercial construction edged up and was expected to rise further with more projects in the planning stages. Commercial real estate prices firmed with stronger sales activity, and real estate contacts noted owners were making fewer concessions to facilitate deals. Commercial real estate rents rose as vacancy rates fell further. Developers reported little change in access to credit.\nBanking\nIn the recent survey period, some District bankers reported modest improvements in loan demand and loan quality with little change in deposit levels. In general, loan demand rose moderately, led by gains in residential mortgage loans and slight upticks in both commercial real estate and agricultural loan demand. Bankers reported steady commercial and industrial loan activity at slightly lower interest rates and a few bankers reported weaker consumer installment loan demand. Some bankers noted that loan quality improved moderately over the past month with addition quality improvements expected over the next six months. Credit standards remained largely unchanged in all major loan categories and bank deposits held steady.\nAgriculture\nAgricultural growing conditions deteriorated substantially since the last survey period as drought spread across the District. Extremely hot, dry weather hindered crop development and more than half of the District's corn and soybean crops were rated in fair or worse condition. Crop prices rose sharply as intensifying drought and few prospects of precipitation cut corn and soybean yield forecasts. The winter wheat harvest was nearly complete with better than expected yields in some regions. To preserve drought-stressed pastures, some cattle ranchers were considering selling feeder calves early, especially with high feeder cattle prices. Losses mounted for feedlot operators as feed costs soared. Rising export demand enticed some hog producers to expand production. Strong farm and nonfarm investor demand drove farmland prices higher.\nEnergy\nDistrict energy activity held at historically high levels in June but was expected to ease in the coming months. The number of active oil and natural gas rigs in the District held steady with a rise in active oil rigs offsetting declines in active natural gas rigs. Some business contacts expected drilling activity to slow with current supplies adequate to satisfy summer demand, especially if economic uncertainty in Europe trims global demand and keeps oil prices below spring highs. In contrast, a few District contacts expected a slight uptick in natural gas prices as hot weather boosted demand for electric power generated by natural gas. Wyoming's coal production fell further as some electricity production shifted from coal to natural gas. District ethanol production slowed as rising corn prices and lower gasoline prices cut profits at ethanol firms.\nWages and Prices\nWage pressures remained subdued during the survey period, raw materials prices edged up, and finished goods prices generally held steady. Many firms were reluctant to increase wages or hire new staff until economic uncertainty diminishes. Some businesses, however, were offering higher salaries to recruit workers with specialized skills such as engineers, software developers, mechanics, and commercial truck drivers. Some transportation companies charged less for freight hauling in light of reduced fuel costs. The cost of raw materials for manufacturing rose at a slower pace compared to previous survey periods and most finished goods prices remained stable. Retailers held selling prices steady and did not anticipate raising prices during the next three months. Restaurant owners, however, planned to increase menu prices due to high food costs. High occupancy rates prompted hotel operators to raise average room rates. Builders and construction supply companies noted rising prices for some construction materials, particularly drywall and asphalt shingles.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

/beige-book-reports/2012/2012-07-ch

"Beige Book Report: Chicago\nJuly 18, 2012\nEconomic activity in the Seventh District continued to expand at a moderate pace in June and early July, although once again the pace of growth slowed from the previous reporting period. Growth in consumer spending further moderated, while business spending increased at a steady pace. Manufacturing production increased at a slower pace, and construction activity continued to improve. Credit conditions improved slightly on balance. Commodity prices moved lower, and wage increases remained moderate. The prospects for the District's corn and soybean crops deteriorated, and crop prices moved higher.\nConsumer Spending\nThe pace of growth in consumer spending further moderated in June and early July. Retailers cited lower consumer confidence, a weaker customer response to promotions, and extreme summer heat as the main contributors to the lower sales pace. However, some exceptions were noted. Demand for luxury goods remained stronger by comparison, and sales of clothing, furniture, and home furnishings improved. In addition, the hot weather sparked sales of swimming pools, fans, and air conditioning units. Auto sales also improved, driven in large part by fleet sales and an increase in manufacturers' incentives on new fuel efficient vehicles. Inventory levels were little changed, but some auto dealers indicated that they were adjusting their inventory mix to include more fuel efficient vehicles in order to meet increased demand.\nBusiness Spending\nBusiness spending continued to increase at a steady pace in June and early July. Inventories were generally reported to be at comfortable levels, and most contacts indicated that capital expenditures were proceeding as planned. Auto dealers reported facility upgrades and a number of manufacturers indicated they were purchasing new equipment. That said, many contacts had become more cautious about future spending decisions, pointing to the heightened uncertainty surrounding the federal fiscal environment and the upcoming November elections. Labor market conditions were little changed on balance. Part-time hiring increased on par with seasonal norms in retail trade, although permanent workforces decreased slightly. Manufacturers reported only moderate gains in employment, but several did note increasing the hours of their existing workforce. A staffing firm reported weaker demand from the manufacturing, transportation, and business services industries but an increase in the growth rate of billable hours in the construction and financial services industries.\nConstruction and Real Estate\nConstruction continued to increase in June and early July. Multi-family residential construction remained an area of strength, particularly apartments, but single-family construction also increased. Residential real estate conditions continued to improve, with home prices and rents both edging up. A contact noted a rise in short sales as a side effect of lenders increasingly looking to avoid the still drawn out foreclosure process. Demand for nonresidential construction also rose. Contacts reported several new hotel and office projects as well as a pick-up in warehousing, industrial, and infrastructure building activity. Commercial real estate conditions were little changed overall. Vacancy rates remained elevated for retail and office properties. Contacts expected that it would take a while for the pace of absorption to pick up significantly despite an increase in capital available for the purchase of commercial properties.\nManufacturing\nManufacturing production increased at a slower pace in June and early July. The auto sector remained a source of strength. Several auto suppliers noted an increase in research and development activity, as automakers were shifting responsibility for new product design and development away from their in-house operations. Outside of the auto industry, conditions were mixed. Capacity utilization in the steel industry edged lower; and while metals manufacturers indicated that orders continued to increase, they also noted that growth had softened some from the robust pace earlier in the year. Exports to Canada and Mexico continued to increase, but exporters noted a decline in demand from Europe and China. Demand for heavy equipment was steady, but a few contacts noted that it may soon be slowing. While freight traffic continued to be strong, the demand for heavy trucks was expected to be flat into next year in advance of the next round of changes in emissions standards. The lower price of natural gas was noted to have slowed activity in the industry, as natural gas demand lagged available supply. Contacts indicated that orders from the defense industry further weakened in anticipation of additional defense spending cuts in the coming fiscal year.\nBanking and Finance\nCredit conditions improved slightly on balance from the previous reporting period. Demand for longer term financing continued to increase. Credit spreads edged up, but market interest rates declined so that net corporate funding costs were essentially flat. There was steady growth in refinancing and lending for capital replacement, but limited loan demand for other purposes. Middle market firms were the primary source of loan growth. Larger firms were said to have been more significantly impacted by the weakening European economy and have scaled back their borrowing accordingly. Banking contacts also noted that uncertainty over the effects of potential fiscal policy actions on both demand and costs was reducing their customers' demand for credit. In contrast, consumer loan demand increased moderately, particularly for auto loans and mortgage refinancing.\nPrices and Costs\nCost pressures decreased in June and early July. Energy prices were noticeably lower. Other commodity prices also decreased, with contacts pointing to steel and lumber as examples. Lead times for some specialty metals remained extended, however. Wholesale price pressures eased, particularly for clothing. Wage pressures continued to be moderate. Manufacturing contacts reiterated having difficulty filling open positions for high-skill trades.\nAgriculture\nExtreme heat and drought conditions spread across most of the District, stressing both crops and livestock. Forecasts made in June called for possibly record crops of corn and soybeans; now it appears the District's harvest will likely be below average, with little prospect for improvement and plenty of downside risk. The corn crop is in the most danger of further damage, as plants entered a critical stage of development with insufficient moisture. Corn and soybean prices moved sharply higher, and wheat prices also rose. Hog prices were higher, cattle prices were little changed, and milk prices moved lower. With higher costs and the outlook for a decline in revenue, insurance coverage may provide an important safeguard for many farmers this year. Insurance coverage is widespread for corn and soybeans, but is less prevalent for some other products. Furthermore, several years of higher-than-usual farm income have left many operations in a better position to absorb losses this year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

/beige-book-reports/2012/2012-07-sl

"Beige Book Report: St Louis\nJuly 18, 2012\nThe economy of the Eighth District has continued to expand at a modest pace since the previous survey. Residential real estate market conditions have continued to improve moderately. Similarly, commercial real estate market conditions have also improved. Recent reports of planned activity from manufacturing firms have been positive. However, reports from services contacts have been mixed. Overall lending at a sample of small and mid-sized District banks increased slightly from mid-March to mid-June.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our previous report. Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to decrease operations and lay off workers. Firms in auto, appliance, wall coverings, stone wool insulation, food, construction machinery, factory components, and packaging and label manufacturing reported plans to hire new workers, expand operations, and build new plants. In contrast, a window coverings manufacturing firm reported plans to lay off workers.\nReports of planned activity in the District's service sector have been mixed since our previous report. Firms in medical transportation services, waste management services, and business support services, as well as a nonprofit organization, announced plans to expand operations and hire new workers. In contrast, contacts in newspaper publishing, telecommunications services, educational services, and a firm in merchant transaction services announced plans to lay off workers. General retailers have reported stronger sales recently, while auto dealers have reported year-over-year increases in sales, especially in certain foreign and luxury brands.\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, May 2012 year-to-date home sales were up 15 percent in Louisville, 7 percent in Little Rock, 21 percent in Memphis, and 19 percent in St. Louis. Residential construction increased in the majority of the District over the same period. May 2012 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2011. Permits increased 45 percent in Louisville, 26 percent in Little Rock, 41 percent in Memphis, and 25 percent in St. Louis.\nCommercial and industrial real estate conditions continued to improve moderately throughout most of the District. A contact in northwest Arkansas reported strong commercial and industrial real estate activity, while a contact noted weak demand for office space in the Fayetteville area. A contact in Louisville reported strong leasing activity for premium-quality office space in Louisville's central business district, while office vacancy rates were mixed in other submarkets in Louisville. A contact reported decreases in office and industrial vacancy rates in downtown St. Louis. A contact in northeast Arkansas reported strong office leasing activity in the Jonesboro area. Commercial and industrial construction activity also continued to improve moderately throughout most of the District. Contacts in St. Louis reported some new commercial and large industrial construction projects. Contacts in Memphis reported that a few large commercial and industrial construction projects are under way in Shelby County.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks increased 0.7 percent from mid-March to mid-June. Real estate lending, which accounts for 73.3 percent of total loans, increased 0.6 percent. Commercial and industrial loans, accounting for 15.8 percent of total loans, decreased 2.0 percent. Loans to individuals, accounting for 4.7 percent of total loans, increased 0.3 percent. All other loans, accounting for 6.2 percent of total loans, increased 9.7 percent. During this period, total deposits at these banks decreased 0.6 percent.\nAgriculture and Natural Resources\nAs of the end of June, the majority of cotton, corn, soybean, sorghum, and rice crop conditions were rated as fair or better in all District states with the exception of sorghum crop conditions in Illinois. Winter wheat harvests were either complete or close to completion, and more than 88 percent of the crop conditions were rated as fair or better. However, the fraction of pasture and range in good condition or better decreased in all District states since the previous report. The District's year-to-date coal production for the end of June was 4.8 percent higher compared with the same period last year. However, the District's coal production for June 2012 was 5 percent lower than in June 2011.\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 18, 2012\nEconomic activity in the Fourth District continued to expand since our last report, but at a slower pace. On balance, manufacturers reported a slight rise in production. New-home construction ticked down, while nonresidential builders saw stronger inquiries. Retailers and auto dealers noted little change in sales during May. Wet shale gas drilling and production increased, though the demand for coal has slowed. Freight transport volume moved lower. And there was some easing in the demand for business credit.\nLittle hiring was reported across industry sectors. Staffing-firm representatives indicated that the largest numbers of job openings were found in healthcare and information technology. Wage pressures are contained. Input prices were stable, apart from the volatility in residential building materials.\nManufacturing\nOn balance, District factories reported a slight increase in new orders and production during the past six weeks, although we continued to hear reports about a weakening in orders from European customers. Almost all of our respondents said that output was above year-ago levels. The outlook by manufacturers was mixed. Respondents who sell products to aerospace, auto, and energy companies expect moderate growth in the near term. Other contacts are less certain about growth prospects than they had been a few months earlier. Shipping volume by steel producers and service centers was flat or down slightly, with demand being driven mainly by the transportation and energy sectors. Because of uncertainty about market conditions in the upcoming months, many steel producers are in the process of lowering their inventories. District auto production showed a moderate pick-up during May on a month-over-month basis, while rising substantially from year-ago levels. Increased production year-over-year was attributed mainly to the abatement of supply chain issues.\nCapacity utilization was at normal levels for most producers after adjusting for seasonal factors. Capital budgets remain on track, with several contacts reporting that they intend to ramp up spending during the second half of the year. Three manufacturers said that they are currently planning capacity expansions. Raw material prices were stable or declined slightly. Most steel makers lowered their prices; otherwise, producer prices held steady. Little change in payrolls was noted, although attracting skilled workers remains difficult. Wage pressures are contained.\nConstruction\u00c2\nSingle-family home construction slowed a bit across the District relative to the March/April time frame, although sales were higher compared to year-ago levels. The outlook by homebuilders is less favorable than in our last report. They believe that the domestic political climate and a lowering in consumer sentiment may hurt sales. Contracts were in all price-point categories, except for the high-end. Buyers are looking to downsize and are noticeably more cost conscious. A few reports indicated an uptick in new-home prices within the Fourth District, though margins are still tight. Volatility in building material prices, which began late in the first quarter, has persisted.\nNonresidential contractors described current business conditions as good and much better than a year ago. Inquiries were strong, which should help bolster near-term backlogs. Projects were broad based, driven by education, healthcare, manufacturing, and multi-family housing. Financing has become more readily available, except for speculative projects. The outlook is fairly positive, but builders are concerned about the upcoming elections and events in Europe and the impact they could have going into 2013. We heard reports of a slight rise in building material prices. Even with the pickup in volume, residential and nonresidential builders have been reluctant to hire additional workers. One builder commented that he is hesitant to add workers until he has a backlog of two-to-three years. Residential and commercial subcontractors have kept their billing rates steady.\nConsumer Spending\nRetailers reported little change in sales during May on a month-over-month basis, but sales were higher relative to year-ago levels. Increased revenues were seen across retail categories. Two of our contacts noted that the warm winter weather did not negatively impact consumer spending during the second quarter. Other respondents reported that the rate of growth in purchases of luxury goods has decelerated during the past couple of months. Retailers anticipate that revenues during the third quarter will be above prior-year levels, mainly in the single digits. Vendor prices were fairly stable. Increases were attributed to higher costs for off-shore labor. Little change was noted in store prices. Inventories continued to rise modestly, but they were described as manageable. Capital spending for the year remains on target. No hiring is anticipated, except at new stores, and wage pressures are contained.\nAuto dealers described new-vehicle purchases as steady during the past six weeks, when compared to earlier in the second quarter. Any slowdowns were attributed to seasonal factors or a poor inventory mix, although most dealers are satisfied with their inventory positions. Volume was higher on a year-over-year basis. Dealers reported that sales of fuel-efficient vehicles and trucks are doing particularly well. Leasing continued to grow in popularity. The outlook by dealers for the remainder of 2012 is cautiously optimistic, with many expecting that total sales for the year will equal or be slightly above 2011 levels. Purchases of used vehicles were fairly steady on a year-over-year basis, although some dealers were unhappy with the quality of their inventory. Hiring for sales and service positions was at a very slow pace. Difficulty in finding qualified service technicians has resulted in some wage pressure.\nBanking\nBankers reported some easing in demand for business credit. Interest rates remain competitive, especially for refinancings. Loan requests were broad based, with the primary drivers being healthcare, multifamily construction, and shale-gas-related businesses. Little change in consumer credit was noted. Products in highest demand were auto loans (direct and indirect) and home equity lines of credit. Consumer credit pricing trended down slightly. In the residential mortgage market, demand was described as stable to very strong. A high percentage of applicants were looking to refinance, although a few contacts said that they are beginning to see a shift in applications from refinancing to new purchase. Two bankers reported some moderate loosening of auto lending guidelines, otherwise no changes were made to loan application standards. Delinquencies were steady or declined and a few of our respondents cited a drop in credit card delinquencies. Core deposits rose; consumers continued to transition from time-deposit accounts to transaction accounts. One banker reported a moderate reduction in the size of his workforce, while another said that his bank is considering a staff reduction due to the low interest rate environment.\nEnergy\nConventional oil and natural gas production was stable, with little change expected in the upcoming weeks. Well-head prices for natural gas remain at very low levels, while crude prices dropped slightly. Permitting in the Utica shale region of Ohio expanded. The number of Utica permits issued by the Ohio Department of Natural Resources during the first half of 2012 equaled the number issued for all of 2011. Drilling in the Utica shale has picked up, mainly by large, out-of-state companies. Coal production this year is expected to fall below 2011 levels due primarily to reduced demand from electric utilities. Spot prices for metallurgical and steam coals declined further. Production equipment and materials prices were flat, and capital outlays were at projected levels. Significant layoffs were announced by one coal producer due to the idling of some of its mining operations. Otherwise, little change was seen in energy payrolls.\nTransportation\nFreight transport volume was flat or moved slightly lower during May on a month-over-month basis. Sectors driving demand included energy and transportation along with seasonal products. The outlook for the remainder of 2012 remains positive, but most respondents do not expect that growth will be as strong as they had predicted earlier in the year. Costs associated with truck maintenance and diesel fuel prices continued to stabilize. Capital spending for 2012 remains on plan. Outlays are allocated for the replacement of aging units and adding capacity. However, some slowing in spending might occur due to concerns about economic growth and industry consolidation. One contact noted that he is finalizing plans for a terminal expansion in the eastern part of the District. Companies are hiring for replacement and capacity expansion. Wage pressure exists due to a tightening of the driver pool.\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 18, 2012\nThe Eleventh District economy grew at a moderate pace over the past six weeks. Overall manufacturing activity continued to expand. Demand for business services remained solid, and transportation services activity increased. Respondents said retail sales grew at a somewhat slower pace than the last report, and automobile sales held steady. The housing sector continued to improve, and commercial real estate leasing activity held steady. Financial firms noted mixed loan demand. Overall energy activity remained strong, although gas-directed drilling continued to decline. Agricultural conditions deteriorated slightly. Employment levels were steady to slightly higher, and prices were mostly unchanged. Wage pressures remained minimal. Outlooks across industries were generally positive, but some respondents expressed concern about European debt issues, U.S. political uncertainty, and healthcare costs.\nPrices\nMost responding firms said prices were unchanged from the last reporting period. However, accounting firms noted a modest rise in rates, airlines reported higher fares, and some construction-related manufacturers said they were able to raise selling prices as a result of improved demand. Overall, input costs were flat to down, with reports of lower prices for cotton, scrap metal, and steel. The recent decline in fuel prices lowered costs for airlines and freight transportation firms.\nThe price of WTI ranged from around $83 per barrel in early June to near $85 in early July. Natural gas prices remained depressed but rose 50 cents to around $2.85 per thousand cubic feet over the\u00c2 same period. The price of gasoline declined about 40 cents over the reporting period. Prices for several petrochemical products fell sharply due in part to softening global demand.\nLabor Market\nMost responding firms said employment levels were flat to up slightly. Staffing firms reported demand remained steady at very high levels and noted rising demand for financial analysts, steel and metal fabricators, and construction workers. Reports of hiring came from some retailers, automobile dealers, and primary metals, lumber, paper, and food manufacturers. Wage pressures remained minimal, although legal contacts said raises and bonuses had improved, and rising wages were noted for manufacturing workers with specialized skills such as machine operators.\nManufacturing\nOverall demand for construction-related products held steady since the last report, and respondents' outlooks have become slightly more guarded. Producers of stone, clay, and glass reported improved demand and higher capacity utilization rates compared to earlier in the year. Contacts in the lumber industry noted a pickup in demand, while primary metals manufacturers reported slight declines. Producers of fabricated metals reported steady sales activity, but said they were concerned about the continuity of some private projects.\nConditions weakened in the high-tech manufacturing sector since the last report. Most respondents said growth in orders slowed or remained flat largely due to a weakening global economy and more uncertainty in outlooks. Contacts said that inventories were close to desired levels and that employment levels were stable. High-tech manufacturers expect growth to remain flat or weaken slightly--a change from earlier in the year when most contacts expected a pickup in the second half.\nDemand for paper products held steady, and contacts said they expect modest sales growth for the year. Food producers said sales activity increased over the past six weeks and orders were up significantly from year-ago levels. One food manufacturer reported adding several new workers in part due to strong demand. Automobile and aviation equipment manufacturers said demand held steady since the last report. Expectations are for seasonal pickup in automobile sales over the summer, but aviation manufacturers expect sales to remain flat.\nPetrochemicals producers reported a sharp decline in prices due to softening global demand, lower feedstock prices, and capacity coming back online following unplanned outages earlier in the year. Still, margins have remained relatively healthy for ethylene and polyethylene producers. Domestic demand for PVC, tied to residential construction, strengthened, and exports continued to be a major source of sales. Contacts noted inventories of gasoline and distillates were below normal, and Gulf Coast refineries were operating at rates above 90 percent in order to catch up.\nRetail Sales\nRetail sales increased but the pace of growth decelerated slightly compared to earlier in the year. Sales of apparel, bedding, household items, and small furniture fared well. Discount retailers said sales of food and sundries continued to perform the strongest. Overall sales growth in the Eleventh District continued to outpace the nation, on average, according to three large retailers. Outlooks are cautiously optimistic and contacts say it appears as if the environment has improved slightly for the consumer.\nAutomobile sales continued to grow at a steady pace. Inventories were at desired levels and prices remained stable. Auto dealers expect sales growth to continue at the same pace through year end.\nServices\nDemand for staffing services remained steady at very high levels, and contacts noted an increase in orders for financial analysts, construction workers, and steel and metal fabricators. Outlooks were mostly positive but slightly more cautious than the last report. Accounting firms noted a seasonal slowdown in demand. Demand for energy and audit-related services increased modestly while advisory, transactional, and tax services activity softened slightly. Legal firms reported a pickup in demand, with continued strength in real estate, intellectual property, energy, and tax-related services.\nReports from transportation service firms were positive. Railroads noted a slight increase in shipments, with particularly strong growth in petroleum products, motor vehicles and equipment, crushed stone, and metals. Air cargo, container, and small parcel shipments increased modestly during the reporting period. Airlines reported stable passenger demand over the past six weeks. Domestic demand remained strong buoyed by both corporate and leisure travel. Demand for international travel was strongest for travel to South America and Mexico. Airlines expect passenger demand to soften in the fall and ramp back up over the holiday season.\nConstruction and Real Estate\nContacts in the single-family housing industry said demand picked up over the past six weeks. Respondents noted that demand was outstripping supply in some areas, leading to falling inventories. Construction activity was picking up as result. Realtors and builders remained cautiously optimistic. Apartment market respondents continued to report solid demand. While rental rates continued to rise, the pace slowed slightly. Apartment construction activity is expected to pick up in coming months.\nCommercial real estate leasing activity remained steady since the last report. Energy and technology sectors continue to drive demand for space, particularly in Houston. Contacts were optimistic but remained concerned about the pace of U.S. economic activity.\nFinancial Services\nOverall, financial firms reported mixed loan demand. National banks said middle-market lending declined, while auto and energy lending activity remained positive. Regional and community banks noted improvement in C&I and commercial real estate lending. Consumer lending appeared to be steady, with strong mortgage demand and a healthy backlog of loans in the pipeline. Loan pricing remained competitive at very low rates. The quality of outstanding loans continued to improve slowly and deposit growth was mixed. Outlooks are slightly more pessimistic than the last report in part due to European debt issues and regulatory and political uncertainty.\nEnergy\nRespondents at energy-related firms said activity remained strong, and the District rig count grew modestly over the past six weeks. The rapid shift from dry-gas drilling to oil-directed drilling has not reduced the overall pace of activity, and business remains strong with long lead times and growing backlogs. Activity in the Gulf of Mexico increased further, and the success of a recent auction of offshore acreage suggests continued interest in the region.\nAgriculture\nAgricultural conditions deteriorated slightly due to hot and dry weather. Planting neared completion and crops were mostly in fair to good shape, with conditions much better than a year ago. Since the last report, livestock producers have seen pastures dry out, cattle prices fall, and feed costs increase. Crop prices generally increased over the past six weeks, particularly for corn, although cotton prices fell sharply.\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 6, 2012\nEconomic activity in the First District continues to expand, with contacts in most sectors citing steady growth. Commercial real estate markets show slight improvement and residential real estate contacts are finally mentioning recovery, albeit fragile. Respondents in this round rarely mention prices or pricing. Except for software and IT services where growth continues to be relatively strong, few firms are doing substantial hiring. The outlook is generally for more of the same, although a couple of manufacturers mention making contingency plans for a potential slowdown.\nRetail\nFirst District retail contacts continue to report that business is good, consumer sentiment seems to be improving, and fears have moderated about higher gasoline prices hurting spending in other categories. Recent year-over-year sales changes range from near zero to gains of 2 percent to 5 percent. One firm, buoyed by recent performance, has increased its overall 2012 sales forecast from 2.5 percent to 4.5 percent. Consumer spending is particularly strong on adult clothing, household goods, and items related to home improvement and maintenance. While respondents have generally positive expectations for their businesses in 2012, some express concern that U.S. economic growth will be hampered by domestic political tensions and potential negative spillovers from a European economic downturn.\nThe travel and tourism sector in the First District continues to report strong results. Both business and leisure travel have been up in the first four months of the year, and advance hotel bookings continue to be robust. For 2012, the industry expects a 9.5 percent increase over 2011.\nManufacturing and Related Services\nAccording to our contacts, the manufacturing sector in the First District continues to grow, but the outlook remains guarded, perhaps slightly more so than in recent months.\nThirteen of 16 responding firms report growing sales in the most recent period compared with a year earlier. Idiosyncratic factors appear to be driving the weakness for one firm with declining sales; contacts at the other two could not point to anything other than general macroeconomic weakness as explanations. A manufacturer of industrial motors mentions the situation in Europe while noting that sales are soft in all regions in which the company sells.\nThe jury is still out on the role of weather in the evolution of business conditions over the last six months. Several of our contacts cited mysterious sales declines at various points which then corrected themselves. A manufacturer of hoses was off 30 percent at the end of March but then had his \"best April ever\" and was back on plan by this round. He hypothesizes that winter goods weren't selling, so big retailers--hoping to avoid having to store snow shovels and road salt over the summer--lacked space until recently to put spring goods on the shelves.\nDramatic changes in U.S. energy supply continue to affect economic activity, according to manufacturing respondents. A chemical manufacturer in the First District said that the low current price of natural gas is restructuring the world chemical industry. For the first time in decades, chemical firms are building ethylene crackers in the United States.\nAll contacts doing business in Europe report that the European manufacturing economy is near or in recession. Asia continues to be relatively strong, but one contact in the industrial membrane business said that \"the best and most stable market\" is the United States.\nFourteen of 16 contacts report that their firms are hiring; nonetheless, they remain reluctant to add to headcount in any significant way. One manufacturer of parts for the aerospace and automotive industry says that, despite strong growth, they have relied mostly on temporary workers to increase production. A contact in the industrial distribution business reports that if conditions do not improve, they will cut staff. Another firm which makes industrial motors says they are drawing up contingency plans for a serious decline which include a hiring freeze.\nSoftware and Information Technology Services\nNew England software and information technology firms report mixed results through May, with some experiencing continued growth and others citing modest slowdowns. Nevertheless, year-over-year revenue increases in the first quarter remained largely in the high-single digits, bolstered by steady demand from the healthcare and banking sectors and a resurgence of activity in the manufacturing sector. Indeed, one contact closed a deal in Q1 with a very large electronics manufacturer, and another reports that deal sizes are beginning to grow, particularly in their software solutions for manufacturers and distributors. Other contacts, however, assert that clients in general remain reticent to finalize large deals.\nMost contacts report increases in headcount, with many continuing to add sales and marketing personnel as well as billable consultants; by contrast, one firm recently completed a realignment in which headcount was reduced by approximately 5 percent. Capital and technology spending and selling prices have gone largely unchanged since February. Looking forward, New England software and IT contacts remain cautiously optimistic, with upticks in activity and strong pipelines tempered by concerns regarding the U.S. economy and the European debt crisis.\nStaffing Services\nNew England staffing firms report that business conditions are largely unchanged since the previous conversations in February, with year-over-year revenue increases in the first quarter generally in the mid-single digits. Labor demand from the healthcare and manufacturing sectors is steady, and one contact reports renewed activity in the financial sector. However, demand for office and clerical assistance has weakened in recent weeks, and activity in the construction, civil engineering, and accounting sectors remains anemic. The number of permanent and temporary-to-permanent placements continues to grow, albeit modestly; however, two contacts say this trend is likely attributable to their own internal efforts to boost permanent hires, rather than improvements in labor-market fundamentals.\nRegarding labor supply, candidates with high-end skill sets such as nurses, mechanical and electrical engineers, and software developers remain difficult to find; one contact reports that this shortage of qualified labor has begun to put upward pressure on pay rates. Other contacts, however, say that increases in bill rates and pay rates, if any, are due almost entirely to changes in their business mix. The outlook among New England staffing contacts is generally consistent with that of three months ago, with most expecting their current rate of growth to continue or pick up through the end of the year.\nCommercial Real Estate\nAccording to contacts, commercial property markets in the First District remain in a holding pattern, with some signs of improvement. The strength of Boston's commercial market continues to stand out within the region and nationally, making it the target of a tremendous amount of investor interest. Construction activity in Boston appears to be increasing--contacts report an uptick in large-scale build-to-suit construction activity for the first time in several years. However, the market is still not strong enough to warrant speculative construction. In Portland, construction activity has increased significantly from the last report, propelled by projects in the public, industrial office, and multifamily sectors. Elsewhere in the First District, construction activity is muted. Strict lending standards are still the norm District-wide.\nDespite a recent uptick in showings, demand in the industrial sector remains flat across New England. Office leasing volumes throughout the District are unchanged from six weeks ago, and the retail sector continues to be quiet in New England. The outlook among contacts is that, barring significant macroeconomic turmoil, conditions should remain flat or improve slightly in the rest of the year.\nResidential Real Estate\nResidential real estate shows further signs of improvement in the First District as year-over-year increases in sales continued in April across the region. Contacts report steady increases in market activity, which they attribute to low interest rates and competitive prices as well as confidence in economic conditions. In the Greater Boston area, sales continue to increase while inventories fall to low levels, particularly in the condominium market. Some respondents say activity among first-time homebuyers has increased, reflecting continued affordability. Reports also indicate increased activity for homes in the mid-price range. Changes in median sales prices compared to a year ago vary across the First District, with some states experiencing modest gains and others observing moderate declines. Rhode Island, where the median sales price in April dropped almost 8 percent from a year earlier, faced the largest price decline in the region, but the drop was close to zero excluding distressed sales.\nThough contacts characterize housing markets as recovering, they note that conditions remain fragile; in particular, with sales gains fairly well established, their concerns focus on the possibility of further price declines. Contacts expect the delicate recovery of housing markets to continue gradually; most anticipate modest gains in sales activity for the next several months and modest price changes, up and down. Respondents say declining inventory levels and increasing demand in Greater Boston may put upward pressure on prices there.\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 6, 2012\nReports from Sixth District business contacts indicated that economic activity continued to expand at a moderate pace in April and May. Reports were somewhat more positive than the previous report, and expectations remained generally optimistic across most sectors. However, uncertainties surrounding the potential impact of developments in Europe weighed on the outlook.\nMost retailers noted a modest increase in sales activity, and auto sales remained strong. Positive reports from the hospitality sector included healthy occupancy and room rates, and future bookings were solid. Brokers and homebuilders noted higher sales compared with last year, and commercial real estate contacts stated they were seeing improvements led by gains in the apartment segment. Manufacturers cited modest growth in new orders and production. Bankers asserted that the demand for refinancing mortgages continued to increase slowly. Hiring activity was positive, but muted. Firms continued to note difficulty filling specialized positions. Most businesses indicated having little pricing power; however, an increasing number of firms said that they have been able to successfully pass on price increases, especially those tied to energy costs.\nConsumer Spending and Tourism\nReports from District retailers indicated that consumer spending improved in April and May. Merchants anticipate that sales will continue to grow at a modest pace in the near term. The auto sector remained strong, and regional dealers expect sales to remain solid going forward. Despite the recent slide in gasoline prices, merchants remained wary of the potential impact on personal spending. That said, few retailers reported significant changes in consumer behavior with the exception of those operating in rural areas.\nLeisure and business travel contacts continued to report robust activity and a solid outlook for the remainder of 2012. Occupancy and room rates exceeded expectations and convention bookings remained strong. Reports also showed that a number of hospitality-related capital investment projects were underway in several areas across the District. Florida continued to be bolstered by visitors from South America and Canada. Cruise-line bookings were down slightly compared with the last report. High fuels costs were identified as a downside risk to the summer travel season, but hospitality contacts were somewhat less concerned than they were earlier in the year. They were more concerned, however, about a potential decline in visitors from Europe.\nReal Estate and Construction\nThe majority of residential brokers said that home sales exceeded year-ago levels in April and May with many reporting that sales exceeded expectations. Strengthening sales, mostly from cash buyers and investors, were noted by most Florida contacts. Brokers observed that inventory levels across the District continued to decline. The majority of contacts reported that home prices were flat to slightly up on a year-over-year basis. The sales outlook among brokers remained positive with most anticipating year-over-year gains, albeit from very low levels of overall activity, over the next several months.\nDistrict homebuilders reported that new home sales and construction rose modestly compared with a year earlier. Builders indicated that home price declines continued to abate. The majority indicated that new home inventories declined further on a year-over-year basis. Contacts noted that multifamily construction remained robust and new projects continued to be announced. In the short-term, homebuilders expect sales and construction to be flat to slightly up compared with a year earlier.\nImprovements in the District's commercial real estate markets were led by gains in occupancy and solid rental growth in the apartment sector. Overall, small improvements were noted in the region's office and industrial sectors as vacancy rates moderated somewhat; however, reports on District retail real estate were more mixed. Although flat on a year-over-year basis, the majority of commercial contractors said that year-to-date construction activity was slightly ahead of activity in last year's fourth quarter. Backlogs were down from a year earlier. Most contacts anticipate a modest increase in private construction activity through the remainder of the year, while public works projects are expected to decelerate.\nManufacturing and Transportation\nThe District's manufacturing sector continued to expand modestly in April and May. Manufacturers reported growth in new orders and production, but noted that employment growth had slowed somewhat. A District auto manufacturer announced plans to add a third shift to meet increased global demand for their products. Auto producers continued to note concern about economic and financial conditions in Europe, a significant market for the region's auto exports.\nRailroad contacts noted continued volume growth in shipments of automobiles, metals, and forest products, along with strong intermodal demand. Shipments of coal, construction-related aggregates, and chemicals continued to moderate, however. Reports indicated that elevated diesel prices were allowing railroads to maintain a competitive edge over trucking. At District ports, imports of construction-related steel was reportedly strengthening.\nBanking and Finance\nLending standards remained largely unchanged since the last report, but banking contacts indicated that more applicants were qualifying for loans. Most District bankers commented that demand for refinancing mortgage loans continued to increase; more applicants had ample cash for down payments or enough equity in their homes to meet the loan requirements. Credit availability increased and competition among lenders for loans remained strong. Some bankers mentioned improvements in the general creditworthiness of borrowers and appraisal valuations.\nEmployment and Price\nRegional employment growth remained positive, although contacts noted that uncertainty regarding future economic conditions was a major headwind for additional job creation. Employers continued to express difficulty hiring for specialized positions, such as those in information technology and engineering. Trucking contacts also noted continuing trouble finding qualified labor to meet new federal regulations and some manufacturers cited difficulties finding trained operators and welders. Skilled auto mechanics also appeared to be in short supply. Firms noted the importance of efforts by government and academic institutions to coordinate training programs with large employers. Contacts also indicated that private training programs funded by trade associations or industry groups were being developed to train workers where larger public programs were not available.\nThough most contacts continued to indicate having little pricing power, more firms recounted successful attempts or plans to pass on price increases since the last report. Increased transportation costs, including those resulting from higher gasoline and other fuel prices were being passed on to consumers without much difficulty. Firms responding in May to the Atlanta Fed's Business Inflation Expectations survey reported that unit costs were expected to rise 1.8 percent for the year ahead, down from an average of 2.0 percent over the previous three month period. According to businesses surveyed, materials costs had subsided somewhat since April, though they are still expected to have a moderate upward influence on prices over the coming year. Despite continuing reports that sales levels are below what they consider to be normal, contacts anticipate little to moderate upward price pressure from improving sales levels over the next 12 months.\nNatural Resources and Agriculture\nContacts noted that more investment is needed in transportation infrastructure to accommodate recent increases in domestic and Canadian energy production. District refining contacts indicated that the capacity to process heavier grades of crude are limited and despite investment in additional refinery capacity, a number of recent and planned refinery closures elsewhere in the country could imply that existing facilities may have difficulty meeting demand for distillate fuels, like diesel and jet fuel. Permits for offshore drilling have increased in recent months. Drought conditions worsened in most of Florida and Georgia and parts of Alabama. Prices paid to farmers for oranges were up and a contact reported these higher prices were dampening demand. Prices paid for soybeans were up on a year-over-year and month-over-month basis because of strong global demand and decreased supplies coming from South America.\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 6, 2012\nThe economy of the Eighth District has continued to grow at a modest pace since our previous survey. Residential real estate market conditions have improved moderately. Similarly, commercial real estate market conditions have also improved. Retail and auto sales in April and early May increased over year-earlier levels. In contrast, recent reports of plans from firms in the manufacturing and services sectors were mixed. Reports of lending activity at a sample of large District banks during the first quarter of 2012 were somewhat mixed.\nConsumer Spending\nContacts reported that retail sales in April and early May were up slightly, on average, over year-earlier levels. About 60 percent of the retailers reported increases in sales, while 12 percent saw decreases and 28 percent saw no changes. Thirty-seven percent of the retailers noted that sales levels met their expectations, 42 percent reported that sales were below expectations, and 21 percent reported that sales were above expectations. Twenty percent of the retailers noted that their inventories were too high, while 12 percent indicated that their inventories were too low. The sales outlook for the summer was positive: 56 percent of the retailers expect sales to increase over 2011 levels, while 24 percent expect sales to decrease and 20 percent expect sales to be similar to last year's sales.\nCar dealers in the District reported that sales in April and early May were up, on average, compared with last year. About 64 percent of the car dealers surveyed saw increases in sales, while 24 percent saw decreases and 12 percent saw no changes. Twenty percent of the car dealers noted that new car sales had increased relative to used car sales, while 20 percent reported the opposite. Also, roughly 28 percent of contacts reported an increase in sales of low-end vehicles relative to high-end vehicles, while about 12 percent reported the opposite. Forty percent of the car dealers surveyed reported that their inventories were too low, while about 8 percent reported that their inventories were too high. The sales outlook for June and July was optimistic: 88 percent of the car dealers expect sales to increase over 2011 levels, while just 8 percent expect sales to decrease and 4 percent expect sales to be similar to last year's sales.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been mixed since our previous report. Several manufacturers reported plans to open plants and hire workers, while a similar number of contacts reported plans to close plants and lay off workers in the near future. Firms in the paper product, agriculture, chemical, paint, and military and police equipment manufacturing industries reported plans to decrease existing operations or close plants in the District. In contrast, contacts in the automobile parts, wood product, solar panel, and steel product manufacturing industries reported plans to hire workers and increase operations.\nReports of planned activity in the District's service sector also have been mixed since our previous survey. Contacts in air transportation support, travel, and religious organization services announced plans to lay off workers and reduce operations in the District. In contrast, firms in software development services announced plans to hire additional workers and expand 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, April 2012 year-to-date home sales were up 13 percent in Louisville, 3 percent in Little Rock, 20 percent in Memphis, and 18 percent in St. Louis. Residential construction increased in the majority of the District over this time period. April 2012 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2011. Permits increased 35 percent in Louisville, 20 percent in Little Rock, 31 percent in Memphis, and 28 percent in St. Louis.\nCommercial and industrial real estate conditions have continued to improve throughout most of the District. Contacts in Louisville reported that the increase in office real estate activity slowed during April, but overall performance in the first quarter of 2012 remained strong. A contact in St. Louis reported strong commercial real estate activity and weak industrial real estate activity in the first quarter of 2012. Commercial and industrial construction activity improved moderately throughout most of the District. Contacts in south central Kentucky noted that new large commercial construction projects have been undertaken, and a contact in Louisville reported plans for speculative industrial construction. A contact in Pine Bluff, Arkansas, reported some new large commercial construction plans. A contact noted a few large industrial construction plans in Wentzville, Missouri, and some commercial and industrial construction plans in Jefferson County, while a contact in St. Louis reported steady commercial construction activity.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks indicated moderate changes in overall lending activity during the first quarter of 2012. During this period, credit standards for commercial and industrial loans remained unchanged, while demand for such loans was moderately stronger. Credit standards for commercial real estate loans generally remained unchanged. Demand for commercial real estate loans ranged from unchanged to substantially stronger. Meanwhile, credit standards for consumer loans ranged from basically unchanged to somewhat eased, while demand ranged from moderately weaker to moderately stronger. Respondents noted that credit standards for prime residential mortgage loans remained unchanged, while demand for these loans ranged from about the same to substantially stronger.\nAgriculture and Natural Resources\nCrop moisture levels from April to mid-May were classified as slightly dry to favorably moist in most of the District except southern Arkansas and most of Mississippi. Rates of completion for the planting of corn, cotton, rice, sorghum, and soybeans were at least 15 percentage points higher than their 5-year average rates in most District states, while crop emergence was also ahead of schedule. More than 88 percent of the winter wheat crop was rated as fair or better, while 77 percent or more of pasture land was also similarly rated in all District states. The District's year-to-date coal production for early May was 3.8 percent lower compared with the same period last year. Similarly, the District's coal production for April 2012 was 2.6 percent lower than in April 2011.\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 6, 2012\nOverall, business activity in the Third District continues to improve, but the pace has slowed slightly in most sectors since the previous Beige Book. Manufacturing activity has eased slightly, but most major manufacturing sectors continue to grow. After a strong first quarter, partially due to the unseasonably mild weather, retail sales slowed somewhat in April but appear to be gaining strength based on customer traffic in May. Although sales remain strong overall, motor vehicle dealers also reported softer sales in April. Third District banks report steadier growth in lending and continued strong credit quality since the last Beige Book. Demand for new home construction has eased off a bit, but brokers report stronger sales of existing homes. Several signs of improvement were cited by commercial real estate contacts. Overall, service-sector firms report continued growth. Price pressures have eased slightly in some sectors since the last Beige Book.\nThe outlook remains optimistic, but more firms readily noted the slow pace of the recovery relative to the sunnier views expressed in the last Beige Book. Manufacturers' expectations for the next six months, although diminished, remain positive. Retailers continue to expect steady improvement. Auto dealers anticipate continued strong sales. Banking, real estate, and service-sector firms are slightly more optimistic but continue to plan for slow growth in 2012. In general, business plans reflect caution, and businesses have resumed a more realistic perspective on the limitations of the current recovery and the risks to its longevity.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported virtually no change in shipments and just the slightest decline in new orders. Gains continue among the makers of food products, lumber and wood products, fabricated metals, industrial machinery, and instruments. Firms in the primary metals and electronic equipment industries report a fall-off in demand. According to various contacts, growth is attributed to warm weather, automotive demand, production returning from China, Marcellus Shale activity, and renewed customer optimism.\nAbout eight out of 10 Third District manufacturers expect business conditions to improve or stay the same during the next six months \u00e2\u20ac\u201c somewhat less optimistic than reported in the last Beige Book. Except for primary metals, optimism is present in all major sectors. Firms seem relatively divided as to whether high energy costs are a concern, depending largely on their ability to pass the cost along to their customers. New to the list of concerns and uncertainties about the outlook is the increasing worry that political gridlock will lead to large cuts in defense-related production through sequestration. While caution remains, firms have reported a little more optimism as have their customers. However, manufacturers have expressed somewhat lower expectations of future capital spending and future hiring since the last Beige Book.\nRetail\nThird District retailers reported that the surprising early sales gains held up through March, then fell back some in April. Year-to-date, gains have remained positive through April. Sunny weather has continued to boost traffic in May; bus counts at outlet malls are nearly double last year's level. Small businesses in less urban markets are struggling as consumers adjust to higher gas prices by cutting retail purchases. Retail contacts remain cautiously optimistic.\nAuto sales in Pennsylvania shifted from strong in March to moderately strong in April. Very low borrowing costs for inventories have helped to support dealers' profitability. A large New Jersey dealer reports that retail auto sales are off year-over-year through April but that fleet sales are strong. Profits are also off. The dearth of auto sales in recent years has created a slump for dealer service sales; they must compete harder to retain customers with aging cars that typically are taken to independent garages. The outlook for auto sales remains positive. Hiring remains spotty and depends on brands carried, fleet business, and local economic conditions.\nFinance\nOverall, loan volumes have continued to grow in the Third District since the previous Beige Book. While activity remains uneven, banks report increasing signs of a steady recovery. Loan demand continues to be strongest for inventories and capital equipment to manufacturers and for investments in the higher education, health care, and technology sectors, and in multifamily housing. Most contacts report solid credit quality.\nReal Estate and Construction\nResidential builders report some softening in May traffic and sales due to a combination of typical seasonal slowing and a drop-off from the atypically strong first-quarter sales. Construction crew members for one Pennsylvania builder are working 45 to 70 hours per week; the builder is hiring cautiously as the builder's pace of activity slowly picks up. Residential brokers report \"seeing genuine improvement\": Year-to-date sales through mid-May exceed last year's and are over plan. A broker reported that much of its workforce operates on a shortened week, and it will exploit this substantial excess capacity before hiring more staff. The outlook among builders and brokers remains positive.\nNonresidential real estate activity has been generally positive since the last Beige Book, with several contacts citing increased leasing activity throughout the District, including southern New Jersey. Despite ongoing demand, Philadelphia's Center City office market has slowed a bit, as the bulk of existing class-A trophy space is now under agreement. Several contacts also cited a few large build-to-suit projects that have gone to bid and are awaiting approvals before construction begins. Other contacts noted reluctance among transportation contractors to hire more workers, given the uncertain future of public infrastructure funding due to the increasingly short funding horizon of the federal transportation authorization bill. The overall outlook for nonresidential real estate has brightened slightly since the last Beige Book.\nServices\nThird District service-sector firms have generally reported positive growth since the last Beige Book. Job postings have risen at area universities, local advertising sales have been strong, and area theme parks are attracting increasing numbers of foreign visitors (notably from China). Contacts note little recent change in defense-related activity; however, concerns are mounting that significant federal spending cuts on defense and civil contracts may result from sequestration or its alternative, political compromise. Employers continue to make liberal use of staffing firms; however, staffing contacts report that employers' sense of urgency to fill specific slots is often low. Overall, service-sector firms retain a positive outlook for growth through the remainder of the year.\nPrices and Wages\nPrice levels have eased slightly since the previous Beige Book and remain generally constrained. Industry contacts indicated that gas prices have stabilized and are expected to ease through the summer. Manufacturing firms report lower cost factors since the last Beige Book. Home builders anticipate cost increases for materials if activity picks up more quickly; however, the current gradual pace of recovery may allow suppliers to adjust without severe cost increases. Retailers and home builders continue to report tight margins. Contacts continue to report a lack of wage pressures, other than for medical benefits. House prices have stabilized in many areas for low-end homes but have fallen further for high-end homes.\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 6, 2012\nEconomic activity in the Seventh District continued to expand at a moderate pace in April and May, although at a touch slower rate than during the prior reporting period. Many contacts remained cautiously optimistic in their outlook for the U.S. economy. Several, however, also noted an increase in economic uncertainty, pointing to weaker business conditions in Europe and Asia and the upcoming elections in the U.S. Growth in consumer spending slowed, while business spending continued to increase at a steady pace. Manufacturing production also rose at a steady pace, and construction activity increased as well. Credit conditions were little changed on balance. Commodity prices moved lower, and wage increases remained moderate. Planting of corn and soybeans was well ahead of the normal pace and that of a year ago.\nConsumer Spending\nConsumer spending increased at a slower rate in April and May. Retailers indicated that the slower sales pace was due in large part to the unseasonable weather that had boosted activity during the prior reporting period. Spending on necessities increased, while outlays for big-ticket items like furniture, appliances, and electronics decreased. Inventories generally were at more seasonally appropriate levels. Looking ahead, some retailers are planning to add to inventories in expectation of a better back-to-school season than last year. Auto sales were flat, and auto dealers expect that sales will remain at about this pace through the fall. Some dealers continued to report difficulty in stocking popular models because of supply chain constraints.\nBusiness Spending\nBusiness spending continued at a steady pace in April and May. Inventories generally were reported to be at comfortable levels. Strong expected sales growth, high rates of capacity utilization, and the need to replace aging equipment continued to support manufacturers' expenditures on plant and equipment. Outside of manufacturing, firms were more cautious in their capital spending, citing increased economic uncertainty. Labor market conditions were little changed over the reporting period. Hiring remained selective, and most contacts indicated that they had not changed their hiring plans. Some manufacturers were increasing overtime, but noted that orders were not yet strong enough to necessitate adding to their labor forces. Those manufacturers who were looking to hire continued to report difficulty in finding skilled workers. Several said they were easing job requirements, using internships, or increasing college recruiting to try to fill open positions.\nConstruction and Real estate\nConstruction and real estate activity increased in April and May. Demand continued to be strong for multi-family construction, especially apartments, but also increased for single-family homes. The residential rental market strengthened, with rents rising further and one contact noting a shortage of single-family properties for lease in parts of the District. Realtors indicated that they were also beginning to see a pickup in demand in the for-purchase market for single-family homes, as more sales had multiple offers on them. Commercial real estate conditions also continued to improve gradually. Demand increased for urban office space, hotels, and education facilities, while it remained weak for suburban office and retail space. Vacancy rates edged lower, but remained elevated, particularly for retail properties. A contact noted, however, that some suburban retail space was being switched over to alternative uses.\nManufacturing\nManufacturing production increased at a steady pace in April and May. Capacity utilization in the steel industry reached its highest level since the end of the recession, as stronger demand from North American customers offset weaker demand from Europe and Asia. The auto industry remained a source of strength for manufacturing. Auto suppliers were operating at high levels of capacity utilization, but noted that production growth had stabilized after the large gains earlier in the year. Demand for heavy equipment, though still strong, decreased slightly. Contacts expressed some concern over current weakness in global demand, but indicated that the industry was still being boosted by domestic demand, notably by a robust rental market and continued strength in the energy and mining sectors. Agricultural and construction equipment were also noted as areas of strength, with dealers adding products for the upcoming construction season. Manufacturers of household goods and building materials continued to experience soft demand, although a few noted a recent pick-up in activity.\nBanking and Finance\nCredit conditions were little changed on balance from the prior reporting period. Credit spreads and market volatility edged up. Business loan demand remained limited apart from steady growth in refinancing and capital replacement. For large banks, some of the weakness in the business loan segment has been offset by an increase in demand for other services, such as foreign exchange hedging and liquidity management. Banking contacts indicated that there continues to be fierce competition among lenders for creditworthy borrowers. Contacts also noted an increase in the availability of credit for commercial real estate and consumer auto loans, while lending standards for residential mortgages remained tight.\nPrices and Costs\nCost pressures leveled off in April and May. Steel prices softened, with one contact noting that weaker demand in Europe and Asia had contributed to the decline. Energy prices also moved lower. Wholesale price pressures eased some, most notably for cotton and dairy products, although transportation costs continued to increase. Retailers indicated that they were largely absorbing the higher transportation costs in their margins and continued to discount heavily items such as clothing. Wage pressures continued to be moderate, although many contacts noted an increase in healthcare costs.\nAgriculture\nDistrict corn and soybean planting in April and May were well ahead of last year's pace, as well as the five-year average. Corn planting was almost finished in Illinois, Indiana, and Iowa. The emergence of corn and soybean plants generally was also faster than typical. With an early and promising start, the corn crop may set a record this year, although dryness currently exists across much of the District. Corn and soybean prices fell during the reporting period, while wheat prices rose. Milk prices decreased, and prices are low enough to trigger some concerns about margins for dairy operations. Hog and cattle prices were higher.\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 6, 2012\nEconomic activity in the Fifth District improved modestly since our last assessment. Retail sales were sluggish, held back in part by weak big-ticket sales. Growth at services firms slowed, although tourism businesses reported strong demand. Bankers said that lending grew slowly, and much of the activity was refinancing. Residential real estate agents noted encouraging signs of improvement in housing sales, while commercial Realtors described leasing and construction activity as mostly flat to moderately up. Manufacturing reports were mixed, with auto and other transportation equipment-related producers continuing to do well, while other producers faced unchanged or weakening demand. District hiring activity varied, with some businesses reluctant to hire or unable to find qualified workers. Recent rainfall aided newly planted fields, but excess moisture in some areas delayed planting. Price increases--both paid and received--generally slowed.\nManufacturing\nWe received mixed signals on manufacturing activity since our last report. According to our latest survey, new orders and shipments were essentially unchanged in May, following solid expansion during the previous month. A producer of metal extrusions reported that, although his sales slowed a bit in April, demand in May picked up again. However, a producer of gas turbines said that economic problems in Europe led to fewer exports, and he expected to lay off ten percent of his employees this summer. Several manufacturers cited decreased government spending as the primary reason for recent cancellations of orders. A manufacturer of aircraft engines expected that cuts in defense spending would soon weaken government demand for his products, but private sector orders remained robust. A spokesperson at another aerospace manufacturing firm said that her business was expanding nicely, and she attributed the increase to strengthening demand for helicopters and gyroplanes. According to our latest survey, both raw materials prices and finished goods prices grew at a somewhat slower pace than a month ago.\nRetail\nSales were tepid in recent weeks, after an early Easter pulled some holiday sales into March. Stores reported good Mothers Day sales, although foot traffic was lighter than normal for many retailers. Shopper traffic was unchanged since our last report and big-ticket sales declined, according to a recent survey. A central Virginia retail representative reported little stability in the market as customers exhibited \"yo-yo spending\" (i.e., up one month, down the next). Accordingly, retailers managed inventories tightly and were reluctant to make capital investments. A South Carolina grocer observed that customers were buying special sale items at different stores, rather than shopping at one store. In contrast, an executive at a chain of hardware stores noted that sales had improved at a slow-but-steady pace since the start of the year. Discount department store managers generally reported a pick-up in sales. For a few discounters, however, the opening of new competition kept sales flat. Automobile sales were also flat. Most home improvement retailers reported a decline in sales in recent weeks. Retailers' prices rose at a somewhat slower pace since our last report.\nServices\nRevenues advanced more slowly at services firms since our last report. A building contractor stated that consumers were still avoiding big projects, but were increasingly looking for \"more than a coat of paint,\" as homeowners improved their current homes rather than trying to sell. Several services providers, particularly architectural, engineering, and telecommunication firms, reported stronger revenues. A healthcare provider in Central Virginia reported that demand for in-patient services had flattened out a bit recently, partly due to an absence of influenza cases, but out-patient services were still growing. Several healthcare institutions reported that they were continuing capital spending projects, especially on computer technology, to meet federal requirements and guidelines. Non-retail services providers reported a mild up-tick in the rate of price increases.\nFinance\nLending activity increased modestly across most segments of the market. On the commercial side, several bankers cited markedly higher volumes of small business loan applications and increased loan approval rates. One banker attributed the gains to growth in inventory and capital improvement spending, while another said that small businesses were making renovations to commercial properties. However, several loan officers around the District saw little improvement in loan demand from the retail sector. On the consumer side, mortgage demand continued to improve, although refinancing dominated much of the lending. Other bank officials noted solid gains in home improvement loans, with one banker citing an increase in use of equity lines of credit. In contrast to the more upbeat reports, several officials at mid-sized banks described loan demand as flat in recent months, with little new business in the pipeline for either mortgage or commercial loans.\nReal Estate\nResidential real estate activity generally improved since our last report. A Realtor in the Richmond area, who noted some improvement in April, said that May would be a big indicator of whether the spring market just came early, or if gains would continue into June. He was cautiously optimistic that real estate activity was moving in a positive direction. A source from the Hampton Roads area of Virginia said that housing-related activity in that area had seen recent signs of improvement, adding that properties were being \"snapped up\" as investors became more confident of a housing recovery and home sellers became more realistic with their prices. Moreover, several brokers in Asheville and Raleigh, North Carolina stated there was an up-tick in housing sales. However, an agent in the Winston-Salem area of the state mentioned that there was still stagnant growth in some areas, and that homes for sale in that area were out of balance with area incomes. Several Realtors reported that sales picked up in recent weeks, while housing prices dropped. Most Realtors indicated that sales were concentrated in the low-to- mid-price range.\nCommercial real estate leasing and construction was flat or moderately improving in recent months, although pockets of weakness persisted. Respondents around the District reported more construction and absorption, especially in the industrial segment. Contacts at several engineering and architectural firms confirmed that interest in new construction projects increased, although demand remained well below pre-recession levels. Construction activity in South Carolina was driven by the recent expansion of manufacturing activity in the state, while gains in West Virginia were associated with the emerging boom in natural gas. One real estate developer in Charleston, South Carolina said that rents had increased to the point where \"new construction is starting to make sense.\" A developer in the Richmond area cited a rise in demand for warehousing space, related to healthcare facilities and an increase in on-line shopping activity.\nLabor Markets\nAssessments of labor market activity were mixed since our last report. Several employment agency contacts saw somewhat greater demand for temporary workers, and most expected demand to remain strong for the remainder of the year. A Baltimore agent reported an increase in demand for manufacturing workers, adding that manufacturers were hurt by a severe shortage of trained workers. Several contacts said that current hiring was focused on skilled positions, and they expected that companies would continue to experience recruitment problems. However, a representative at a Richmond staffing agency reported that job orders continued to be steady and that more area companies were hiring workers on a permanent basis than a year ago. A source in South Carolina noted that the aerospace industry was investing heavily in new technologies that would reduce the need to hire additional workers. According to our latest survey, District wage gains in manufacturing were slightly lower than a month ago, while the pace of wages in the service sector increased.\nTourism\nTourism contacts reported strong bookings during the last four to six weeks, and restaurants in tourist areas experienced solid customer demand. Several hotel owners on the outer banks of North Carolina said that spring got off to a strong start and summer rentals were up. Memorial Day is the traditional summer kick-off for resorts, and most were advertising special events for that weekend. A resort owner in the mountains of Virginia said that he expected a record crowd for the holiday. He added that lower gas prices and good weather boosted bookings in recent weeks, following a winter season with weak demand due to unusually warm weather. In addition, time-share rentals were strong, and booking incentives were no longer necessary.\nAgriculture\nRainfall across the District supplied much-needed moisture to emerging field crops. In South Carolina, cotton planting was slightly ahead of schedule, and planting of peanuts was well ahead of its normal pace. However, rainfall delayed plantings of cotton and peanuts in parts of North Carolina and Virginia. Excess precipitation was also problematic for strawberry farmers in Virginia, causing fruit spoilage; the problem was compounded by a lack of pickers. Corn and soybeans began to emerge in Maryland, while farmers in West Virginia reported that warm weather put planting of corn and soybeans ahead of schedule. Lastly, the peach harvest was under way in South Carolina, and cantaloupe and watermelon planting was complete.\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 6, 2012\nThe Second District's economy has continued to expand at a moderate pace since the last report. Labor market conditions have generally improved, and, on balance, contacts indicate they plan to add workers in the months ahead. Business contacts in a number of industries note a slowing pace of cost increases and mostly stable selling prices. Manufacturers report a pickup in business conditions. Tourism activity has been strong since the last report, while retailers and auto dealers indicate steady sales activity in April and May. Home sales activity has continued to increase gradually since the last report, though prices have generally been steady to somewhat lower. Rental markets remain strong, with rents rising due to tight inventory levels. New York City's commercial real estate market has tightened slightly. Finally, bankers report widespread increases in loan demand, no change in credit standards, and continued broad-based declines in delinquency rates.\nConsumer Spending\nRetailers report that sales activity was mixed but generally steady in April and the first few weeks of May. One major retail chain reports that sales were running on plan and up modestly from a year earlier, with particular strength in home-related goods. However, another chain indicates that sales were slightly below plan and down considerably from this time last year, with weakness in home goods and fine jewelry. In general, New York City stores tended to outperform other stores in the District. Retail contacts in upstate New York report that sales in recent weeks have been brisk and on par with a year earlier, and note increased demand from Canadian shoppers. Retail prices continue to be mostly stable, though price declines are anticipated for fall-season apparel, due to the retreat in cotton prices. Inventory levels are well managed, and are reported to be at desired levels.\nAuto dealers in upstate New York report that sales remained fairly brisk since the last report. Sales of new vehicles were up modestly from a year earlier in April and are seen remaining steady in May. Product availability is no longer a drag on sales, except for some of the most popular models. The used car market continues to be strong and prices remain elevated, although dealers in the Buffalo area note some recent softening in prices at auction. Wholesale and retail credit conditions remain favorable and continue to improve.\nTourism activity has been quite robust since the last report. New York City hotels indicate that revenues were up roughly 10 percent from a year ago in April and May. This increase reflects both higher room rates and higher occupancy rates. Hotel bookings have been fairly broad based, but an industry contact notes that there has been a noticeable pickup in business travelers in recent months. Moreover, ticket prices and attendance at Broadway theaters increased in April and May; as a result, theater revenues were up considerably from a year ago.\nConstruction and Real Estate\nHousing markets across much of the District have been mixed but, on balance, stable since the last report, while rental markets have continued to firm. The volume of apartment sales in New York City has been generally steady, with brisk activity at the top and bottom segments of the market but activity in the middle described as quiet. Home sales in northern New Jersey have continued to improve from a low level, but mainly due to a pickup in sales of distressed properties. Home prices in and around New York City are characterized as steady to declining slightly, in part because more distressed properties are coming to market. By contrast, real estate contacts in Western New York report robust sales activity and rising prices in recent months. Apartment rental markets in both New York City and northern New Jersey continue to firm, with tight inventories and rents continuing to rise. A major New York City appraisal firm notes that rising rents in the City continue to make buying more attractive, and credits this trend for the recent uptick in sales in the lower third of the market. Conditions in the outer boroughs have been somewhat softer than in Manhattan.\nNew York City's office market has tightened slightly since the last report, although leasing activity has slowed in recent months. Office vacancy rates have edged down and rents have risen 7-8 percent from a year ago. However, a major commercial brokerage firm notes that demand for office space from the finance industry has softened considerably since earlier in the year. Some of this recent softening has been offset by strong demand by technology firms, especially in the Midtown South area. There also continues to be a fair degree of leasing activity from businesses in the media, information, and legal sectors. Commercial property sales activity remains slow. There is a moderate amount of new office development underway, but most of it will not come on-line for another 12-18 months. In addition, a hospitality industry contact notes that interest in luxury hotel development in Manhattan has increased recently.\nOther Business Activity\nContacts across the District, on balance, indicate that business activity has expanded since the last report. Manufacturers across New York State report a noticeable improvement in business conditions and a growing proportion of non-manufacturing contacts report increases in business activity. In addition, business contacts in manufacturing and other sectors note a slower pace of input price increases and steady to somewhat higher selling prices.\nOn balance, labor market conditions have continued to improve across the District since the last report. Moreover, both manufacturers and business contacts in other sectors say that they plan to increase hiring activity in the months ahead. However, a major New York City employment agency specializing in office jobs reports that hiring activity has been mixed since the last report, with bouts of starts and stops in hiring and some reluctance by firms--particularly in the finance sector--to commit to hiring new employees. Moreover, fewer job openings are available in part because the amount of job churn is still much less than normal. A financial industry contact reports that previously-announced major layoffs at large banks in the New York City area are ongoing and expected to continue.\nFinancial Developments\nSmall to medium-sized banks in the District report increased loan demand in all categories to a more widespread degree than at any time since the mid 1990s. The increase in demand was most prevalent for commercial loans and mortgages. Bankers also indicate increased demand for refinancing but to a lesser extent than in recent months. Credit standards are reported to be little changed across all loan categories. Respondents note a decrease in spreads of loan rates over the cost of funds for all loan categories--particularly for commercial mortgages where over three in five bankers report lower spreads. Respondents also indicate some decline in average deposit rates. Finally, bankers again report 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"

Cleveland

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"Beige Book Report: Cleveland\nJune 6, 2012\nBusiness activity in the Fourth District has grown at a moderate pace since the beginning of April. Manufacturers reported stable production, while residential and nonresidential construction showed moderate growth. Retail sales held steady, and auto dealers described April sales as generally good. Exploration and production in shale gas expanded, even as the demand for coal has slowed. Freight transport volume moved higher. And the market for business credit has strengthened.\nHiring continued at a modest pace across most industry sectors, although staffing-firm representatives reported that the number of job openings had increased for information technology and healthcare workers. Wage pressures are contained. Input prices were stable, apart from increases in building materials.\nManufacturing\u00c2\nNew orders and production at District factories were mainly steady during the past six weeks, with a few reports indicating a weakening in orders from European customers. Nonetheless, a majority of our respondents said that output was above year-ago levels. The outlook by manufacturers has grown more positive since our last report, buoyed by a pickup in activity in the construction, energy, and transportation sectors. Manufacturers expect that this pickup will continue through the remainder of 2012. On balance, shipping volume by steel producers and service centers was stable. Demand is being driven mainly by the auto industry. Steel shipments are expected to follow their seasonal drop-off during the summer. However, several of our contacts expressed uncertainty about the extent to which markets will pick up in the fourth quarter. District auto production showed a moderate decline during April on a month-over-month basis, while increasing substantially from prior-year levels. Year-over-year increases were attributed mainly to the abatement of supply chain issues.\nNo change in capacity utilization was noted, with most producers running at or slightly below normal rates. Inventories were generally consistent with demand. Respondents citing rising inventories reported that they are manageable. Capital budgets remain on track; only one-third of our contacts said that they expect to increase outlays during the upcoming months, mainly for information technology upgrades or capacity expansion. Input costs were stable, with any upward pressure being characterized as modest. However, the majority of our respondents reported raising their product prices slightly, partly to recoup raw-material cost increases that they were unable to pass through in prior years. A few manufacturers reported hiring due to expansions in auto and steel plants; otherwise there was little change in payrolls. Wage pressures are contained.\nReal Estate\nSingle-family home construction showed a moderate improvement during the past couple of months, and the majority of our contacts said that sales were significantly above year-ago levels. Contracts were almost all in the move up price-point categories. While builders are encouraged by year-to-date results, they are guardedly optimistic in their outlook. We heard a few reports of builders raising new home prices, though margins are still tight. Reports indicated a broad-based rise in building material prices. One respondent told us that suppliers are raising prices because there is a perception that the housing industry is on a comeback. Year-to-date sales of existing single-family homes showed modest growth relative to prior-year levels across the eastern third of the District. Several of our contacts noted that sellers are becoming more realistic and flexible about asking prices. The appraisal process remains a major challenge.\nActivity in nonresidential construction for small to medium-size contractors continued to strengthen and stands at a higher level than a year ago. Financing projects is getting easier, but banks still demand a substantial equity share on the part of the developer, and the amount of due diligence required has increased. Construction activity is broad based, driven by healthcare, higher education, hospitality, and retail. We heard several reports of downward pressure on rents for retail space, which was attributed to retailers looking for smaller footprints. Our contacts expect that business will continue to slowly improve as the year progresses. The majority of residential and commercial builders reported hiring a few people, but recruiting highly qualified candidates is difficult, especially for project managers. Top candidates are demanding higher wages.\nConsumer Spending\nRetailers reported that April sales held steady on a month-over-month basis, but increased by mid-single digits relative to year-ago levels. Contacts cited the unusually warm, dry spring weather as a factor for the pickup in sales across product lines. Nonetheless, several reports described middle-income households as stressed. One contact noted that his company is investing in the development of new products that would be more attractive to value-conscious consumers. All of our contacts anticipate that revenues during their next fiscal quarter will be above prior-year levels, mainly in the mid-single digits. Retailers cited upward pressure on vendor costs, which they attributed to elevated commodity prices and increased costs for packaging and off-shore labor. There was some reluctance to pass through rising costs to consumers. Inventories rose modestly, but they were described as manageable. Capital spending for the year remains on target, with a large majority of retailers expecting to increase outlays during the upcoming months. Monies will be used largely for technology enhancements, distribution facilities, and store remodeling. Little hiring is anticipated, except at new stores.\nAuto dealers characterized new-vehicle purchases during the past six weeks as generally good, with commercial truck sales doing particularly well. Some slowing of passenger car sales was reported, which dealers attributed to a lack of incentives from the manufacturers and a small number of lease rollovers. On a year-over-year basis, transactions were higher. Most contacts are satisfied with their inventory positions. The outlook by dealers for the remainder of 2012 has grown more positive since our last report, although some dealers believe that total sales during 2012 will be slightly below prior-year levels. Purchases of used vehicles were fairly steady year-over-year--inventories are building and prices declined slightly. On the financing side, we heard two reports that banks are more willing to work with dealers. Leasing activity picked up. Dealers are investing in manufacturer-mandated facility upgrades and imaging programs. Hiring for sales and service positions continued, but at a very slow pace.\nBanking\nDemand for business credit is on the upswing. Bankers reported that loan pricing remains very competitive. Loan requests were broad based, with the primary drivers being commercial real estate, energy, and healthcare. Little change in consumer credit was noted. Products in highest demand were auto loans (direct and indirect) and revolving lines of credit. Consumer credit pricing held steady. In the residential mortgage market, demand was described as stable to very strong. A high percentage of applicants are looking to refinance, although a few bankers said that they are beginning to see a shift in applications from refinancing to new purchase. No changes were made to loan application standards; some respondents saw an improvement in the quality of loan applicants. Delinquencies were steady or declined, with several bankers citing a drop in credit card delinquencies. Core deposits rose. There was a slight increase in the number of new hires compared to a couple of months ago, but on balance, no change in payrolls is expected in the near term.\nEnergy\nConventional oil and natural gas production was stable, with little change expected in the upcoming weeks. Conventional drilling has slowed due to very low natural gas prices. Well-head prices for oil dropped slightly. The Ohio Department of Natural Resources has issued 119 Utica shale drilling permits since January 1 and 68 horizontal wells are currently being drilled in Ohio. Coal production during 2012 is expected to be slightly less than 2011 levels. Spot prices for metallurgical and steam coals declined. Production equipment and materials prices were flat. Capital spending is expected to hold at current levels or decline. Little change was seen in energy payrolls.\nTransportation\nOverall, freight transport volume moved higher. A couple of contacts did report a modest slowdown beginning in April, although they were uncertain if this was the beginning of a trend. Sectors driving demand include energy and transportation along with seasonal products. Volume is expected to continue growing at a moderate to strong pace for the remainder of the year. However, all of our contacts expressed concern about the regulatory environment and the negative impact it could have on potential growth. Costs associated with truck maintenance moderated, and diesel fuel prices have declined, although fuel surcharges remain in place. Many carriers negotiated rate increases as freight contracts came up for renewal. Capital spending for 2012 remains on plan. Outlays are allocated for replacement of aging units and adding capacity. We heard two reports about small carriers reducing the size of their fleets due to high replacement costs. Companies are hiring for replacement and capacity expansion. Wage pressure exists due to a tightening of the driver pool.\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 6, 2012\nEconomic activity in the Twelfth District continued to grow at a moderate pace during the reporting period of April through late May. Price increases for final goods and services were very modest, and upward wage pressures were quite limited overall. Sales of retail items rose, as did demand for consumer and business services. District manufacturing activity picked up further. Sales remained robust for agricultural producers, while conditions were mixed for providers of energy resources. Demand rose modestly for residential real estate and also improved a bit for commercial real estate. District banking contacts reported that overall loan demand edged up, and they noted further slight improvements in credit quality.\nWages and Prices\nPrice inflation remained quite limited for most final goods and services. Contacts noted price declines for energy inputs, particularly oil, and for an assortment of food items at the retail level. More generally, upward price pressures were quite modest, as suppliers of final goods and services were readily able to meet the existing modest growth in demand.\nContacts reported that upward wage pressures were quite limited overall. High unemployment and modest demand for new hires continued to hold down compensation gains for workers in most industries and occupations. However, wage and compensation gains remained substantial in various industries and regions for workers with specialized skills in the application of information technology.\nRetail Trade and Services\nRetail sales grew modestly on balance. Gains were reported by traditional department stores and discount chains alike, although contacts noted a slightly slower pace of growth compared with the prior reporting period. Inventories generally were at or near desired levels given the current pace of sales. Demand growth slowed for retailers of home furnishings and major appliances, resulting in mostly flat sales. Demand was largely unchanged for grocers. Sales of new automobiles rose during the reporting period, although the pace of growth has moderated from that seen in the most recent reporting periods. Demand remained strong for used vehicles and combined with tight inventories to keep prices elevated.\nDemand for business and consumer services rose a bit further on balance. Activity was largely flat for professional services such as legal services and accounting, as well as for health-care services. By contrast, demand improved for transportation services such as trucking. Sales rose at a modest pace for providers of technology services, with the pace held down in part by weaker sales to European buyers; however, contacts continue to anticipate that growth will pick up in the second half of the year. Activity expanded further for radio and television broadcasters, spurred by rising demand for advertising slots. Sales activity improved further for restaurants and other food-service providers. District travel activity continued to pick up, with contacts in major markets such as Southern California, Hawaii, and Nevada highlighting ongoing improvements in visitor counts and hotel occupancy rates.\nManufacturing\nDistrict manufacturing activity rose further during the reporting period of April through late May. New orders continued to improve for manufacturers of semiconductors and other technology products, and inventories were reported to be at appropriate levels given the prevailing pace of sales. Contacts in the pharmaceutical manufacturing sector reported robust demand. Orders grew a bit for makers of commercial aircraft and parts, driven primarily by demand for fuel-efficient aircraft, and an extensive order backlog kept production rates at very high levels. For petroleum refiners, strong global demand supported an uptick in capacity utilization rates. Demand improved slightly for steel manufacturers but remained depressed for manufacturers of wood products.\nAgriculture and Resource-related Industries\nDemand for agricultural products remained robust, while extraction activity for energy resources continued to be uneven. Orders and sales expanded further for most crop and livestock products, spurred in part by strong growth in overseas exports. However, contacts noted that the costs of energy inputs remained quite high, and they cited renewed concerns that drought in some areas may undermine growing conditions in coming months. For energy resources, elevated price levels continued to support a pickup in oil extraction activity. By contrast, price declines for natural gas resulted in a further reduction of extraction activity, primarily at sites for which the extracted amount of valuable liquid byproducts is low.\nReal Estate and Construction\nDistrict home demand improved a bit further overall, and demand for commercial real estate picked up slightly on balance. Sales of new and existing homes ticked up in many areas, although the pace remained well below its historical average. The pickup was supported in part by slight improvements in financing availability, which has been an important factor holding down sales in the recent past. Faster sales reduced the inventory of available homes, which in turn caused home construction activity to rise slightly in some areas. By contrast, home prices remained largely flat. On the commercial side, vacancy rates for office and industrial space stayed elevated throughout many parts of the District. However, contacts noted widening signs of improved demand. The San Francisco Bay Area and Seattle markets continued to benefit from growth in the technology sector, which is prompting rapid absorption of commercial space and encouraging new construction. Contacts noted improved demand for office and retail space in other areas as well, such as Boise, Idaho.\nFinancial Institutions\nReports from District banking contacts indicated that loan demand showed further slight gains overall. Although businesses remained very cautious in their capital spending plans, demand edged up a bit further for new commercial and industrial loans. Furthermore, reports from most sectors suggested that capital spending is likely to increase modestly in the second half of the year compared with the first. Demand for consumer credit appeared largely unchanged. Further improvement in overall credit quality was noted, and continued fierce competition to extend credit to well-qualified small and medium-sized businesses has kept a lid on loan rates and fees. Overall, however, lending standards remained somewhat restrictive for many types of 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\nJune 6, 2012\nPrepared at the Federal Reserve Bank of Dallas and based on information collected on or before May 25, 2012. 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 overall economic activity expanded at a moderate pace during the reporting period from early April to late May. Activity in the New York, Cleveland, Atlanta, Chicago, Kansas City, Dallas, and San Francisco Districts was characterized as growing at a moderate pace, while the Richmond, St. Louis, and Minneapolis Districts noted modest growth. Boston reported steady growth, and the Philadelphia District indicated that the pace of expansion had slowed slightly since the previous Beige Book.\nManufacturing continued to expand in most Districts. Consumer spending was unchanged or up modestly. New vehicle sales remained strong and inventories of some popular models were tight. Sales of used automobiles held steady. Travel and tourism expanded, boosted by both the business and leisure segments. Demand for nonfinancial services was generally stable to slightly higher since the last report, and several Districts noted strong growth in information technology services. Conditions in residential and commercial real estate improved. Construction picked up in many areas of the country. Lenders in most Districts noted an improvement in loan demand and credit conditions. Agricultural conditions generally improved, and spring planting was well ahead of its normal pace in most reporting Districts. Energy production and exploration continued to expand, except for coal producers who noted a slight slowing in activity.\nWage pressures overall were modest. Hiring was steady or increased slightly, and contacts in a number of Districts reported difficulties in finding qualified workers, particularly those with specialized skills. Price inflation remained modest across Districts, and overall cost pressures eased as the price of energy inputs declined. Economic outlooks remain positive, but contacts were slightly more guarded in their optimism.\nManufacturing\nManufacturing continued to expand, and most Districts reported gains in production or new orders. The only exceptions were from the Philadelphia, Richmond and St. Louis Districts, where factory activity was mixed or had softened slightly. Demand appeared to be the strongest in auto and steel manufacturing. Reports from the Cleveland, Atlanta, Chicago, and St. Louis Districts noted vibrant activity for auto manufacturers, and an auto maker in the Atlanta District reported plans to add a third shift to keep up with increased global demand. Steel manufacturing remained robust, with contacts in the Chicago District reporting the highest capacity utilization rates since the end of the recession and firms in the St. Louis and Minneapolis Districts noting plans to upgrade or expand operations. Producers of semiconductors and high-tech equipment saw continued growth in orders in the Dallas and San Francisco Districts. Aircraft and parts makers noted further increases in orders according to reports from Boston, Richmond, and San Francisco, while the Dallas District reported steady demand. Demand for agricultural and construction equipment remained strong according to the Chicago District report, and industrial machinery manufacturers in the Philadelphia District noted gains. Food producers in the Philadelphia and Dallas Districts noted solid demand for their products, and pharmaceutical manufacturers in the San Francisco District reported robust activity. Activity at refineries and petrochemical manufacturing facilities expanded further. Demand for construction-related products improved in the Dallas District, and orders for lumber and wood products increased in most reporting Districts.\nHiring at manufacturing firms was mixed, but manufacturers in some Districts reported difficulty finding qualified workers such as welders. Capital spending plans in most reporting Districts were positive. Ongoing capital investments and plans for future capacity expansions were reported by various manufacturers in the Chicago, St. Louis, Minneapolis, and Kansas City Districts. Firms in the Cleveland District noted spending on capital outlays was on track, while producers in the Philadelphia District reported a decline in future spending plans since the previous report. Manufacturers' outlooks were positive in the Philadelphia, Cleveland, Chicago, and Kansas City Districts; however, contacts in a number of Districts were concerned that a slowdown in Europe and domestic political uncertainty may affect future business conditions.\nConsumer Spending and Tourism\nRetail spending was flat to modestly positive in nearly all Districts. Firms in the Richmond, Chicago, and Minneapolis Districts noted sales increased at a more modest pace than in the previous report, as unseasonably warm weather and an earlier Easter holiday had shifted sales into the previous reporting period. By contrast, warm spring weather continued to boost traffic and sales for retailers in the Philadelphia and Cleveland Districts. Sales of household goods increased in the Boston and Kansas City Districts, and gains in apparel sales were reported by the Boston and Dallas Districts. Sales of big ticket items declined in the Richmond and Chicago Districts, and there were a few reports of high fuel prices affecting consumer spending and sentiment. Inventories were generally at desired levels and were being managed carefully. Outlooks were optimistic, and retailers in several Districts expect modest sales growth in the near term. In particular, contacts in the Kansas City District expect stronger sales growth in coming months, while some retailers in the Chicago District plan to add inventories in expectation of higher back-to-school sales compared with last year.\nAutomobile sales generally remained strong, although the pace of growth moderated in a few Districts. Sales of used vehicles held steady, and a slight decline in prices was reported. Inventories of popular vehicles were tight. Outlooks were positive and contacts across several Districts expect steady growth in sales in coming months.\nReports from most Districts pointed to continued strength in travel and tourism, bolstered by both the business and leisure segments. Favorable spring weather spurred tourism in the Minneapolis and Kansas City Districts. Time-share rentals were strong in the Richmond District, and foreign visitors boosted activity in Florida as well as at theme parks in the Philadelphia District. Restaurants and food service contacts in the Richmond, Kansas City, and San Francisco Districts noted increased sales. Ticket prices and attendance at Broadway theaters strengthened in the New York District, boosting revenues to well above year-ago levels. Business travel picked up in the Boston, New York, and Atlanta Districts, and convention bookings were strong according to the Atlanta District. Hotel bookings were strong in the Boston and New York Districts, and solid gains or high levels of occupancy and room rental rates were noted by hotel contacts in most reporting Districts. Atlanta's report noted that hospitality-related projects were underway in several areas of the District.\nNonfinancial Services\nDemand for nonfinancial services was generally stable to slightly stronger since the previous report. Several Districts noted some growth in information technology services, including Boston, Richmond, Kansas City, Dallas, and San Francisco. Solid demand for healthcare services was also noted by some Districts.\nA few Districts said that activity expanded for professional and business services, such as accounting, engineering, advertising, and legal services. The Boston District noted some renewed activity in the financial sector, although engineering and accounting demand remained weak. The Richmond District said architectural engineering firms reported stronger revenues, and Minneapolis noted strength in engineering near oil producing areas, in part due to planned future construction. Responding firms in the Dallas District noted strength in legal services and accounting.\nAdvertising sales picked up in the Philadelphia and San Francisco Districts, and air travel improved in the Dallas and San Francisco Districts. Freight transportation volumes moved higher in Cleveland, and railroad contacts in the Atlanta District noted continued growth. However, Kansas City's report noted flat activity in transportation, and the Dallas report noted mixed results from shipping firms.\nReal Estate and Construction\nActivity in residential real estate markets improved in most Districts since the previous report. Several Districts noted consistent indications of recovery in the single-family housing market, although the recovery was characterized as fragile. The apartment market continued to improve, and multifamily construction increased in several Districts.\nHome sales were above year-ago levels in most areas of the country and several Districts noted sales had improved since the previous report, although some noted that the pace was well below the historical average. In particular, the New York, Cleveland, and Richmond Districts noted a pickup in the pace of distressed sales. Residential brokers and some builders in the Philadelphia, Atlanta, and Dallas Districts said home sales were exceeding expectations. Contacts in the Richmond District said homes were being snapped up as investors become more confident in the housing recovery, and the Atlanta report noted stronger sales to cash buyers and investors in Florida. Chicago said more sales had multiple offers. Apartment rental markets improved in the New York, Atlanta, and Dallas Districts. One contact from the New York District noted rising apartment rents have made buying more attractive, contributing to a slight uptick in sales.\nMost Districts reported that home inventories decreased. Overall, home prices remained unchanged in many Districts, although reports were mixed. There were a few reports that sellers were lowering asking prices, leading to downward pressure on housing prices.\nNew home construction increased in a number of Districts, including Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco. Contacts in the Philadelphia District said demand for new home construction eased slightly. Builders in Kansas City noted housing starts were down, but they expected an increase in the next three months. The Boston, Atlanta, and Chicago Districts reported an increase in multifamily construction, and the Minneapolis District noted numerous multifamily projects were in the pipeline.\nCommercial real estate conditions improved in most Districts, and there were some reports that commercial construction picked up. Commercial leasing remained steady or increased in most Districts including Philadelphia, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The New York, Dallas, and San Francisco Districts noted growth in the technology sector was prompting the absorption of commercial space. Energy activity was helping boost demand for space in the Richmond and Dallas Districts. Boston's relatively strong commercial market continued to generate robust investor interest, although commercial property sales in the New York District remained slow.\nBuild-to-suit construction was noted by the Boston and Philadelphia Districts. The New York District reported new office development projects in the pipeline, and St. Louis' report noted a pickup in speculative industrial projects. The Richmond District said expansion in manufacturing led to a pickup in construction. Reports from the Cleveland and Chicago Districts suggested an increase in hotels and higher education projects, and a New York contact noted that interest in luxury hotel development increased. Outlooks were positive overall, although there were a few reports of increased uncertainty from still unknown U.S. fiscal changes and Europe's debt situation.\nBanking and Finance\nMost Districts that commented on lending noted steady or slightly stronger loan demand. Small and medium-sized banks in the New York District reported the most broad-based increase in loan demand since the mid-1990s. Several bankers in the Richmond District said the volume of small business loan applications was markedly higher. Drivers of business loan demand included energy, healthcare, and commercial real estate. Several Districts noted increased demand for capital spending loans.\nReports on mortgage lending generally indicated slow improvement. The New York District noted stronger mortgage lending, although growth in refinancing eased. The Cleveland District indicated strong mortgage demand and a shift from home refinancing to new purchases. The Richmond District cited continued improvement in mortgage demand, although refinancing still dominated much of the mortgage lending. The Atlanta District said that more applicants had ample cash for down payments or enough equity in their homes to meet refinancing requirements. Demand for commercial real estate loans was generally reported to be stronger.\nA number of Districts, including Cleveland, Atlanta, Chicago, Dallas, and San Francisco, said loan pricing remained quite competitive. New York District respondents noted a decrease in spreads of loan rates over the cost of funds, particularly for commercial mortgages. Lending standards were relatively unchanged to slightly easier across Districts and loan types. Bankers reporting on deposit growth indicated that deposits were steady or continued to increase. Credit quality remained solid, and there were several reports of improved loan quality. Most District banks said loan delinquencies continued to decline.\nAgriculture and Natural Resources\nAgricultural conditions generally improved since the previous report. Rainfall provided much needed moisture in several parts of the Richmond, Minneapolis, and Dallas Districts. Spring planting and crop emergence was well ahead of the normal pace in most reporting Districts, and corn producers in the Chicago District were hopeful that this promising start may result in a record harvest. Producers in the St. Louis, Kansas City, and Dallas Districts noted that the winter wheat crop was in fair-to-good condition. Farm incomes rose further in the Minneapolis and Kansas City Districts, and the San Francisco District reported further sales growth for most crop and livestock products. Producers in the Chicago and San Francisco Districts expressed concern that persistent dry conditions may undermine crop production. Although prices of most agricultural commodities declined, hog and cattle prices rose since the previous report.\nEnergy activity remained robust, with drilling expanding further in the Cleveland, Atlanta, Minneapolis, Kansas City, and Dallas Districts. Atlanta's report noted that increased investment in transportation infrastructure was needed to accommodate the recent rise in domestic and Canadian energy production. Exploration and production continued to shift away from dry-gas to wet-gas or oil-directed drilling in the Dallas and San Francisco Districts in part due to low natural gas prices. Firms in the Kansas City District said they would like to expand payrolls but reported difficulty finding engineers and experienced field workers. Iron-ore and rock mining continued to expand at a strong pace according to the Minneapolis District report. In contrast, demand for coal slowed in the Cleveland and St. Louis Districts, and contacts noted that production was below year-ago levels. Limestone quarries in the Minneapolis District continued to report sluggish demand.\nEmployment, Wages, and Prices\nHiring was steady or showed a modest increase. Reports of hiring were most prevalent in the manufacturing, construction, information technology, and professional services sectors. Staffing firms in the Cleveland and Dallas Districts noted a pickup in orders, and contacts in the Boston and Philadelphia Districts reported steady growth in orders. Demand for temporary workers rose in the Richmond District, and several employers in the Minneapolis District noted a tightening labor market. New York's report indicated that demand for staffing services was mixed, but manufacturers and other business contacts expect hiring to pick up in coming months. Atlanta's report pointed to positive employment growth in the District. Hiring remained limited in the Chicago District, and modest employment increases were noted in the San Francisco District report. There were widespread reports that firms continued to face difficulty finding highly trained or skilled workers--especially in information technology, engineering, and manufacturing fields--and manufacturers in the Chicago District said they were easing job requirements or using interns to fill open positions. Overall upward wage pressures continued to be fairly modest. There were reports of slight wage increases for skilled workers in the Boston, Cleveland, Minneapolis, Dallas and San Francisco. Contacts in the Philadelphia and Chicago Districts noted increases in healthcare costs.\nPrice inflation was modest across most areas of the country. Reports from several Districts, including New York, Philadelphia, Richmond, Chicago, Minneapolis, and Dallas indicated selling prices were stable or had softened somewhat since the previous report. Some Districts, including Philadelphia, Chicago, Minneapolis, Dallas, and San Francisco noted cost pressures eased as the price of energy inputs fell. However, Atlanta's report noted some firms had implemented price increases tied to previous increases in energy costs, and firms in the Kansas City District noted higher input and final goods prices.\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 6, 2012\nThe Eleventh District economy expanded at a moderate pace over the past six weeks. Manufacturing activity was flat to up, demand for business services rose and transportation services activity was mixed. Energy activity remained strong, and the housing sector continued to improve. Retail sales rose moderately, and auto sales were strong. Loan demand picked up since the last report. Drought conditions improved. Most firms reported no change in selling prices. Employment levels were steady to slightly higher, and wage pressures remained minimal. Most firms' outlooks are optimistic, although many respondents expressed concern about U.S. political uncertainty and the European debt situation.\nPrices\nMost responding firms said prices were unchanged, although some noted that input prices ticked up slightly. Retailers said selling prices were stable, although food prices increased. Auto dealers said prices were unchanged. Transportation service firms expect lower energy surcharges by July due to recently reduced prices for jet and diesel fuel. In contrast, airlines expect a slight upward trend due to higher fuel costs compared to last year at this time. Agricultural producers noted lower commodity prices and input costs.\nThe price of WTI fell from near $100 per barrel to the low $90 range over the reporting period. Natural gas prices rose to $2.70 MMBtu after falling under $2 in early April. Respondents said the substitution of natural gas for coal in power generation reduced inventories, although they remain 40 percent above normal. The price of gasoline fell about 20 cents per gallon, and diesel prices fell by 15 cents. Spot prices for several petrochemical products fell sharply as plants returned to production following maintenance, and contacts expect contract prices to follow.\nLabor Market\nEmployment levels were flat to up slightly at most responding firms. Staffing firms said demand picked up over the past six weeks after a slight softening during the prior reporting period. Reports of small employment increases came from some high-tech, transportation, metals, construction materials and food manufacturers. Contacts in auto sales, staffing and transportation services also noted slight increases. Wage pressures remained minimal, although wage increases were noted by some legal firms.\nManufacturing\nOverall demand for construction-related materials improved during the reporting period. Favorable weather and improved residential and commercial construction activity provided a boost to stone, clay and glass producers. Primary and fabricated metals manufacturers reported steady demand, and producers of lumber and related products noted a broad-based increase in orders. Construction-related outlooks were generally positive, but some contacts are concerned about domestic political uncertainty and unfavorable developments in Europe derailing the pickup in activity seen so far this year.\nHigh-tech manufacturers said orders continued to grow at a moderate pace. According to contacts, demand for logic devices was strong, while orders and prices for memory chips remained weak. One respondent noted some strengthening in industrial demand and orders for communications infrastructure equipment, such as cell phone towers. Inventories were near desired levels. The outlook for the next three to six months is for mild to moderate growth, although one contact said a recent increase in new orders has raised the likelihood that production may pick up in the second half of the year.\nAviation equipment manufacturers said demand was flat during the reporting period. Contacts were more pessimistic in their outlooks for the year, citing soft demand and negative economic news as key factors. Recreational vehicle manufacturers reported weak sales, in part due to economic uncertainty and fuel price shocks. Food producers said sales activity increased over the past six weeks, and orders were well above year-ago levels. Reports from paper manufacturers were mixed, but contacts expect modest sales growth for the year.\nPetrochemicals producers reported moderate domestic demand but said export demand slowed, partly a result of higher U.S. plastics prices, but also due to weaker growth in Asia and the Middle East. Notably, contacts said domestic PVC demand rose for the first time in a long time in response to an increase in housing starts and other construction. Outlooks for the petrochemical industry were positive, and announcements for new construction or expansion continue at a rapid pace. Refiners said margins improved slightly in early May.\nRetail Sales\nRetail sales grew modestly over the comparable period from a year ago and performed in line with contacts' expectations. Strength was seen in sporting goods and men's and women's apparel.\u00c2\u00a0 Eleventh District sales growth was stronger than the nation on average, according to a large national retailer. Contacts noted that consumers still seem a bit hesitant, but business is improving nonetheless. Inventories are in good shape and being managed closely. Automobile sales continued to rise over the reporting period. Car sales were especially strong, but trucks were selling well too. Contacts' outlooks remain optimistic and they expect continued growth in vehicle sales.\nServices\nStaffing services said activity picked up over the past six weeks, following a slight softening in demand seen during the prior reporting period. Shortages of skilled IT professionals continued, and several contacts reported an increase in demand for construction workers. Legal firms reported steady demand, with continued strength in corporate, intellectual property and energy services. Contacts also noted a slight uptick in estate planning, lobbying and real estate related services. Accounting firms noted a modest pickup in demand largely due to growth in mergers and acquisitions related activity.\nReports from transportation service firms were mixed. Small parcel and air cargo volumes increased, while railroad shipments and shipping container volumes declined during the reporting period. Intermodal firms reported an increase in cargo volumes largely due to strong demand for oil field supplies.\nAirlines said passenger demand improved over the past six weeks. Domestic demand increased, while demand for international travel was flat. Contacts said business travelers continued to be price sensitive and were purchasing restricted discount fares. Responding firms expect passenger demand to remain steady over the next three months.\nConstruction and Real Estate\nContacts in the single-family housing industry noted consistent indications of recovery in Texas markets. Respondents said sales are up year-to-date, and some builders were beating sales expectations. Agents noted solid sales for existing homes, and outlooks are more positive. Apartment market respondents said that after first quarter softness, demand came back stronger in recent months, as expected. Texas apartment markets continued to outperform other parts of the U.S., according to contacts. Rental rate increases slowed, but remain relatively healthy. Apartment construction activity is still at low levels, but is expected to pick up in the second half of the year.\nCommercial real estate leasing activity remained strong across Texas metros. Houston, in particular, saw robust office and industrial demand growth thanks to strong energy sector expansion. Construction activity is expected to improve modestly in Texas markets in the second half of 2012. Some contacts noted a recent trepidation in the capital market/lending environment due to heightened worries about European debt problems.\nFinancial Services\u00c2\nFinancial firms reported a modest uptick in loan demand. National banks reported strength in middle-market lending, auto loans and corporate merger and acquisition activity. Regional banks also noted improved sentiments. Several banks suggested energy-related activity remains robust. Some smaller business and middle-market deals have begun to crop up. Outlooks are generally less pessimistic, and some outright optimistic, with an overall theme that \"loan demand is slightly stronger.\" Loan pricing remains competitive. Outstanding loan quality continues to improve and contacts note fewer problem loans.\nEnergy\nRespondents at energy-related firms said drilling activity remained strong, and the District rig count grew modestly over the past six weeks. The shift from dry-gas drilling to wet-gas or oil-directed drilling continued, and some firms noted logistical problems as they try to move crews and equipment. Overall, contacts say that outside of pressure pumping and fracturing used in dry-gas drilling, the market for oil field machinery and services remains very strong.\nAgriculture\nDrought conditions improved over the reporting period, particularly in West Texas thanks to recent rains. Better soil moisture continued to improve prospects for the 2012 crop year, and pastures greened up for livestock producers. The wheat harvest began and yields so far were above average.\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 6, 2012\nThe Tenth District economy improved moderately in late April and May. Retailers and restaurant contacts reported stronger sales, while auto sales declined. Both retailers and auto contacts expected increased activity in the months ahead. Manufacturing activity rose, and the high-tech services industry experienced modest growth. Transportation activity was flat and was expected to remain unchanged in the months ahead. Residential and commercial real estate activity increased solidly with higher sales and lower vacancy rates. Banking contacts reported slightly higher loan demand, improved loan quality and increased deposits. Agricultural growing conditions improved, and farmland values continued to climb. The energy sector expanded further, but the oversupply of natural gas was leading to a slower pace of expansion. Most sectors reported higher input prices and final goods prices, and expected further increases in the coming months. Wage pressures increased, and firms reported some difficulty in filling positions.\nConsumer Spending\nConsumer spending increased in the retail, restaurant and tourism sectors but declined in the auto sector. District contacts from every consumer sector expected stronger sales over the next three months. Retailers reported sharply higher sales compared to a month ago. Most product lines experienced gains including home goods such as dining tables, bedroom sets and appliances. Auto sales fell sharply with large SUVs and trucks continuing to be weak sellers. However, most auto contacts remained satisfied with current inventory levels. Restaurant contacts reported increased traffic and higher check amounts. Tourism activity increased in the District due in part to good spring weather. Hotel occupancy held steady as average room rates edged up.\nManufacturing and Other Business Activity\nManufacturing activity in the Tenth District improved in May, and expectations for future activity were stronger than in previous months. Both durable and non-durable goods manufacturers reported increased production. New orders and factory shipments increased during the survey period. Manufacturing contacts reported that capital spending plans were much improved, and several noted plans to expand into new products and markets. Growth in transportation activity was flat, and contacts reported higher input prices. Capital spending plans at transportation firms continued to be sluggish, and firms expected future activity to be unchanged. High-tech services firms reported moderate growth in sales, and expectations for future activity were strong. Several high-tech firms reported difficulty in finding experienced workers, especially qualified software developers.\nReal Estate and Construction\nResidential real estate activity improved during the most recent survey period, and commercial activity was solid. Housing starts were down compared to the previous survey, but builders expected new home construction to increase over the next three months. Housing materials were readily available, but several respondents had trouble finding skilled workers. Sales activity at construction supply firms surged during the survey period across all types of materials, and expectations for sales continued to be strong. Residential sales were much improved from the previous survey, and inventories continued to fall. Contacts reported that homes priced between $150,000 and $300,000 sold particularly well, but homes at the upper end of the market continued to be difficult to sell. Overall mortgage lending activity grew this survey period, but refinancing activity was flat. The majority of refinancing activity was due to lower payments in response to low interest rates. Commercial real estate activity was solid during the survey period, but there was some uncertainty about future activity. Vacancy rates fell, and contacts expected them to continue to fall over the next three months. Prices and rents were flat, but expectations were for some increases in the future. Several respondents believed that political uncertainty could create some weakness in the construction and commercial real estate markets.\nBanking\nIn the recent survey period, bankers generally reported slightly stronger loan demand, improving loan quality, and increased deposits. Overall loan demand was improving as most respondents reported stable to increased loan demand for residential real estate loans, commercial and industrial loans, and commercial real estate loans. Demand for consumer installment loans remained steady. Credit standards remained largely unchanged in all major loan categories, and the majority of respondents reported steady or increased deposits. Most bankers reported improving loan quality compared to a year ago. Additionally, every banker believed the outlook for loan quality over the next six months would be steady or improving.\nAgriculture\nAgricultural conditions improved since the last survey. District contacts reported that winter wheat development was roughly three weeks ahead of normal. Most of the winter wheat was rated in fair-to-good condition. Spring planting was nearly complete, and early emerged crops were rated in good condition. Tight crop supplies kept cash prices high, while the prospects of a bumper 2012 crop weighed on futures prices. High feeder calf prices continued to support strong profits for ranchers. In contrast, profits at cattle feedlots were strained by high feed and feeder calf costs. Strong export demand underpinned profits for pork producers. Farmland values rose further, buoyed by farm incomes and revenues from mineral rights leases.\nEnergy\nEnergy activity continued to expand in May. Drilling activity increased since the previous survey. However, contacts reported that storage reservoirs were full and that an oversupply of natural gas was beginning to result in a slowdown in the pace of drilling. Oil prices fell during the survey period, and contacts believed that a slumping world economy would keep prices steady over the next three months. Natural gas prices rose somewhat but remained near historically low levels, and contacts expected prices to stay low due to oversupply. Firms reported that they would like to expand their workforces in the coming months, but noted that it had been difficult to find experienced field workers and engineers.\nWages and Prices\nDistrict contacts reported higher prices for both inputs and finished goods, and wage pressures increased from low levels. Manufacturers continued to report higher raw material prices, but prices increased at a slower pace than earlier this year. Finished goods prices rose slightly in April and were flat in May. Manufacturers expected higher prices for both raw materials and finished goods over the next six months although the number of contacts expecting an increase fell slightly. Builders reported higher input prices, and retailers reported higher sales prices. Both builders and retailers expected further increases over the next three months. Higher food costs and menu prices were noted by restaurant contacts who also anticipated raising menu prices further as food prices continue to rise. Wage pressures increased since the previous survey but remained fairly low. The number of contacts reporting labor shortages remained stable, but contacts reported difficulty in filling a variety of positions including housekeeping, sales, drivers, mechanics, engineers, and skilled workmen.\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 6, 2012\nThe Ninth District economy grew at a modest to firm pace since the last report. Strength was noted in consumer spending, tourism, professional services, real estate, construction, manufacturing, energy and mining, and agriculture. Firms reported difficulties hiring qualified candidates, although wage increases remained modest. Price increases were generally subdued.\nConsumer Spending and Tourism\nConsumer spending increased modestly. Same-store sales at a Minnesota-based retailer increased just over 1 percent in April compared with a year ago; the soft gains were attributed to an earlier Easter holiday and warmer weather in February and March, which likely pulled sales earlier into the year. Recent sales were up slightly at a Minneapolis area mall where a number of stores were undergoing or planning renovations. A Montana bank director reported that vehicle sales were up from a year earlier and a representative of an auto dealers association in North Dakota reported strong sales during the past two months, particularly in the western part of the state. Recent sales at grocery stores owned by a Minnesota-based company were down slightly. Meanwhile, a Minnesota-based electronics retailer announced plans to close six stores in Minnesota.\nTourism officials and businesses were cautiously optimistic about the upcoming summer season. According to a survey of Minnesota lodging and camping properties, 39 percent of respondents expect summer occupancy to be up, while 15 percent expect decreases from a year ago. Officials in South Dakota reported an increase in the number of tourism information requests; early warm weather increased visits to a number of attractions.\nConstruction and Real Estate\nConstruction activity increased from a year ago. The value of commercial building permits in the Sioux Falls, S.D., area was up in April from a year earlier. The value and number of new commercial permits increased in Fargo, N.D., during 2012 compared with the same period in 2011. Several new commercial building projects are under consideration in the Minneapolis area. However, respondents to the University of St. Thomas's semiannual Minnesota Commercial Real Estate Survey (May) expected higher land and building costs, which could dampen growth in construction. Residential construction increased from a year ago. The value of residential building permits increased significantly in the Sioux Falls area in April. The number of single-family building permits increased in Minnesota in March 2012, compared with March 2011. Numerous new multifamily projects were planned for several parts of the District.\nCommercial real estate market activity increased. According to the aforementioned University of St. Thomas survey, respondents expected growth in commercial rents and occupancy. Several large Minnesota companies recently renewed or signed new leases for additional office space. A real estate consultancy reported that industrial vacancy rates in the Minneapolis area decreased in the first quarter of this year compared with the fourth quarter of last year; however, office and retail vacancy rates increased. Increases in residential real estate sales continued across most of the District. Home sales in April were up 7 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 the median sales price rose by 12 percent. In the Sioux Falls area, April home sales were up 11 percent, inventory was down and the median sales price rose 4 percent relative to a year ago.\nServices\nActivity at professional business services firms increased slightly since the last report. An engineering and design firm near oil producing areas of the District reported extremely strong demand for construction developments. Preliminary results of the Minneapolis Fed's annual survey of professional services companies in May showed that sales revenue, space usage, and profits are expected to increase over the next year. A medium-sized Minnesota services firm commented that they \"feel optimistic and are trying to improve efficiency.\"\nManufacturing\nManufacturing activity continued to expand since the last report. An April survey of purchasing managers by Creighton University (Omaha, Neb.) found that production expanded in Minnesota and the Dakotas. A light industrial manufacturer in South Dakota reported the strongest capital expenditure levels in 10 years as it developed a successful niche business line. A cement factory in Rapid City, S.D., is considering a $100 million expansion. A steel mill in Minnesota announced a $50 million investment in upgrades.\nEnergy and mining\nActivity in the energy and mining sectors grew. Oil and gas exploration activity increased in North Dakota and Montana since the last report. A biodiesel refinery in Minnesota announced a $20 million upgrade to switch feed stocks from soybean oil to waste fats. District iron ore mines continued to operate at near capacity. Montana hard-rock mines were also busy, with numerous expansions underway across the state. However, District limestone quarries were still suffering from reduced cement demand.\nAgriculture\nThe agricultural sector maintained its strength. Warm spring weather allowed farmers to get into fields early and plantings of corn, spring wheat and soybeans in mid-May was well ahead of average in District states. In addition, recent rains alleviated drought conditions that had persisted until recently in Minnesota and the Dakotas. The Minneapolis Fed's first quarter (April) survey of agricultural credit conditions indicated that most lenders saw continued increases in farm household income and capital spending, though respondents expect growth to moderate over the next three months. Agricultural output prices have come down somewhat recently. April prices received by farmers for soybeans, cattle and chickens increased from a year earlier; prices declined for wheat, corn, hogs, dairy products and eggs.\nEmployment, Wages, and Prices\nA number of employers with open positions noticed tightening in the labor market. Manufacturers in several areas reported difficulty recruiting skilled workers, particularly welders. Agriculture operations in the western part of the District noted difficulty finding workers for certain positions. An aircraft maintenance company recently confirmed plans to expand its operations in Minnesota with potential hiring of up to 225 people. In North Dakota an equipment manufacturer announced plans to create 200 jobs and in northwestern Wisconsin a recreational vehicle manufacturer will add almost 90 jobs.\nIn contrast, a surprising number of lay-offs were reported recently. A food manufacturer announced plans to cut over 400 positions in Minnesota as part of a restructuring strategy. Also in Minnesota a medical devices company will lay off 220 employees and a cleaning products manufacturer laid off 70 information technology workers. An aerospace manufacturer will close a plant in northwestern Wisconsin, affecting 130 workers.\nA larger number of businesses reported wage increases, but the size of increases remained modest. According to a recent Minneapolis Fed ad hoc survey of business contacts, 65 percent reported that their companies were facing higher wages. Larger wage increases were reported in the oil drilling region of western North Dakota and eastern Montana.\nPrice pressures were generally subdued since the last report, although 73 percent of respondents to the Minneapolis Fed's ad hoc survey reported upward input cost pressures. Late-May Minnesota gasoline prices were about 15 cents per gallon lower than mid-April and 35 cents per gallon lower than a year ago. A number of metals prices decreased since the last report. A recent budget proposal for the University of Minnesota includes a 3.5 percent increase for in-state undergraduates, the smallest percentage increase in 12 years.\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 11, 2012\nPrepared by the Federal Reserve Bank of Cleveland based on information collected on or before April 2, 2012. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March. Activity in the Boston, Atlanta, Chicago, Dallas, and San Francisco Districts grew at a moderate pace, while Cleveland and St. Louis cited modest growth. New York reported that economic growth picked up somewhat. Philadelphia and Richmond cited improving business conditions. The economy in Minneapolis grew at a solid pace and Kansas City's economy expanded at a faster pace.\nManufacturing continued to expand in most Districts, with gains noted in automotive and high-technology industries. Manufacturers in many Districts expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices. Demand for professional business services showed modest to strong growth and freight volume was mainly higher. Reports on retail spending were positive, with the unusually warm weather being credited for boosting sales in several Districts. While the near-term outlook for household spending was encouraging, contacts in several Districts expressed concerns that rising gas prices could limit discretionary spending in the months to come. New-vehicle sales were reported as strong or strengthening across much of the United States. Tourism increased in most reporting Districts. Residential real estate showed some improvement, with many contacts citing expansion in the construction of multi-family housing. Activity in nonresidential real estate increased or held steady in most Districts. Agricultural conditions were generally favorable. Mining activity expanded and oil extraction rose, while natural gas drilling slowed. Banking conditions were largely stable, with some improvement seen in loan demand. Several Districts reported increased credit quality.\nHiring was steady or showed a modest increase across many Districts. Difficulty finding qualified workers, especially for high-skilled positions, was frequently reported. Upward pressure on wages was constrained. Overall price inflation was modest. However, contacts in many Districts commented on rising transportation costs due to higher fuel prices.\nManufacturing\nManufacturing continued to expand in most Districts, although respondents in the Boston and St. Louis Districts reported that manufacturing was mixed and Chicago reported that growth in manufacturing production leveled off after a strong start to the year. Contacts in automotive industries reported gains in Cleveland, Atlanta, and Chicago. The Kansas City, Dallas and San Francisco Districts reported increased sales for high-technology manufacturers, with Dallas noting key demand drivers continue to be mobile applications, cloud computing, and automobiles. The Philadelphia and Dallas Districts indicated improvement in demand for manufacturing with ties to residential housing and construction. Cleveland steel producers and service centers reported that volume was trending slightly higher, while Chicago steel producers said that capacity utilization was steady. For refiners in San Francisco, capacity utilization rates continued to hold largely stable, as weak domestic gasoline demand was offset by strong foreign demand for distillate products. In Dallas, Gulf Coast refiners noted steady margins overall.\nManufacturers in Boston, Cleveland, and Chicago are expanding payrolls but finding it difficult to find highly-skilled workers. Comments from the Cleveland, Atlanta, Chicago, and Kansas City Districts indicated a rise in capital spending. Manufacturers in over half the Districts commented on increasing input costs, focusing, in particular, on rising petroleum prices. Contacts in Boston, Philadelphia, Chicago, Kansas City, and San Francisco remained optimistic that activity will increase in the near term. However, several respondents in Cleveland and Dallas noted that their outlooks have become more cautious. Manufacturers in Boston and Cleveland expressed concern about the European economy. Expectations were mixed in St. Louis.\nNonfinancial Services\nDemand for professional business services was characterized as modest to strong in the Boston, Philadelphia, Richmond, Kansas City, and Dallas Districts. St. Louis, Minneapolis, and San Francisco reported that demand was mixed. Boston and Richmond cited rising demand for advertising, marketing, and consulting services, while accounting services saw a modest pickup in Minneapolis and Dallas. Growth in technology-related services to the energy sector was noted in the Minneapolis and Kansas City Districts. St. Louis and San Francisco reported that activity in the healthcare sector was flat to down. Both Richmond and San Francisco noted increased sales for restaurants and food-related service providers. Freight transportation services were higher in the Cleveland, Richmond, and Kansas City Districts. Reports from Atlanta and Dallas were mixed due to declining air cargo volumes and railroad shipments. St. Louis reported that plans have been announced to close certain freight transport and distribution facilities. Contacts in Cleveland, Richmond, and Kansas City noted a shortage of qualified truck drivers.\nConsumer Spending and Tourism\nRetail spending continued to improve in almost all Districts. Contacts in the Boston, New York, and St. Louis Districts characterized retail activity as strong. Reports from Chicago and Richmond indicated a significant strengthening in retail spending. Sales expanded at a modest or moderate pace in Philadelphia, Minneapolis, Kansas City, and Dallas. Unseasonably warm weather boosted sales in the Boston, Philadelphia, Cleveland, Richmond, and Chicago Districts. Grocers in Cleveland and San Francisco reported sales as unchanged. Apparel sales were strong in Boston and New York. Purchases at home improvement stores were up in Richmond and Chicago. Reports from Boston, Atlanta, St. Louis, and Kansas City indicate a positive near-term outlook for retail spending; however, contacts in Philadelphia, Cleveland, Atlanta, Chicago, and Kansas City expressed concerns that rising gas prices could limit discretionary spending in the months to come.\nAutomobile sales were reported as stronger or strengthening during late February and early March in most Districts. Mild winter weather boosted sales in Cleveland but depressed motor vehicle service spending in New York and Minneapolis. Rising gas prices lead to increased purchases of fuel-efficient vehicles in Kansas City, Dallas, and San Francisco. Contacts in Philadelphia and Kansas City expect continued sales strength. Reports from Cleveland showed a mixed outlook, with some respondents expecting solid sales and others seeing the current pace of sales as unsustainable. Used-vehicle sales were reported as strong or robust in Cleveland and San Francisco.\nTourism was characterized as strong by respondents in the Boston, New York, Richmond, and Atlanta Districts. Minneapolis indicated a slowdown in activity due to a general lack of snow this winter. Conversely, warm weather boosted tourism in Richmond. Bookings were strong in New York, and occupancy rates improved in the Boston, New York, Atlanta, and San Francisco Districts. In Boston and Kansas City, business travel continues to be the main driver of tourism activity. Contacts in Boston and Atlanta expressed concern over high fuel prices as a possible drag on leisure spending.\nReal Estate and Construction\nResidential real estate activity improved in most Districts, though Cleveland and San Francisco noted that activity remained lackluster or at low levels. The St. Louis and Minneapolis Districts reported increases in building permits. The construction of multi-family housing units, including apartments and senior housing, expanded in many Districts. Home prices continued to decline in Boston, New York, and Minneapolis, but were largely flat in San Francisco. Contacts in Boston, Philadelphia, and Kansas City indicated that mild weather had boosted real estate activity.\nNon-residential construction activity improved in the Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis Districts, though many of these contacts characterized the improvement as slow. Boston, New York, and San Francisco characterized non-residential real estate activity as unchanged or steady. The energy and high-tech sectors were driving much of the demand in the Dallas District. San Francisco noted a rise in the demand for office space from the technology sector. Cleveland and Chicago saw a boost in healthcare-related construction. Projects related to the education sector are showing growth in Boston, Cleveland, Philadelphia, and Richmond. The outlook of builders is described as positive or slowly improving in the Philadelphia, Cleveland, Atlanta, and Kansas City Districts, and as cautiously optimistic in Boston.\nBanking and Finance\nFor most Districts reporting on financial services, banking conditions remained stable, with modest improvements in demand for lending. Loan demand was reported as improved in New York, Philadelphia, Cleveland, Richmond, Chicago, Kansas City, Dallas, and San Francisco, while lending activity was unchanged in St Louis. The Dallas District reported improved sentiment by national and regional banks due to improved middle-market and large corporate lending. Contacts in Cleveland, Richmond, and San Francisco reported that increased competition among lenders has been driving more aggressive loan pricing. In general, the demand for commercial and industrial loans remained steady, while several Districts reported an increase in commercial real estate lending activity. The Philadelphia and Cleveland Districts reported increased lending for multifamily housing and health care, and contacts in Richmond cited increased lending to small business to finance inventory and capital expenditures. Consumer lending has remained stable or risen modestly across a few Districts. The Cleveland and Richmond Districts reported increased home equity and auto lending, while bankers in Chicago noted improved credit availability for auto loans and credit cards. Several Districts reported that credit standards remain stable, but Richmond bankers reported that they were offering easier terms to attract new commercial borrowers. Several Districts reported increased credit quality, as delinquencies have continued to decline and few problem loans have been reported.\nAgriculture and Natural Resources\nRecent rain and snowfall has helped alleviate dry agricultural conditions from earlier in the year. Nonetheless, the Atlanta, Minneapolis, Kansas City, and Dallas Districts have all reported certain areas where drought conditions continue to persist. Due to unseasonably warm weather, contacts in several Districts reported that the planting of some crops is beginning earlier than normal, including corn in Chicago and wheat in Minneapolis. San Francisco commented that there has been an increase in certain input costs, such as fertilizer, while Chicago reported tight supplies of some agricultural chemicals and corn seed. Atlanta and Chicago reported an increase in the prices paid to farmers for soybeans; Chicago noted that the increase was due to lower-than-expected harvests in South America. Livestock prices rose in the Chicago, Minneapolis, and Kansas City Districts, while orders for livestock were robust in San Francisco. Farmland values in Kansas City continue to rise and are at record highs.\nActivity in natural resources remained strong. The Kansas City, Dallas, and San Francisco Districts reported a shift from natural gas to oil exploration and production due to low natural gas prices and growing demand for oil. In the Cleveland District, leasing activity in the Utica shale is expanding. Cleveland and St. Louis noted that the production of coal has slowed over the past few months. The mining sector is expanding in San Francisco due to high prices for a variety of precious metals, and iron ore mines in the Minneapolis District continued to operate near capacity. Contacts in Kansas City reported a shortage of engineers and experienced technical support for oil and gas drilling.\nEmployment, Wages, and Prices\nHiring was steady or showed a modest increase in the Boston, New York, Cleveland, Richmond, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco Districts. Industries reporting some employment growth included manufacturing, freight transport, professional business services, and information technology. A preference for part-time and temporary workers was seen in the Richmond and Atlanta Districts. Atlanta noted that temporary workers were being utilized in order to contain costs and retain flexibility, while some employers in Richmond prefer temporary workers due to uncertainty about future demand. Some employers in the Boston, Cleveland, Atlanta, Chicago, Kansas City, and Dallas Districts reported having difficulty finding qualified workers, especially for certain high-skilled positions. Contacts in Philadelphia and Cleveland noted that new federal regulations are exacerbating a truck-driver shortage. New York commented that employers are planning to step up hiring activity in the months ahead. Boston, Richmond, and Atlanta said that employers in their Districts are cautious and need to see more robust growth before they expand their permanent payrolls further.\nWage pressures were characterized as contained or modest among reporting Districts. Contacts in Chicago, Dallas, and San Francisco noted some upward pressure on wages for skilled jobs, especially in manufacturing and information technology. In the Minneapolis District, strong oil-drilling and production activity continued to bid up pay. Transportation contacts in Cleveland noted some wage pressure due to a tightening of the driver pool. And medical benefits continue to put pressure on labor costs in Philadelphia.\nOverall price inflation was modest in most Districts. However, contacts in the Cleveland, Richmond, Atlanta, Chicago, Kansas City, and Dallas Districts cited rising transportation costs due to higher fuel prices. Minneapolis and Dallas noted that airlines have raised their fares to offset higher fuel costs. Richmond reported that rising fuel costs were a serious problem for both land and ocean shippers, while intermodal transportation firms in Dallas said that they had increased prices in response to higher fuel costs. In Atlanta, higher transportation costs were passed through to consumers without much difficulty. In contrast, contacts in Cleveland, Chicago, and San Francisco said it was difficult to pass through higher costs to consumers. Input costs for manufacturers in Boston, Cleveland, and Kansas City rose somewhat, but with little pass-through. Price pressures have eased somewhat for manufacturing firms in Philadelphia. Higher prices for construction materials narrowed profit margins for contractors in Kansas City.\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 11, 2012\nReports from Sixth District business contacts indicated that the pace of economic activity expanded at a moderate pace in late February through March. Expectations remained generally positive across most sectors, although contacts expressed concern regarding the impact of higher energy prices on the outlook.\nRetailers mostly indicated sales were growing at a modest pace and auto sales remained strong. Leisure and hospitality businesses reported robust activity in all segments except cruise lines. Homebuilders and brokers experienced improvements in sales of new and existing homes while multifamily construction remained strong. General contractors noted slow improvements in commercial construction conditions. Manufacturers and transportation contacts reported positive production trends, on balance. Loan demand remained relatively weak according to community bank contacts. The share of firms reporting they were hiring continued to increase, although many contacts continued to express a preference for part-time or temporary contract workers. Most contacts continued to report having relatively little pricing power. However, the proportion of firms saying they were successful in their attempts to pass on price increases rose since the last report.\nConsumer Spending and Tourism\nMost contact reports on consumer spending were generally positive. Sales of home appliances, furniture, and autos were solid, while apparel was more mixed. Most retailers remained optimistic that sales would improve over the next three months, but noted that the impact of higher gasoline prices posed a downside risk to their sales outlook.\nTourism activity remained strong and contacts were optimistic about the outlook for leisure and hospitality spending in the summer. Occupancy rates were up in many areas and South Florida continued to be boosted by visitors from South America and Canada. Convention activity continued to improve as well. Similar to retail, tourism contacts expressed concern about higher fuel costs and the potential impact on domestic travel to many regional tourist destinations. There continued to be a modest drop off in bookings on some cruise lines, which was attributed mostly to the recent disaster off the coast of Italy.\nReal Estate and Construction\nThe majority of residential broker contacts reported that home sales exceeded the year earlier level in late February and March. More than two-thirds of the brokers indicated that sales met or exceeded their expectations. Florida contacts noted strengthening sales, particularly in South Florida markets. Many noted that inventory levels across the District continued to decline on a year-over-year basis and, in spite of this, home prices were flat to slightly down compared with a year ago. The outlook among brokers for sales growth remained positive, with most anticipating modest year-over-year gains over the next several months.\nThe majority of homebuilder contacts reported that new home sales and construction rose modestly during late February and March compared with a year earlier. Similar to brokers, builders also noted that home price declines abated somewhat and new home inventories continued to decline on a year-over-year basis. Contacts observed that multifamily construction remained robust across much of the District and new projects continued to be announced. Over the next several months, homebuilders anticipate sales and construction to be flat to slightly up compared with a year ago.\nMost commercial real estate contacts indicated that conditions continued to improve slowly in the region. Contractors noted a slight improvement in demand, but the market remained very competitive and overall activity remained at low levels. Commercial real estate brokers continued to report modest improvements in demand, mostly for class A space in urban markets. Some reported that businesses have become more willing to move ahead with lease plans. Rent concessions continued to be noted with several brokers reporting that rates have begun to stabilize; however, longer leases were reported which included generous tenant improvements. The outlook among contacts was a bit more positive than previously reported, but most contractors and commercial real estate brokers continued to anticipate that activity would improve slowly this year.\nManufacturing and Transportation\nManufacturing activity across the Sixth District improved compared with the last report. Most contacts reported an increased level of both new orders and production. Several large auto manufacturers announced plans to hire more workers to meet increased demand for their products. A major industrial equipment producer and two medium-sized manufacturers announced plans to increase their presence in Georgia. Most manufacturers also indicated some increase in non-labor input costs.\nTransportation contacts continued to report volume growth across most segments with the exception of air cargo, which is being hindered by slowing global demand and rising fuel costs. A railroad contact noted significant volume increases in automobiles, steel, and forestry products. Domestic coal shipments slowed because of the effects of warmer weather and lower natural gas prices. A port contact indicated strong container volumes and increases in steel imports. The majority of transportation contacts reported substantial investment spending in anticipation of future demand.\nBanking and Finance\nContacts at community banks indicated liquidity levels remained high, a result of increasing deposit balances and relatively soft loan demand. Some contacts acknowledged a slight increase in demand for C&I and commercial real estate loans in some metropolitan areas, and a general rise in demand for automobile loans. In rural areas, however, low property valuations were said to be hindering overall loan activity. The demand for mortgages varied widely by market and some community bank contacts indicated that they have exited the mortgage origination market altogether. Lending standards at these institutions have remained largely unchanged. Smaller institutions noted tough competition from larger banks for credit customers. Many of these contacts expressed concern that regulatory compliance costs were affecting profit margins.\nEmployment and Prices\nOverall hiring trends were positive, but growth remained relatively modest in late February and March. While business contacts noted some increased optimism about the economic outlook, most firms continued to approach expansion plans with considerable caution. Among firms adding to payrolls, many were utilizing temporary or contract hires in order to contain costs and retain flexibility. Reports indicated that smaller businesses were looking to rebuild margins before proceeding to adjust their payrolls. Several businesses, including trucking related firms, asserted that they were faced with a lack of qualified labor. One large manufacturer addressed the issue of the lack of qualified workers by bringing back retirees on a contract basis to help train new hires.\nThough most contacts continued to report having little pricing power, more firms recounted successful attempts or plans to pass on price increases since the last report. Increased transportation costs, including those resulting from higher gasoline and other fuel prices, were reportedly passed on to consumers without much difficulty. According to the firms surveyed in the Atlanta Fed's March Business Inflation Expectations survey, unit costs were expected to rise two percent for the year ahead, up slightly from February. According to the businesses surveyed, profit margins, though still below normal, have begun to improve. Firms expect modest improvement in margins over the next year.\nNatural Resources and Agriculture\nInvestment in transportation infrastructure for oil and natural gas continued to increase; however, contacts noted that more investment is needed to accommodate recent increases in domestic and Canadian energy production. District refining contacts noted that the capacity to process the heavier grades of crude oil that are increasingly available is limited, despite recent investment in additional refinery capacity. While conditions improved in parts of the District, much of Georgia and Florida continued to experience varying degrees of drought. Contacts also reported that Florida citrus growers continued to fight greening disease. Prices paid to farmers for poultry and soybeans were up from the previous reporting period. Contacts continued to report concerns regarding available labor supplies in Georgia and Alabama, attributing this to the tougher immigration laws.\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 11, 2012\nEconomic activity continues to expand at a moderate pace in the First District. Most contacted retailers, manufacturers, and consulting and advertising firms report higher revenues in recent months than a year earlier. Commercial real estate markets are mostly unchanged, while residential contacts across the region cite rising sales and declining prices. Except for a consulting firm unable to meet very strong demand growth without aggressive hiring, responding firms are hiring modestly or not at all; a few mentioned small layoffs. Retailers express concern about what rising energy costs may do to consumers' willingness to spend, while manufacturing contacts acknowledge the increasing costs, but say they are not a problem.\nRetail and Tourism\nMost First District retail contacts characterize year-to-date 2012 performance as strong, attributing this strength to mild winter weather and improving consumer sentiment. For February, year-over-year comparable-store sales increases ranged from low to high single digits, with the exception of one retailer citing a 23 percent rise. Furniture continues to sell well in the First District, as does apparel and other household items. Paper-based products are expected to see 3 percent to 4 percent price increases. While respondents are optimistic that performance will continue to be good, they remain cautious, noting that gasoline price increases might damp consumer sentiment.\nThe travel and tourism sector in the First District continues to expect a strong 2012, based on 5.6 percent annual growth in 2011, a strong start to 2012, and analyst forecasts predicting high single-digit to low double-digit increases over 2011. In January and February, hotel revenues were up nearly 10 percent, reflecting improved occupancy rates. Higher hotel occupancy has positive spillover effects for restaurants, retail, and entertainment venues. Business travel is driving this increase, as leisure travel is still subject to some consumer caution. Echoing the retail contacts, tourism contacts say higher gas prices could retard growth in leisure travel, but aggressive price discounting might provide a counterweight.\nManufacturing and Related Services\nNone of the 10 First District manufacturing firms contacted this round saw year-over-year sales declines in recent months, but performance varied. A semiconductor machinery manufacturer which generates most of its sales in Asia reports flat sales in the first two months of 2012, an improvement over declining sales in the fourth quarter of 2011. By contrast, an information technology equipment provider cites 18 percent sales growth in 2011 and continued strong growth in the first quarter of 2012. Geography matters, as firms with large operations in Europe saw slower growth and some outright overseas declines whereas firms more focused on the U.S. and Asia experienced better results. A contact in the information technology sector argues that the end of 2011 was strong because customers held back on spending during the weak spring and summer period but then made sure to spend that money before the year ended.\nAll of our contacts report that input costs and, in particular, energy costs are up. However, none says rising costs are a problem and all in this round say energy has little noticeable effect on their costs or revenues. In general, respondents indicate they are hiring to keep up with demand. Two firms undertook relatively small layoffs; one did so because of weaker sales in the fourth quarter of 2012 and the other is offsetting layoffs at one New England plant with increases elsewhere in the region. Firms continue to report difficulty finding qualified workers, especially in skilled manufacturing trades and engineering. One contact, an electrical equipment manufacturer, is trying to re-orient recruiting to hire young engineers, for example, and train them in-house, rather than continuing to search for workers who already have experience with the relevant technology.\nNone of the contacted firms has revised its outlook since our last conversations earlier this year or in the closing months of 2011. Most appear to expect U.S. economic growth around 2 percent in 2012 and company sales growth in the low single digits. Contacts remain concerned about the European economy and about political \"gridlock\" here. A few contacts also expressed slight concern about prospects for growth in China.\nSelected Business Services\nConsulting and advertising contacts in the First District report increasing revenues in the first quarter of 2012 and most say that the pace of growth, while not rapid, is sustainable. Despite the fact that recent growth is generally slower than at the end of 2011, contacts are relatively upbeat, partly because the faster growth of late 2011 represented a recovery from a very weak third quarter, in which several contacts experienced declining revenues and laid off workers. Revenue results, while good for marketing and advertising firms, are stronger for consulting firms, especially economic consulting. A firm that focuses on marketing and promotional materials saw year-over-year growth of about 10 percent while another that focuses on advertising cites stable revenues recently after rapid growth in the latter half of 2011. Strategy and business consulting contacts report growth around 5 percent, as clients who had previously been sitting on large stockpiles of cash are beginning to spend them to address pent-up need for consulting services cut during the recession. Clients have reportedly begun to focus on increasing sales and positioning themselves within markets rather than solely on cutting costs. Economic consulting contacts note that demand is extremely strong for high-end consulting and revenue growth is limited mostly by their own capacity to respond. Demand for health care consulting is generally strong, with the exception of pharmaceuticals, but some business lines have slowed as firms wait until the uncertainty over health care reform clears up. One consulting firm has seen rapid growth due to two new large government contracts, but notes that individual consulting firms' prospects are contingent upon the funding status of and uncertainty surrounding the specific agencies with which they do business.\nContacts report wage increases in the low single digits and expect this pace to continue. Input costs consist primarily of salaries in this sector, but other cost growth is generally low. Firms say they are able to pass on cost increases to clients and thus see either steady or slightly increasing profit margins. Responding firms say they changed employment levels very little in the first quarter of 2012, except for economic consultants who are hiring to meet demand growth, and a strategic and management consultant with small layoffs. Aside from economic consulting, contacts do not plan to expand headcounts in the near future, requiring more rapid increases in demand to reinitiate hiring.\nMost contacts expect moderate growth for the rest of 2012, with some anticipating an acceleration either late in the year or in 2013. They note very few downside risks, saying their biggest concerns are the macro economy in general and uncertainty surrounding partisanship in Washington and the upcoming election.\nCommercial Real Estate\nReports from commercial real estate contacts in the First District indicate that conditions are largely unchanged since the last report. Boston's commercial property market remains more active than other New England markets, which are \"quiet,\" a term one contact used to describe Portland. Contacts note that investment demand for prime office and apartment properties continues to be robust in Boston and expect it to remain so for the foreseeable future. Office and retail demand elsewhere in New England is moderate. Contacts in these areas do not foresee increases in vacancy rates, but note that a dearth of interest from potential entrants to these markets means they are unlikely to fall in the near future. Retail sector rents remain flat across the region and all contacts reported retail sector vacancy rates somewhere between flat and modestly decreasing.\nConstruction activity continues at moderate levels in Boston and low levels elsewhere in the District. One contact perceives an increased interest in new retail and medical office projects in Boston for the first time in recent history. Another contact expects education sector construction activity in the Boston area to increase later in the year, but notes that large health care projects continue to be delayed. Market appetites for multifamily apartment development remain strong in Boston. According to contacts, favorable terms but strict standards characterize financing markets for construction projects in Boston and financing conditions in Boston remain markedly better than in the region's smaller markets. Respondents throughout the region remain cautiously optimistic about the coming months, but many acknowledge that commercial markets will not begin to pick up until macroeconomic conditions improve substantially.\nResidential Real Estate\nResidential real estate in New England shows signs of strengthening as sales continued to increase in February, except in Connecticut where February sales were close to year-earlier levels. According to most contacts, activity is improving across all price segments. Contacts cite low interest rates, falling prices, improving economic conditions, and milder weather as factors contributing to the observed sales increases. Nonetheless, contacts remain cautious about the prospect of housing-market recovery because home prices continued to decline across the six states. Most contacts attribute falling prices to distressed properties; however, they also say the role of distressed properties in the market is diminishing. In the Greater Boston area, by contrast, the median sale price of homes and condos rose in February compared to a year ago. Respondents say buyer activity in Boston has intensified and they are concerned that inventory levels will not provide adequate selection for homebuyers.\nContacts in states with significant levels of inventory remain cautiously optimistic about the near future; they say sales growth observed in recent months appears promising, but declining prices remain a source of concern. Other contacts maintain a more optimistic outlook for coming months due to inventory levels coming into balance with buyer activity. Based on pending sales figures and current market activity, contacts expect growth in year-over-year sales to continue into spring.\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 11, 2012\nThe Tenth District economy expanded at a faster pace in late February and March. Consumer spending improved, residential real estate activity rose solidly, and commercial real estate activity edged higher. Growth in the energy industry eased slightly but remained solid. Manufacturing firms reported further increases in activity, and agricultural conditions improved from the previous survey. Transportation activity picked up slightly, and high-tech service firms said sales growth was mostly solid. Bankers noted steady loan demand, better loan quality, and rising deposits. Prices rose slightly, but wage pressures were contained outside of a few skilled positions.\nConsumer Spending\nConsumer spending improved and expectations for the months ahead remained solid. Retail sales rose moderately from the previous survey, although several contacts noted concerns about lower discretionary spending due to rising gasoline prices. Store inventories remained stable and were expected to rise only slightly in future months. Auto sales rebounded strongly from the previous survey, with several dealers citing increased customer traffic and pent up demand as key reasons. Contacts said rising fuel prices have led to stronger sales of fuel efficient vehicles, and sales of large SUVs and trucks weakened. Expectations for future auto sales remained positive and inventories continued to increase. Restaurant sales improved, with further growth expected in coming months. Tourist activity edged higher, with several contacts noting increased business travel. Tourism contacts remained generally optimistic about future months.\nManufacturing and Other Business Activity\nDistrict manufacturing activity grew solidly, and expectations for future activity strengthened. Factory orders and shipments increased, and employment growth remained steady with some future hiring planned. Continued strong commodities-related activity boosted machinery production, and high-tech and aircraft manufacturing growth remained strong. Although rising gasoline prices and continued economic uncertainty restrained activity in several segments, most plant managers indicated moderate growth in capital spending plans. Growth in transportation activity picked up slightly, although several contacts cited driver shortages and higher contractor fuel costs as barriers to growth. Expectations for future sales were mostly positive, but capital spending plans among transportation firms were somewhat subdued. The majority of high-tech services firms reported solid growth in sales, but the pace of growth slowed somewhat from the previous survey. Several high-tech contacts noted higher activity in the energy and health care market, and future capital spending plans were generally positive.\nReal Estate and Construction\nResidential and commercial real estate activity increased in late February and March, and expectations were solid heading forward. Housing starts edged slightly higher, with several contacts in Nebraska noting increased demand due to the booming agricultural industry. Expectations for future homebuilding remained positive, and building materials were generally available. Sales at construction supply firms were stable, with some contacts noting increased business among multi-family and remodeling contractors, and expectations for future activity were favorable. Home sales rose markedly from the previous survey period and inventory levels fell, which contacts attributed to seasonal patterns, favorable weather, lower interest rates, and newfound optimism in the overall economy. Expectations for future home sales continued to strengthen, and home price levels improved slightly. Mortgage lending activity was positive and remained above year-ago levels, though contacts expected refinancing volume to slow somewhat as rates begin to rise. Commercial real estate activity continued to edge higher, and expectations for future sales were mostly positive. Vacancy rates dropped and were expected to fall further. Office prices and rents remained subdued but were slightly higher than a year ago, and expectations were largely flat. Several commercial real estate contacts in Oklahoma noted strong sales due to heavy activity in the energy industry, while a contact in Missouri expressed continued financing difficulties.\nBanking\nBankers generally reported steady or stronger loan demand, stable or improved loan quality, and increased deposits. Overall loan demand was steady or improved. Most respondents reported stable to increased loan demand for residential real estate loans, while loan demand for commercial and industrial loans and commercial real estate loans remained steady. Loan demand was stable to weaker for consumer installment loans. Credit standards remained largely unchanged in all major loan categories, and the majority of respondents continued to report increased deposits. Most bankers reported stable or improved loan quality compared to a year ago, and every banker respondent believed the outlook for loan quality over the next six months would be steady or improving.\nEnergy\nEnergy activity grew solidly in late February and March, though the pace of growth slowed slightly from previous surveys. Contacts reported a sharp slowdown in natural gas drilling, with many noting a shift towards oil exploration. Natural gas prices reached decade-low levels in recent months, and most producers expected prices to stay low due to oversupply and mild weather. Crude oil prices climbed higher from the previous survey period, which many contacts attributed to continued Middle East conflict concerns. Contacts reported some shortages in equipment and labor, particularly for engineers and experienced technical support, and one producer noted continued delays in receiving permits for drilling on federal land.\nAgriculture\nAgricultural growing conditions improved since the last survey. Scattered rains increased soil moisture levels in many areas, although drought conditions persisted in some western areas of Kansas and Oklahoma. Winter wheat development was ahead of normal with most of the crop upgraded to good condition. Mild winter weather was favorable for calving and encouraged forage growth, reducing the need for supplemental feeding. Spring field work began early, and crop prices moved higher. Low cattle inventories trimmed beef production, and strong domestic and export demand pushed up cattle and hog prices. Operating loan demand declined as many producers used cash to buy crop inputs. Farmland values rose further and were expected to remain at record highs.\nWages and Prices\nPrices rose slightly and were expected to continue to increase, but wage pressures were mostly contained outside of a few skilled positions. Retailers reported a slight uptick in prices with further increases anticipated. Manufacturing materials price increases continued and were expected to increase further, although fewer firms planned on raising selling prices. Higher prices for construction materials narrowed profit margins, as the majority of firms were unable to pass these costs through to customers. Transportation firms reported higher input prices, and increased food costs continued to impact profit margins and selling prices for hotels and restaurants. Wage pressures were still generally contained in most industries, although some firms reported continued difficulties in obtaining skilled labor.\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 11, 2012\nOverall, business activity in the Third District has continued to show slow, steady improvement since the previous Beige Book. Overall sentiment improved, and the unseasonably mild weather undoubtedly contributed to this. Since the last Beige Book, manufacturing activity has grown further, and many manufacturing industries have contributed to this growth; however, the pace has slowed slightly. Retail sales continued to grow modestly. Motor vehicle dealers experienced unseasonably strong sales growth in February, but sales were less robust in March. Third District banks have reported slight growth in demand and continued strong credit quality since the last Beige Book. New home construction continued to improve in Pennsylvania but slowed in New Jersey due to the large inventory of distressed homes. Little change was seen by commercial real estate contacts who reported slowly improving markets. Overall, service-sector firms reported continued growth. Price pressures have remained contained for most sectors, with little change from the last Beige Book.\nThe outlook remains relatively optimistic among most firms, similar to the sentiment expressed in the last Beige Book. Manufacturers' expectations for the next six months have changed little and remain relatively high. Retailers continue to expect slow, steady improvement. Auto dealers anticipate continued strong sales; however, they acknowledge that the robust first quarter might shave a little off the typical spring seasonal surge. Banking, real estate, and service-sector firms continue to plan for slow growth in 2012. In general, business plans remained cautious; however, there was a noticeable lack of the litany of risks and uncertainties as expressed by contacts over the last six months.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported continued growth of new orders and shipments, although the pace has slowed slightly. Gains were widespread among the makers of food products, lumber and wood products, fabricated metals, industrial machinery, and instruments. New apartment construction, rising auto sales, and Marcellus shale activity are driving increased demand, according to various contacts. A lumber firm expects growth but mostly from market share gains. Manufacturers of food products and of chemicals expressed concerns about the impact of rising fuel prices on their input and output prices.\nAbout nine out of 10 Third District manufacturers expect business conditions to improve or stay the same during the next six months; firms are evenly divided. Seasonal trends may be responsible for some of the anticipated improvement, but the optimism is nearly uniform across all major sectors. The usual litany of risks and uncertainties to the outlook \u00e2\u20ac\u201c typical over the past six months \u00e2\u20ac\u201c was virtually absent from current comments by manufacturers. However, caution remains; expectations of capital spending and future hiring have changed little since the last Beige Book.\nRetail\nThird District retailers reported modest growth rates overall but expressed greater certainty that mild weather had played a significant role in year-over-year comparisons. According to one contact, outlet malls fared better than broad retail but they should have experienced stronger sales. Gas prices pinched. While mild weather attracted more people, the average purchase per store dropped from year-ago levels. Overall, retail contacts see the economy firming but remain very cautious.\nAuto sales were robust in February for dealers in New Jersey and Pennsylvania. For the first two months of the year, year-over-year sales growth in New Jersey was reported to be higher than national growth despite a soft January report. Pennsylvania contacts indicated that March sales were strong but not as robust as in February. The outlook for auto sales remains strong. However, contacts indicate that the rapid first quarter pace may somewhat dampen the spring sales season, which typically peaks in May or June. Modest hiring continues at select dealers, but caution remains the trend.\nFinance\nOverall, loan demand has continued to grow slightly in the Third District since the previous Beige Book; however, activity has been uneven. Mirroring trends noted by other sectors, community banks note that the strongest loan demand has been for inventories and capital equipment to manufacturers and for investments in higher education, health care, technology sectors, and multifamily housing. One large bank contact noted strong demand from middle-market private equity firms, while the pace of refinancing had diminished. Most contacts reported solid credit quality.\nReal Estate and Construction\nSince the last Beige Book, residential builders have reported mixed results for sales \u00e2\u20ac\u201c and hence for their construction activity \u00e2\u20ac\u201c depending on the extent of distressed sales activity in their region. Builders reported slower sales in southern New Jersey \u00e2\u20ac\u201c where foreclosure rates are the highest \u00e2\u20ac\u201c but continued apace in Pennsylvania. A Pennsylvania builder was more encouraged than at any time in the past five years; the company is doing more hiring for sales and for construction workers. One contact observed the resumption of heavy flows of specialized construction trade workers on the roads between Philadelphia area worksites and their Lancaster area homes; this level of activity has been absent for five years. Residential brokers reported strong, weather-aided year-over-year sales growth. The outlook among builders and brokers remains somewhat more positive.\nNonresidential real estate activity has continued to slowly improve since the last Beige Book, with few changes. The industrial real estate market remains the strongest, followed by higher education, multifamily residential investment, and activities related to Marcellus shale. Philadelphia's Center City office market is characterized by a continuing trend toward consolidations and a growing trend toward conversions to apartments. The overall outlook for nonresidential real estate remains positive but modest.\nServices\nMost Third District service-sector firms have reported further growth since the last Beige Book. Firms' strongest demand emanated from higher education and health-care institutions. Hospital systems reported rising admissions. Staffing firms reported mixed results, with strong orders from the manufacturing, health-care, and technology sectors. Demand for general administration and for clerical workers has been softer; however, clients were beginning to talk of hiring plans. Service-sector firms anticipate that growth will steadily improve in 2012.\nPrices and Wages\nPrice levels have changed little since the previous Beige Book \u00e2\u20ac\u201c remaining generally constrained. Some deals and promotions are beginning to sap strong auto dealer pricing power. This was anticipated as Japanese automakers resumed normal production levels. New federal regulations, including medical certification requirements for commercial drivers, have exacerbated truck driver shortages. Favorable pricing power for freight shippers will push costs along to their customers and end-users. As a recent study predicts, these high costs could rise even further if the need arises to truck fuel to nearby markets that are currently being served by pipeline from refineries that are being closed. Price pressures have eased somewhat for manufacturing firms since the last Beige Book. Retailers and homebuilders continued to report tight margins with high, not rising, nonlabor factor costs. House prices have fallen further; however, nonresidential rents are stabilizing in some sectors. Contacts continued to report a lack of wage pressures, other than for medical benefits.\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 11, 2012\nThe Ninth District economy grew at a solid pace since the last report. Strength was noted in consumer spending, professional services, construction, manufacturing, energy and mining, and agriculture. Residential real estate had an unexpectedly large increase in sales activity. Warm weather slowed winter tourism activity. Hiring activity outpaced layoffs since the last report. Wage increases were moderate, and price increases were generally subdued.\nConsumer Spending and Tourism\nConsumer spending continued to expand moderately. Same-store sales at a Minnesota-based retailer increased 7 percent in February compared with a year ago. February sales at a Montana mall were up about 10 percent over last year; remodeling activity was strong for new stores and expansions. March sales were up over 5 percent compared with a year earlier at a North Dakota mall. However, a Minnesota-based hair salon plans to close some of its stores. A Minnesota auto dealer reported that mild weather depressed service and vehicle sales during January and February, but auto sales bounced back in March. In addition, higher gasoline prices don't seem to be influencing buying decisions away from SUVs and light trucks.\nLack of snow and warm temperatures slowed winter tourism in a number of areas; however, late-season snow perked up activity in some places. Enough snow fell in northwestern Wisconsin during February to hold the annual American Birkebeiner cross-country ski race, bringing thousands of visitors to the area. Western South Dakota received late-season snow, which enabled a strong finish for snowmobiling and downhill skiing. A ski resort in Montana reported that visits and revenue were up from a year ago.\nConstruction and Real Estate\nThe continued warm weather aided construction activity. The value of commercial building permits in the Sioux Falls, S.D., area was up in February from a year earlier. The value and number of new commercial permits increased in Fargo, N.D., during the first two months of 2012 compared with the same period in 2011. Residential construction increased from a year ago. The value of residential building permits increased significantly in the Sioux Falls area in February. The number of single-family building permits increased in Minnesota in January 2012, compared with January 2011. Several new multifamily projects were planned for the Minneapolis area.\nCommercial real estate market activity increased. A commercial broker in Minneapolis noted more leasing activity, especially for class A space. Residential real estate had an unexpectedly large increase in sales activity. Home sales in February were up 23 percent from the same period a year ago in the Minneapolis-St. Paul area, and the inventory of homes for sale was down 27 percent. However, median sales prices dropped slightly. In the Sioux Falls area, February home sales were up 5 percent and inventory was down 7 percent relative to a year ago. A broker noted that lower-priced homes saw an investor \"feeding frenzy,\" with properties selling in a few days with multiple offers.\nServices\nActivity at professional business services firms increased slightly since the last report. An accountant noted that this tax season was busier and that many firms saw an increase in earnings in 2011 compared with 2010. A bank director from Montana noted that law firms were experiencing mixed activity and that firms specializing in petro-chemical and environmental engineering were seeing increased activity, while mechanical and structural engineering activity was flat to down.\nManufacturing\nManufacturing activity expanded. A survey of purchasing managers by Creighton University (Omaha, Neb.) found that manufacturing activity in Minnesota and the Dakotas increased in March. A manufacturer based in northwestern Wisconsin announced plans to build a production plant. A mill in Minnesota will begin a $170 million conversion from producing pulp for paper mills to producing cellulose for textiles. A brewery in Minnesota is expanding its operations. In contrast, a manufacturer of recreational vehicles in South Dakota has halted production and may not reopen.\nEnergy and Mining\nActivity in the energy and mining sectors continued at strong levels. Oil and gas exploration activity in North Dakota increased since the last report, but was flat in Montana. A Federal Circuit Court judge upheld a permit for construction of a $10 billion oil refinery in southeastern South Dakota, which would be the first new refinery in the United States since 1976. A separate $500 million diesel refinery was in early planning stages in western North Dakota. Two District ethanol plants are planning conversions to produce a different biofuel. Ninth District iron ore mines continued to operate at near capacity. A mining firm is developing plans in northern Minnesota for a large underground mine to tap a recently discovered copper deposit. Meanwhile, a tribe in western Montana moved to block a copper and silver mine on a wilderness site.\nAgriculture\nAgricultural conditions remained strong. Cattle ranchers benefited from both high beef prices and strong export demand as well as ideal weather for the calving season. Drought conditions remained in Minnesota, the Dakotas and western Wisconsin, but were abated somewhat by recent rain and snowfall. Drier conditions may actually lead to increased corn plantings in the eastern Dakotas by making long-flooded fields available. Unseasonably warm weather has led to reports of early spring wheat plantings in some areas. Prices received by farmers for wheat, corn, dry beans, cattle, hogs, eggs and poultry increased in March from the previous month, while dairy prices fell for the month and the year.\nEmployment, Wages, and Prices\nHiring activity outpaced layoffs since the last report. The new production plant in northwestern Wisconsin is expected to hire 300 workers. In Montana, a company that services student loans could hire about 100 more people this summer. A new wheat straw pulping and molding factory in North Dakota will create 100 jobs. A major Minnesota-based employer noted that fewer employees accepted a recent early retirement offer than expected. In contrast, a telecommunications firm in Minnesota will eliminate 85 positions as part of a restructuring plan, and a printer laid-off almost 50 workers.\nWage increases were moderate. In a first quarter business survey by St. Cloud State University (Minnesota), 65 percent of respondents left wages unchanged in the past three months. However, in western North Dakota and eastern Montana, strong oil-drilling and production activity continued to bid up pay. In contrast, a Minnesota business that makes in-store advertising for retailers was cutting compensation for salespeople and some managers while laying off some staff.\nPrice increases were generally subdued; however, some exceptions were noted. More than two-thirds of respondents to the St. Cloud survey reported that prices at their companies did not change over the past three months. Late March Minnesota gasoline prices were up about 25 cents per gallon from mid-February and 20 cents per gallon from a year ago. Airlines raised airfares during the past couple of months in response to higher fuel costs. A Minnesota-based food company noted that input cost increases were above 10 percent. Amid higher oil prices, low natural gas prices have spurred energy and transportation companies to pursue conversion projects.\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 11, 2012\nEconomic activity in the Seventh District continued to expand at a moderate pace in late February and March. Growth in consumer spending picked up, and business spending continued to increase. The pace of growth in manufacturing production was little changed and construction activity increased. Credit conditions improved slightly. Energy prices increased, but with limited pass-through to downstream prices, and wage increases remained moderate. Soybean and cattle prices rose, while corn, wheat, milk, and hog prices decreased.\nConsumer Spending\nConsumer spending increased significantly in late February and March. Retailers reported unseasonably warm temperatures boosted retail sales. Because of the earlier-than-normal start to the spring shopping season, inventories of some lawn & garden, home improvement, and leisure items ended the reporting period on the lean side. Several contacts thought that the recent gains in consumer spending might dissipate over the medium-term, pointing to the temporary nature of the boost from warmer weather and concerns about the impact of higher gasoline prices on consumer budgets. Auto sales increased, with contacts noting improved availability of financing for prospective buyers with below-prime credit ratings. Dealerships continued to report some difficulty in stocking popular models because of supply-chain constraints.\nBusiness Spending\nBusiness spending continued to increase in late February and March. Contacts reported that inventories were generally at comfortable levels, with the exceptions in auto and consumer goods noted above. Capital spending increased steadily. Purchases of heavy equipment picked up, led by robust activity in the energy sector. An exception was the coal mining industry which a contact noted was being negatively impacted by mild weather and the cheaper extraction costs for natural gas. Several manufacturers reported spending for technological upgrades as well as moving ahead with planned increases in capacity. Contacts also noted a pick-up in building renovation and increased spending on marketing and for labor force training. Labor market conditions continued to improve. Hiring increased, although it remained selective in many industries. Manufacturing contacts continued to report difficulty in attracting job applicants with ideal skill sets, and in some cases have reduced experience requirements or increased salaries to fill open positions. A staffing firm reported an increase in demand for light industrial, office and clerical, and IT and engineering positions. However, gains in these areas were being offset by declines in others, so that on net temporary employment was little changed.\nConstruction and Real Estate\nConstruction activity increased in late February and March. Demand continued to be strong for multi-family construction, particularly apartments. That said, a few contacts questioned whether current apartment building plans would lead to overbuilding in this segment. Overall, residential real estate conditions improved slightly. Single-family construction was up some from its depressed levels, as large homebuilders have seen a solid increase in sales in the last three months. Realtors noted some increase in activity in the market for existing homes, although many buyers are still waiting for prices to come down further. Foreclosures continued to put downward pressure on prices. Nonresidential construction also increased. Contacts noted a pick-up in industrial, healthcare and infrastructure building activity. Commercial real estate conditions were mixed by segment. Vacancy rates decreased for office and industrial properties, but contacts indicated that excess retail space continues to exist, especially big box stores and strip center/mall space. Commercial rents were flat, as was the available sublease space on the market.\nManufacturing\nAfter a strong start to the year, growth in manufacturing production leveled off in late February and March. With an increase in quoting activity and deepening order books, contacts remained cautiously optimistic that growth would pick up again in the coming quarters. The auto industry continued to be a source of strength. Automakers expected sales to continue to increase over the year, but voiced concern that it would be challenging for production to rise much further above what is already planned given the capacity constraints faced by their suppliers. Confirming this production limit, several auto suppliers reported that they have already been asked by their customers to increase capacity. Capacity utilization in the steel industry was steady, but an industry contact expected to see some acceleration in production in the near term. Demand for heavy equipment was boosted by the need to replace ageing equipment. Exporters continued to benefit from advantageous terms of trade; and despite some softening in demand from Western Europe, again reported robust orders from Asia and Latin America.\nBanking and Finance\nCredit conditions were slightly improved from the prior reporting period. Volatility and risk premia edged lower and concerns about European sovereign debt continued to subside. Several contacts noted an increase in risk appetite, pointing to higher demand for equities and real estate. Banking contacts indicated that business loan growth remained moderate, with their larger corporate clients continuing to cite policy uncertainty as a reason for caution in borrowing. In contrast, consumer loan growth picked up, with credit card usage increasing. Credit availability for households improved, particularly for auto loans and credit cards, where greater competition was leading to more favorable terms for borrowers. However, credit conditions remained tight for homebuilders and small businesses.\nPrices and Costs\nCost pressures increased in late February and March. Contacts noted higher energy prices, particularly for gasoline, although natural gas prices remained at historic lows. Prices for chemicals, steel, and non-ferrous metals also edged up. Wholesale prices increased; however, retail contacts indicated that it had become increasingly difficult to pass on higher wholesale costs to consumers. Wage pressures increased, but continued to be moderate. Contacts expected that wage and benefit increases this year would not exceed inflation. However, a shortage of skilled manufacturing workers contributed to upward pressure on wages to attract qualified candidates as well as improved benefit packages to retain current employees.\nAgriculture\nUnseasonably warm weather has jumpstarted field work and corn planting in the District. There were reports of tight supplies of some agricultural chemicals, as well as some types of corn seed. Most of the District has sufficient moisture for a strong start to the corn crop. With spring planting taking place up to a month early, some corn will be harvested in August; combined with the potential of a record corn crop, concerns about corn stocks being low before the traditional harvest time diminished and corn prices moved lower. Soybean prices have risen in response to lower-than-expected harvests in South America. The increase in soybean prices relative to corn prices, as well as some acreage being removed from environmental protection restrictions, resulted in an increase in the number of acres that famers expect to plant in soybeans. Milk and hog prices decreased, while cattle prices continued to rise.\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 11, 2012\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of late February through the end of March. Despite higher energy prices, overall price pressures for final goods and services remained modest, as did wage gains. Sales of retail items and demand for business and consumer services rose further. District manufacturing activity increased on net. Demand was robust for agricultural producers but remained uneven for providers of energy resources. Activity in District housing markets strengthened modestly but remained lackluster on balance, and demand for nonresidential real estate was largely unchanged. Contacts from financial institutions reported small increases in overall loan demand and slight improvements in credit quality and availability.\nWages and Prices\nPrice inflation for most final goods and services remained subdued during the reporting period, with the notable exception of gasoline. While contacts noted an increase in the prices of oil and selected other commodities, resulting cost increases generally were absorbed in profit margins rather than pass-through to final prices. Restaurant prices were an exception, with notable increases reported. Looking ahead, contacts in general expect prices for their products to hold largely stable or increase slightly during the second half of the year compared with the first half.\nUpward wage pressures were quite modest overall, held down by high levels of unemployment and limited demand for new workers. However, wage gains remained pronounced for highly skilled workers in information technology fields, and significant gains were also reported for experienced workers in some segments of manufacturing. The reports suggested that wage gains are likely to remain limited going forward, as most contacts plan to engage in only modest hiring for the foreseeable future.\nRetail Trade and Services\nRetail sales continued to improve. Discount chains reported modest increases in sales, while traditional department stores noted stronger gains, particularly in the luxury segments of the market. Demand continued to improve for retailers of home furnishings and major appliances. By contrast, sales remained largely flat for grocers. Sales of new automobiles continued to strengthen, with high gas prices spurring especially strong growth for fuel-efficient vehicles. Similarly, demand for used vehicles remained robust.\nDemand for business and consumer services strengthened further on balance. Sales continued to expand at a moderate pace for providers of technology services, and contacts anticipate growth will pick up in the second half of the year. Demand has improved in the radio and television broadcasting industries. By contrast, demand for professional services was largely flat, as was demand for health-care services. Sales activity was reported to be up somewhat for restaurants and other food-service providers. Activity in the District's travel and tourism industry picked up further, with contacts in Hawaii and Southern California noting ongoing gains in visitor volumes and hotel occupancy rates.\nManufacturing\nDistrict manufacturing activity rose a bit on net during the reporting period of late February through the end of March. Makers of commercial aircraft and parts saw limited new orders, but an extensive order backlog kept production rates near capacity. Manufacturers of semiconductors and other technology products reported some firming in new orders and indicated that they expect demand growth to pick up further in coming months. Capacity utilization rates continued to hold largely stable for petroleum refiners as weak domestic gasoline demand was offset by strong foreign demand for distillate products. Production activity was largely unchanged for metal fabricators, but demand remained quite depressed for producers of wood products. Food processors saw solid growth in orders and sales.\nAgriculture and Resource-related Industries\nDemand for agricultural products and mined metals remained strong, while extraction activity of natural resources used for energy production was uneven. Final sales and orders were robust for a broad range of crop and livestock products, and recent precipitation has eased concerns in parts of the District about drought during the upcoming growing season. Contacts noted increases in the costs of some inputs, such as fertilizer. Expanding activity in the mining sector continued to be supported by high prices for a variety of precious metals and metallic elements used for specialized industrial purposes. Mild winter weather continued to tamp down demand for natural gas, prompting additional declines in extraction activity, while elevated price levels and robust foreign demand spurred further increases in oil extraction.\nReal Estate and Construction\nDistrict home demand improved slightly but remained weak on balance, and demand for commercial real estate was largely unchanged. Sales of new and existing homes continued to improve modestly in certain areas of the District, although the pace remained quite lackluster overall. Furthermore, despite relatively low interest rates, contacts noted that tight financing terms more generally held down the pace of sales. With inventories of available homes still very high, new construction activity stayed at depressed levels and home prices remained largely flat. Demand for commercial real estate continued to be weak overall, as reflected in elevated vacancy rates and limited leasing activity for office and industrial space in many parts of the District. On the other hand, growth in the technology sector has led to rapid absorption of commercial space in certain locales, such as the San Francisco Bay Area and Seattle. As a result, increased construction activity for new office space is expected for these areas over the next twelve months.\nFinancial Institutions\nDistrict banking contacts reported that overall loan demand rose modestly since the prior reporting period, and credit quality and availability improved slightly. While businesses generally remained highly cautious about their capital spending plans, the volume of new commercial and industrial loans edged up as businesses continued to pursue targeted investments geared towards increasing productivity. On the consumer side, demand for credit was largely unchanged. Credit quality improved slightly, with reports indicating a general decline in loan delinquencies. Although lending standards have remained relatively restrictive for most types of business and consumer loans, contacts reported modest improvement in overall credit availability. The reports also indicated that competition among lenders has been creating downward pressure on rates and fees for well-qualified small and medium-sized businesses.\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 11, 2012\nBusiness conditions have improved in the Fifth District economy since our last report. Manufacturing activity continued to advance, although somewhat more slowly than at the beginning of the year. While trade activity increased, imports improved somewhat more slowly than exports. Retail sales activity rose sharply, as shopper traffic increased and big-ticket sales strengthened. Services-providing firms also recorded solid revenue growth in recent weeks, and unseasonably warm weather bolstered tourism. Bankers reported modest gains in most types of lending; however, other than refinancing, the amount of mortgage lending remained relatively weak. Nonetheless, Realtors noted an increase in sales of existing homes, and contractors reported an uptick in new home construction. Commercial real estate activity also improved moderately across most segments of the market, although contractors reported fewer government-related new construction projects. Hiring activity picked up, especially for temporary workers. Finally, the pace of price increases rose marginally over the last month, according to our latest manufacturing and service sector surveys.\nManufacturing\nActivity expanded moderately over the last month. However, shipments, new orders, and employment all grew at a somewhat slower pace since our last report, with several contacts citing the increasing cost of petroleum\u00e2\u20ac\u201cbased products as a major factor affecting their business. An automotive parts manufacturer reported that customer orders remained elevated, but he was concerned that orders and sales could weaken if recent high fuel prices persist. A contact at a lumber mill stated that he had seen improvement in both sales and output prices since the beginning of the year. In contrast, a paper producer said that his firm was experiencing a significant decline in business, adding that most of his employees were currently on a thirty hour workweek. A textile manufacturer said that synthetic raw material prices were \"soaring,\" but that it was difficult to pass these increases through to customers. According to our recent survey, prices of both raw materials and finished goods grew at a somewhat quicker pace than a month ago.\nPort activity in the District continued to strengthen since the end of last year, with exports slightly outperforming imports. Several port authorities reported that roll-on, roll-off stock was up. Indeed, several officials noted that autos and automotive parts were key products boosting both imports and exports. Exports of bulk goods, including coal, wood by-products, and agricultural goods, continued to be robust. An executive at a large container carrier noted that downward pressure on shipping rates persisted due to excess capacity. Rising fuel costs were cited as causing serious problems for both land and ocean shippers. However, most port contacts expected that exports and imports would continue to strengthen.\nRetail\nRetail sales strengthened markedly since our last report. Gains were led by rising shopper traffic and an uptick in big-ticket sales, while inventories flattened. A store manager in West Virginia remarked that unusually warm weather had caused sporting goods sales to pick up earlier than normal. Additionally, home improvement sales were up at most of the merchants polled in our latest survey. A contact at a home improvement chain noted particular strength in sales of kitchen remodeling components. Higher gasoline prices led to freight surcharges, according to several contacts. Sales of both domestic and foreign cars remained strong, as consumers replaced aging vehicles and looked for better fuel-efficiency. Consumers continued to bargain intently, with a North Carolina furniture retailer commenting that margins were \"the tightest they've ever been.\" A contact at a Virginia food chain remarked that customers were purchasing more selectively, as retail prices accelerated. However, a home appliance retailer noted that consumers absorbed significant price increases.\nServices\nRevenues expanded at service-providing firms, despite concern about the rising cost of gasoline. Contacts at construction-related service firms reported an increased volume of business, and sales activity picked up at several advertising firms and travel services. Information technology firms also noted greater demand, particularly from the healthcare industry. Stronger demand allowed some trucking firms to raise prices to offset fuel cost increases. However, a trucking executive indicated that the shortage of drivers remained a serious concern. A manager of a restaurant chain in Maryland noted that people were eating out more, but area restaurants still needed to increase their use of incentives to compete for customers. Finally, a recent survey indicated that the pace of price change inched up at services-providing firms.\nFinance\nModest improvements in lending activity were widely reported since our last assessment. Officials at several large banks reported slow upward movement in commercial lending, particularly to small businesses that were financing inventory and new equipment. Several community banks around the District noted an increase in commercial lending for office and retail space. A lending officer in Richmond reported further strength in consumer borrowing, especially to meet home improvement and auto financing needs. Many bankers stated that mortgage financing remained weak, with the exception of home refinancing. However, several bankers from across the Districted noted a slight pickup in new home loans beyond seasonal norms. Competitive pressures among banks remained intense, putting downward pressure on rates. Several bankers reported that they were offering easier terms to attract new commercial borrowers. Loan quality and payment timeliness continued to improve, according to most bank officials.\nReal Estate\nResidential real estate activity showed promising signs of recovery since our last report. Several contacts stated that they were beginning to see a \"ray of hope\" in the housing sector, and several builders reported starting construction in areas that had not seen new building activity for several years. For example, a source from Charlotte said that real estate was starting to move again in his area, and another North Carolina contact described multi-family housing activity, particularly for senior citizens, as being \"on fire\" in recent months. Lower inventory of both new and existing homes was reported in northern and central Virginia, with contacts noting that \"days on market\" were down as well. Moreover, a few contacts noted that housing prices had stabilized and, in some markets, prices were beginning to trend upward. Some agents attributed the rise in sales price to greater buyer traffic as a result of unseasonably warm weather. Several Realtors reported sales of higher priced homes were faring better than other price categories. A number of Realtors held a positive outlook for expected sales.\nCommercial real estate leasing and construction activity improved across most segments of the market since the beginning of the year. Several commercial Realtors reported solid increases in inquiries about availability of office and retail space, but only moderate growth in leasing of those properties. Still, leasing rates were firming, according to agents, due to the reduction in the number of attractive properties still on the market. Most contractors cited moderate increases in private sector construction projects. Unusually warm weather helped contractors finish projects ahead of schedule, but some contractors with weak backlogs sought to spread out work in order to keep their workforce active. In contrast, government sector projects declined dramatically, according to several contractors, although one builder noted an increase in demand for secondary education facilities. Both contractors and Realtors reported that access to financing continued to be limited, and the required paperwork was inhibiting completion of loans on a timely basis. Prices of construction-related goods, especially petroleum-based products, cement and drywall increased in recent months, according to contacts, with most having only minimal success passing through any cost increases.\nLabor Markets\nFifth District labor markets improved moderately in recent weeks, with several employment agencies citing strong demand for temporary workers. The increase in overall demand was attributed to a general strengthening in the economy and also to the opening of new companies, coupled with a revival in activity at previously dormant companies. Several employment agencies indicated that some of their clients remained uncertain about future demand, however, and preferred hiring temporary workers. A representative at a North Carolina staffing agency reported that demand for information technology workers was much higher than supply and that the gap was worsening. She added that schools did not have enough graduates to meet the demand in that sector. District manufacturers increased employment more slowly than a month ago, according to our latest survey, while wage gains picked up. Growth in employment and wages in the broad services sector nearly matched our last report.\nTourism\nUnseasonably warm temperatures contributed to strong tourist activity since our last report. A North Carolina contact from the outer banks cited exceptional attendance at early spring events. While beach house rental rates were unchanged in recent weeks, real estate rental companies were able to remove incentives that had been included since last autumn. In Washington, D.C., the atypical temperatures resulted in cherry blossoms peaking at the second-earliest date ever. Tourist-related businesses were busy and restaurants were full. This year marks the one-hundred year celebration of the gift of the cherry trees from Japan, with numerous special events planned, drawing a significantly higher volume of foreign visitors than normal. A contact described the crowds as \"wall-to-wall humanity.\"\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 11, 2012\nGrowth in the Second District's economy has picked up somewhat since the last report. Labor market conditions have been stable to slightly stronger in recent weeks, and a sizable number of contacts say they plan to add workers in the months ahead. While consumer prices generally remain steady, business contacts in a number of industries indicate rising cost pressures. Manufacturers report steady improvement in business conditions. Most retailers and auto dealers describe sales as steady but strong in February and the first few weeks of March. Tourism activity has been mixed but generally strong since the last report, with bookings for the months ahead described as robust. Home sales activity has continued to strengthen since the last report, though prices have been steady to somewhat lower; rental markets have continued to improve, and there has been a pickup in rental multi-family construction. Commercial real estate markets remained steady in the first quarter of 2012. Finally, bankers report increased loan demand, no change in credit standards, and the most widespread declines in delinquency rates in a number of years.\nConsumer Spending\nRetailers report that sales were mixed but mostly steady and strong in February and the first few weeks of March. One major retail chain reports that sales were above plan and running more than 5 percent ahead of year earlier in both February and March, led by strength in spring apparel and accessories. Retail contacts in upstate New York report that sales in recent weeks have been strong and running roughly on par with a year earlier, which was also characterized as a very strong period, with continued strong demand from Canadian shoppers. However, another major retailer indicates that same-store sales were below plan and down considerably from 2011 levels. Retail prices continue to be mostly stable, but one major chain notes declining costs for apparel merchandise. Inventories are generally reported to be at desired levels.\nAuto dealers in upstate New York report that sales activity picked up in February and has remained strong in the first few weeks of March. Sales of new vehicles were up 4-7 percent from a year earlier in February and remained fairly strong in March. Inventory stock-outs are no longer a factor holding down sales. Business generally remains brisk at dealer service departments, although dealers in the Buffalo area report that unseasonably mild weather has reduced demand for winter-oriented service. Wholesale and retail credit conditions remain favorable.\nThe Conference Board's latest survey of residents of the Middle Atlantic states (NY, NJ, PA) shows confidence slipping moderately in March, though it remains well above its lows of last October. Tourism activity has been fairly robust since the last report, and hotel bookings for upcoming months look strong as well. Albany area hotels report rising occupancy rates in February. New York City hotels report that total revenues per room were up roughly 6 percent from a year ago in February and March, with particular strength in the last couple of weeks. All of the increase reflects higher occupancy rates, as room rates have leveled off. Moreover, an industry contact notes that advance bookings are very strong and that room rates are poised to rise. Attendance at Broadway theaters was fairly robust in February but has tapered off in March, largely because fewer shows are running than at this time last year; however, revenues continue to run ahead of 2011 levels, reflecting a substantial rise in ticket prices.\nConstruction and Real Estate\nHousing markets across much of the District appear to have picked up since the last report, while rental markets continue to firm. Home sales are reported to be on the upswing in northern New Jersey, though prices are steady to declining, largely due to more distressed properties coming to market. One industry expert notes surprising strength in new multi-family construction in New Jersey--almost entirely rental units--thus far in 2012; this segment now accounts for well over 50 percent of all new homebuilding, which is said to be unprecedented. Apartment rental markets in both New York City and northern New Jersey continue to firm, with inventories tight and rents rising steadily. A major New York City appraisal firm notes that Manhattan's co-op and condo market has firmed since mid-February: while prices remain flat, sales have picked up--especially for studio and 1-bedroom co-ops--and new contract activity is estimated to be running 7 percent ahead of a year earlier. Conditions in the outer boroughs have been somewhat softer. Real estate contacts in western New York State report continued gradual improvement in home sales activity but note some downward pressure on prices.\nCommercial real estate markets have been mixed but, on balance, steady since the last report. Office vacancy rates in New York City and on Long Island declined in the first quarter, while rents have risen moderately. By contrast, office markets have slackened in northern New Jersey, Westchester and Fairfield counties, and in Rochester. Most other metro areas in upstate New York have seen steady to slightly declining vacancy rates. Industrial markets across the District have been fairly stable.\nOther Business Activity\nA major New York City employment agency specializing in office jobs reports that hiring activity has held steady since the last report. Legal hiring has picked up somewhat but for specific positions with specialized qualifications, while finance-sector hiring remains modest. More broadly, though, a sizable number of manufacturers and a growing number of business contacts in other sectors say that they plan to step up hiring activity in the months ahead.\nLooking at business conditions more generally, manufacturers across New York State report continued improvement since the last report, while a growing proportion of non-manufacturing contacts report increases in business activity. Business contacts in both manufacturing and other sectors report that input costs are rising; however, selling prices are reported to be holding steady, on balance.\nFinancial Developments\nSmall to medium-sized banks in the District report increased loan demand in all categories, but particularly for commercial mortgages. Bankers indicate increased demand for refinancing but to a less widespread degree than in recent months. Credit standards are reported to be little changed across all loan categories. Respondents note a decrease in spreads of loan rates over the cost of funds for all loan categories--particularly for commercial and industrial loans where well over two in five bankers report lower spreads, while none report higher spreads. Respondents also indicate some decline in average deposit rates. Finally, bankers report decreases in delinquency rates for all loan categories. Moreover, the reported decreases are more widespread among our banking contacts than at any time since the late 1990s.\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 11, 2012\nThe Eleventh District economy grew at a moderate pace over the past six weeks. Overall manufacturing activity continued to expand. Demand for business services rose slightly, and transportation services activity remained positive overall. The housing sector continued to improve modestly, and nonresidential leasing activity remained solid. Respondents said retail sales grew at a modest pace and auto sales strengthened. Financial firms noted a modest pickup in loan demand. Energy activity continued to be strong, although gas-directed drilling activity weakened. Drought conditions improved. Employment levels were steady to slightly higher. Prices were unchanged or somewhat higher, according to contacts. Outlooks across industries remain positive, but more respondents noted concern about higher energy costs.\nPrices\nResponding firms said prices held steady or increased, and several noted concerns regarding rising fuel costs. Food producers reported increases in selling prices to offset high input costs, and airlines noted higher fares. Intermodal transportation firms said they had increased prices in response to higher fuel costs, and parcel shipping firms noted plans to increase surcharges to offset rising fuel costs. Retailers and automobile dealers said higher gas prices had not significantly affected sales. Agricultural commodity prices declined since the last report.\nThe price of WTI averaged $105.95 per barrel during the reporting period. Natural gas prices fell from $2.50 per thousand cubic feet to below $2.20. Gasoline prices rose by 34 cents per gallon over the past six weeks, and the price of diesel rose by 20 cents. Prices of petrochemicals and plastics also increased since the last report.\nLabor Market\nMost responding firms said employment levels held steady since the last report, although several noted slight increases. Staffing firms said demand softened slightly in March, but direct hires were still strong. Staffing contacts also noted shortages of skilled workers in IT and accounting. There were scattered reports of small employment increases in the high-tech manufacturing, transportation manufacturing, metals, auto sales and airline industries. Accounting firms noted a pickup in temporary workers due to the tax season. Wage pressures remained minimal, although slight salary increases were noted by some legal, auto and high-tech manufacturing firms.\nManufacturing\nOverall demand for construction related products increased since the last report, although a few respondents' outlooks have become slightly more guarded. A cement producer and a lumber firm noted improving demand in the residential sector, while a fabricated metals producer said private projects related to oil and gas, manufacturing and highway construction were driving the pickup in demand. Primary metals firms noted that commercial construction projects including hospitals, schools and government buildings were a factor behind improving demand, along with solid sales to truck and trailer manufacturers.\nRespondents in high-tech manufacturing reported that orders continued to grow at a modest pace since the last report. According to contacts, key demand drivers continue to be mobile applications, cloud computing and automobiles. One contact noted that demand for DRAM memory remains weak relative to supply, while demand for flash memory and logic devices is generally good. Most respondents expect demand to continue to grow at a modest pace over the next three to six months.\nAviation equipment manufacturers said demand weakened during the reporting period. Contacts were less optimistic in their outlooks for the year, citing high energy prices and the bankruptcy of several service and maintenance companies that serve the airline industry. Food producers said sales activity increased over the past six weeks, and near-term outlooks were positive. Reports from paper manufacturers were mixed but overall suggested steady to slower growth in demand. Contacts expect moderate growth for the year.\nPetrochemicals producers said planned maintenance outages have tightened capacity, constrained production and raised the price of ethylene. Capacity was reduced by closures during the recession, and new modern plants will not be on line for several years. The pass-through of higher ethylene prices has weakened export demand for petrochemical products including polyethylene. Gulf Coast refiners noted steady margins overall since the last report.\nRetail Sales\nRetail sales grew modestly over the comparable period a year ago and performed in line with expectations. According to some national retailers, the Eleventh District's strength relative to the nation declined as warm weather in the north and east prompted strong spring clothing sales in those regions. Contacts noted that consumer demand appears healthier, and most expect moderate sales growth for the year. Inventories are being managed closely.\nAutomobile sales showed strength in late February which continued through the first half of March. Contacts noted that customer concern over gas prices remains muted at this point, but they have seen more interest in smaller vehicles recently. The outlook for sales remains optimistic.\nServices\nDemand for staffing services softened slightly at the end of March, following solid activity earlier in the year. Still, orders for direct hires remained strong and shortages of skilled accounting and IT professionals were reported. Outlooks were positive as contacts expect demand to bounce back in the second quarter. Legal firms reported a slight pickup in demand for their services. Contacts said mergers and acquisitions and transactional service activity had surpassed expectations, and there is continued strength in demand for intellectual property, energy and some real-estate related legal services. Accounting firms reported a modest increase in overall activity and characterize this year's tax and audit season as unusually good.\nReports from transportation service firms were mixed. Intermodal firms reported an increase in cargo volumes buoyed by shipments of oil field supplies. Small parcel shipments increased, while air cargo volumes and railroad shipments declined during the reporting period. Airlines reported solid passenger demand over the past six weeks. Domestic air travel increased, while international air travel demand was flat. Contacts said customers remained price sensitive and were purchasing restricted discount fares. Airline contacts expect passenger demand to remain stable or improve in the near-term.\nConstruction and Real Estate\nHousing demand continued to pick up over the past six weeks. Tight new home inventories led to a modest rise in construction activity. Sales activity rose and inventories fell in the existing home market. Some contacts expect lower inventories to impact prices positively in 2012. Apartment leasing activity remained robust since the last report.\nOffice and industrial leasing activity continued to improve. Contacts noted that the energy and high tech sectors were driving much of the demand for space. Sales of nonresidential investment properties were unchanged over the past six weeks. Respondents noted some trepidation among investors, even though capital is widely available. The one exception was apartment properties, which remain popular among investors according to contacts.\nFinancial Services\nFinancial firms reported a modest uptick in loan demand. National banks reported strength in middle-market lending and large corporate lending activity. Regional banks also noted improved sentiments, and several banks suggested energy-related activity remains robust. Outlooks are generally less pessimistic, and some outright optimistic, with an overall theme that \"loan demand is slightly stronger.\" The most optimistic contacts were large bank lenders or regional banks that expressed strength in renewed corporate lending. Loan pricing remains competitive. Outstanding loan quality continues to improve, and contacts continue to note fewer problem loans.\nEnergy\nContacts at energy-related service firms said demand and backlogs from oil-producing areas remained very strong over the past six weeks. Many respondents, however, were concerned about weaker than expected demand for gas-directed drilling and a related decline in demand for fracturing services and horizontal drilling services. While respondents said overall demand in Texas is still very strong, several noted that crews were being shifted from dry gas-producing basins such as the Barnett shale to oil-producing basins such as Permian and Eagle Ford. While such disruptions were expected to be temporary, some contacts had lowered expectations for 2012.\nAgriculture\nRainfall continued to ease drought conditions in many parts of the District. West Texas did not receive much moisture, however, and the severity of drought there worsened over the reporting period. Prospects for 2012 crops are improved due to better soil moisture, and producers will have more flexibility with what to plant.\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 11, 2012\nThe economy in the Fourth District grew at a modest pace since our last report. Manufacturers reported a small increase in production, while activity in residential and nonresidential construction picked up slightly. Many retailers and auto dealers characterized February sales as good. Energy production was stable except for shale gas, where activity expanded. Freight transport volume trended higher at a moderate rate. And the demand for business and consumer credit improved slightly.\nHiring remains at a low level and was mainly limited to the manufacturing and freight transport sectors. Staffing-firm representatives reported that the number of job openings has increased, especially for information technology and healthcare workers. Wage pressures are largely contained. Prices were largely stable apart from increases in petroleum-based products, metals, and some building materials.\nManufacturing\nProduction at District factories showed a small increase during the past six weeks, and a majority of manufacturers said that output was above year-ago levels. However, several contacts reported that the boost in new orders they had seen late last year is leveling off and they are uncertain about sales to European customers. Some of our respondents expressed a more cautious outlook than at the start of 2012, but they are not expecting a significant weakening. Shipping volume by steel producers and service centers was trending slightly higher. Demand is being driven by the auto, energy, and industrial equipment markets. Steel representatives are cautiously optimistic about second-quarter shipments, and they expect the positive growth trend to continue. District auto production showed a modest rise during February on a month-over-month basis, while increasing substantially from prior-year levels. Increases were attributed, in part, to the abatement of supply chain issues.\nCapacity utilization has returned to normal rates for the majority of our contacts, while inventories were consistent with demand. Capital budgets remain on track, with many manufacturers reporting that they plan to increase outlays during the next several months. Input- cost changes were mainly limited to rising prices for petroleum-based products and metals. Only a few producers said that they are considering raising product prices during the second quarter. Manufacturers continued to hire, but at a modest pace. We heard reports about difficulties recruiting professional and high-skilled production workers. Wage pressures are contained. Several contacts said that they need to allocate additional monies for pension plans due to low rates of return.\nConstruction\nSingle-family-home construction has improved slightly during the past couple of months, although overall sales remain at very low levels. Activity in multi-family construction and remodeling remains strong. Single-family-home builders are a little more optimistic in their outlook due to the time of year and low mortgage interest rates. A few builders reported reducing house sizes and altering interior specs as a means of holding new- home prices steady. Employment and wages were stable.\nActivity in nonresidential construction for small to medium-size contractors continues to strengthen and is at a higher level than a year ago. Inquiries were up substantially for most of our contacts, although backlogs, while growing, are not as strong as builders would like. Financing projects remains one of the biggest challenges facing contractors. Construction activity is broad-based, driven by student housing, senior housing, healthcare, office, and manufacturing. Our contacts expect that business will slowly improve as the year progresses, but it will remain below pre-2008 levels. Looking at building-materials prices, residential and nonresidential contractors reported increases for petroleum-based products, drywall, and lumber. Hiring by nonresidential general contractors was limited. Several commented that they need to see more robust growth before expanding their payrolls.\nConsumer Spending\nRetailers reported that sales were ahead of plan during the past six weeks and increased by single digits relative to year-ago levels. Almost all of our contacts cited the unusually warm weather as a primary factor for the pickup in sales, which was seen across their product lines. However, several of our respondents described middle-income households as challenged. These consumers are trading down, looking for value, and they remain very sensitive to rising gasoline prices. Most retailers expect second-quarter sales to increase over prior-year levels, mainly in the low- to mid-single digits. However, grocers anticipate little change in sales. Reports on vendor pricing were mixed. Upward pressure was attributed mainly to rising transportation and offshore labor costs, with little emphasis on changes in raw material pricing. There was some reluctance to pass through rising costs to consumers. Inventories were characterized as being in good shape. Capital spending for the year remains on track. Outlays will be used largely for technology enhancements, distribution facilities, store expansions, and new store construction. Little hiring is anticipated except at new stores.\nAuto dealers described new-vehicle sales during February as good. Sales received a boost from the unusually warm weather. We heard one report of a shale gas producer purchasing 75 vehicles from a dealer. On a year-over-year basis, sales were mainly higher. However, some dealers reported seeing a lull in activity, which they attributed to a significant pick up in vehicle leasing at the beginning of 2011. Inventories are light on the domestic side, but foreign nameplates are rebuilding stocks rapidly, as those manufacturers are trying to recapture market share. The outlook for the remainder of this year was mixed. Half of our contacts expect the rise in 2011 sales will be repeated, while others believe that the rate of increase seen last year is unsustainable. Purchases of used vehicles were fairly strong. On the financing side, interest rates are competitive, but it remains difficult to arrange financing for customers with low credit scores. Auto dealers are hiring at a very slow rate.\nBanking\nDemand for business credit was described as either steady or rising, with a majority of bankers telling us that loan pricing remains competitive. Requests are being driven by commercial real estate, including multifamily housing, and healthcare. Consumer credit requests rose slightly during the past six weeks. Demand was mainly for auto lending (direct and indirect) and home equity lines of credit. Several community bankers commented that it is difficult competing against large banks, credit unions, and captives, especially for motor vehicle loans. In the residential mortgage market, demand was described as steady to very strong. A high percentage of applicants are looking to refinance. No changes were made to loan application standards. Delinquencies were generally steady or declined; any increases were found largely in real estate portfolios. Core deposits continued to grow. Payrolls were stable, with little hiring expected.\nEnergy\nConventional oil and natural gas drilling and production were flat since our last report, with little change expected in the upcoming weeks. Our contacts attributed these conditions to low natural gas prices and regulatory costs. Well-head prices for oil were up slightly. Leasing activity in Ohio's Utica shale continues to expand, and energy companies are redeploying drilling resources from dry gas to the wet gas areas of the Marcellus shale due to its significantly higher market value. The outlook for coal production during 2012 is similar to 2011 levels. However, there is a growing likelihood that output will decline due to the regulatory environment and lessening demand from electrical utility companies and offshore markets. Spot prices for metallurgical and steam coals continued to decline. Production equipment and materials prices were fairly steady except for rising diesel fuel prices and the cost of items tied to steel. Energy payrolls were stable, though some small oil and gas companies are considering layoffs because of reduced revenues.\nTransportation\nFreight transport volume has been trending higher during the past few weeks. Industries driving demand include energy and metals. One executive noted a significant upswing in long-term leasing of his railroad cars. Volume is expected to continue growing at a moderate pace for the remainder of the year. Costs associated with truck maintenance have begun stabilizing after increasing for two consecutive quarters. The price of diesel fuel continues to rise, although a few of our contacts characterized it as manageable. Some of the increase was passed through via surcharges. Capital spending for 2012 remains on plan. Outlays are allocated for replacement of aging units and adding capacity, although it remains difficult to recruit qualified drivers. We heard two reports of additional drivers being hired to meet potential staffing requirements under the new hours-of-service rules. Some wage pressure exists due to a tightening of the driver pool.\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 11, 2012\nThe economy of the Eighth District continued to grow at a modest pace since our previous survey. Residential real estate market conditions have improved moderately. Similarly, commercial real estate market conditions also have improved. However, recent reports of plans from firms in the manufacturing and services sectors were more mixed. Overall lending at a sample of small and medium-sized District banks was essentially unchanged during the three-month period from mid-December to mid-March.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been mixed since our previous report. Several manufacturers announced plans to increase operations and hire workers, while a similar number of contacts reported plans to close plants and lay off workers in the near future. Firms in the pipe, bathroom products, all-terrain vehicle, construction machinery, processed poultry, and power tool manufacturing industries announced plans to increase existing operations or open new plants in the District. In contrast, firms in the oil blending and packaging and fish farming industries announced plans to close plants and lay off workers. In addition, a major firm in the printing industry announced plans to close a plant in the District and lay off a large number of workers.\nReports of planned activity in the District's services sector also have been mixed since our previous survey. Firms in hotel, business support, distribution, and natural gas distribution services announced plans to expand operations and hire new workers. In contrast, contacts in health care, distribution, freight transportation, casino, and storage services announced plans to close facilities and lay off workers. General retail contacts have reported strong sales for the first two months of the year, and they expect positive sales growth to continue through 2012. District auto dealers have reported strong demand in the luxury automobile market while truck sales have been down.\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, February 2012 year-to-date home sales were up 10 percent in Memphis, 24 percent in St. Louis, 19 percent in Louisville, and 14 percent in Little Rock. Residential construction increased in the majority of the District over this time period. February 2012 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2011. Permits increased 22 percent in Memphis, 63 percent in Louisville, 28 percent in Little Rock, and 25 percent in St. Louis.\nCommercial and industrial real estate conditions improved moderately throughout most of the District. Contacts in northeast Arkansas continued to report strong commercial real estate activity in the Jonesboro area. A contact in Little Rock noted stronger commercial real estate activity for office and retail space than last year. Contacts in the Louisville metropolitan area reported improvement in office real estate activity and expect increases in the demand for industrial space. However, a contact in central Kentucky noted that commercial real estate activity is very soft. Commercial and industrial construction activity showed modest improvement in several parts of the District. A contact in Little Rock reported that new construction activity has improved because of the mild winter weather, but it is still at weak levels. Contacts in central Arkansas reported increased bidding in commercial construction projects, while a contact in western Kentucky noted large commercial and industrial construction projects to be completed in Owensboro.\nBanking and Finance\nTotal loans outstanding at a sample of small and medium-sized District banks were essentially unchanged in the three-month period from mid-December to mid-March. Real estate lending, which accounts for 73.7 percent of total loans, decreased 0.4 percent. Commercial and industrial loans, accounting for 15.8 percent of total loans, grew 2.2 percent. Loans to individuals, accounting for 4.7 percent of loans, decreased 1.3 percent. All other loans decreased 8.8 percent and accounted for 5.8 percent of total loans. Over this period, total deposits increased 1.9 percent.\nAgriculture and Natural Resources\nMonthly output of commercial red meat in the District for February 2012 increased 9.9 percent compared with February 2011. However, monthly output of commercial red meat declined 4.4 percent between January and February 2012. The number of chickens slaughtered and the total live weight also decreased by 4 to 5 percent between January and February 2012. The District's year-to-date coal production for early March was 3.5 percent lower compared with the same period last year. Similarly, the District's coal production for February was 2.4 percent lower than in February 2011.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

/beige-book-reports/2012/2012-02-sl

"Beige Book Report: St Louis\nFebruary 29, 2012\nEconomic activity in the Eighth District has continued to expand at a modest pace since the previous survey. Manufacturing activity has continued to increase, and activity in the services sector has also increased. Residential real estate activity has continued to decline, while commercial real estate market conditions have been mixed. Overall lending at a sample of large District banks saw little change during the fourth quarter of 2011.\nConsumer Spending\nContacts reported that retail sales in January and early February were up slightly, on average, over year-earlier levels. Half of the retailers saw increases in sales, while 37 percent saw decreases and 13 percent saw no changes. Roughly 71 percent of the retailers reported that sales levels met their expectations, 17 percent reported that sales were below expectations, and 12 percent reported that sales were above expectations. About 21 percent of the retailers reported that their inventories were too high, while 12 percent reported that their inventories were too low. The sales outlook for March and April was mostly optimistic: 65 percent of the retailers expect sales to increase over 2011 levels, while 13 percent expect sales to decrease and 22 percent expect sales to be similar to last year's sales.\nCar dealers in the District reported that sales in January and early February were up slightly, on average, compared with last year's sales. About 48 percent of the car dealers surveyed saw increases in sales, while 32 percent saw decreases and 20 percent saw no changes. Twenty-eight percent of the car dealers reported that used car sales had increased relative to new car sales, while 24 percent reported the opposite. Thirty-two percent of contacts reported an increase in sales of low-end vehicles relative to high-end vehicles, while 8 percent reported the opposite. Thirty-two percent of the car dealers surveyed reported that their inventories were too low, while 24 percent reported that their inventories were too high. The sales outlook for March and April was mostly optimistic: 76 percent of the car dealers expect sales to increase over 2011 levels, while just 4 percent expect sales to decrease and 20 percent expect sales to be similar to last year's sales.\nManufacturing and Other Business Activity\nManufacturing activity has continued to increase since our previous report. Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to close plants or decrease operations. Firms in the furniture, automobile, food, stone product, air conditioning component, and medical device manufacturing industries announced plans to increase existing operations and hire new workers. Additionally, firms in the automobile parts and primary metal manufacturing industries announced plans to open new plants and hire workers. In contrast, firms in the faucet, chemical, paper product, and lawn mower manufacturing industries announced plans to close plants and lay off workers.\nActivity in the District's services sector has continued to increase since our previous report. Firms in information technology services, pest control services, distribution services, health services, and leisure services announced plans to expand operations and hire new workers. In contrast, contacts in freight transportation services, education services, government services, and business support services announced plans to decrease operations and lay off workers.\nReal Estate and Construction\nHome sales continued to decline throughout most of the Eighth District. Compared with 2010, total 2011 home sales were down 2 percent in Memphis, 3 percent in St. Louis, 4 percent in Louisville, and 6 percent in Little Rock. Residential construction also continued to decrease throughout the District. Total 2011 single-family housing permits decreased in the majority of the District metro areas compared with 2010. Permits decreased 15 percent in Louisville, 20 percent in Little Rock, and 21 percent in St. Louis. However, permits increased 1 percent in Memphis.\nCommercial and industrial real estate conditions were mixed throughout the Eighth District. Contacts in Memphis reported weak commercial real estate loan demand but stable industrial real estate activity. Contacts in Louisville reported that commercial real estate activity has increased since December 2011 while contacts in St. Louis noted an increase in fourth-quarter 2011 office and industrial vacancy rates compared with the third quarter of 2011. Commercial and industrial construction also varied throughout the District. Contacts in south central Kentucky noted that commercial construction is showing improved activity with recent business additions and relocations in the region. Contacts in western Kentucky, however, noted that construction projects are very scarce, with the exception of Owensboro-Daviess County, which has a significant number of public and private projects underway. Contacts in northwest Arkansas noted an increase in commercial building construction in the Bentonville area, while contacts in Little Rock continued to report overall weak construction activity.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks showed little change in overall lending activity during the fourth quarter of 2011. During this period, credit standards and demand for commercial and industrial loans remained unchanged. Credit standards for commercial real estate loans also remained unchanged. Demand for these loans ranged from unchanged to moderately stronger. Meanwhile, credit standards for consumer loans remained unchanged, while demand ranged from moderately weaker to about the same. Credit standards for prime residential mortgage loans ranged from unchanged to somewhat eased, while demand for these loans ranged from about the same to moderately stronger.\nAgriculture and Natural Resources\nYields for corn, sorghum, hay, soybeans, and cotton were lower in 2011 compared with 2010, while yields for winter wheat, rice, and tobacco showed positive gains. Monthly output of commercial red meat for December 2011 decreased compared with November 2011; the District's total live weight and number of chickens slaughtered also decreased during the same period. The District's coal production for January 2012 was 1 percent lower compared with January 2011. Similarly, as of early February, year-to-date coal production was 4.2 percent lower than the same period in 2011.\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\nFebruary 29, 2012\nEconomic activity in the Twelfth District continued to grow at a moderate pace during the reporting period of January through mid-February. Price increases for final goods and services were limited, and upward wage pressures were minimal. Sales of retail items rose on balance, and demand improved modestly for business and consumer services. District manufacturing was mixed but appeared to expand overall. Demand grew further for agricultural producers but was uneven for providers of energy resources. Activity in District housing markets remained sluggish, and demand for nonresidential real estate stayed weak overall. Financial institutions reported a small increase in overall loan demand.\nWages and Prices\nUpward price pressures remained very limited during the reporting period. While price increases were reported for some commodities, including oil and assorted construction materials such as cement and wallboard, declines were noted for others, such as natural gas. Price increases for most goods and services continued to be restrained by weak final demand and stiff competition among businesses.\nUpward wage pressures were quite modest, as high levels of unemployment and limited demand for new workers kept a lid on compensation gains. However, contacts continued to point to notable increases in the costs of employee benefits, particularly in regard to defined benefit pension plans, although they reported slight easing in upward pressures on health benefit costs. Consistent with prior periods, upward wage pressures remained pronounced for workers with specialized skills in the application of information technology in assorted sectors.\nRetail Trade and Services\nRetail sales continued to expand. Modest improvements in sales were reported for general merchandise such as apparel and smaller household items, with stronger gains noted for traditional department stores than for discount chains. Demand also improved modestly for retailers of major appliances and furniture, but it remained lackluster for electronics. Sales held relatively stable for grocers, although upscale chains saw gains. For retailers of pet products, demand continued to show robust growth.\nDemand for business and consumer services rose a bit on net. Sales grew further for providers of technology services to businesses and consumers. Similarly, demand for professional services such as legal services and accounting ticked up on balance. For providers of health-care services, demand was largely stable, with declines in inpatient admissions and surgeries offset by higher emergency room visits. Sales activity was reported to be largely unchanged for restaurants and other food-service providers. Conditions in the District's travel and tourism industry continued to strengthen, reflecting growth in both the business and tourism segments of the market.\nManufacturing\nManufacturing activity in the District was mixed but appeared to expand further during the reporting period of January through mid-February. Manufacturers of semiconductors and other technology products reported moderate sales gains; reports of ongoing investments in information technology equipment by firms in most sectors suggest that demand growth is likely to continue for these manufacturers. For makers of commercial aircraft and parts, strong demand for narrow-body aircraft along with an extensive order backlog kept production rates near capacity. Activity was essentially flat for metal fabricators, and slack demand combined with a diminishing backlog have raised concerns that production activity may decline going forward. Capacity utilization rates for petroleum refiners held largely stable as robust global demand for distillate products, especially from Latin America, continued to offset weak domestic demand for gasoline. Output and sales of wood products remained extremely weak.\nAgriculture and Resource-related Industries\nDemand continued to improve for agricultural products and mined metals, but it was mixed for natural resources used for energy production. Orders and final sales grew further for most crops and livestock products, with little or no change indicated for the cost and availability of inputs. Mining activity in parts of the District expanded further for a variety of precious metals and metallic elements used for specialized industrial purposes. Strong foreign demand for oil prompted additional increases in extraction activity. By contrast, warm weather held down demand for natural gas relative to seasonal norms, causing further declines in recent and planned extraction activity.\nReal Estate and Construction\nHome demand in the District persisted at very low levels, and conditions were little changed for commercial real estate. The sales pace for new and existing homes remained quite subdued, although scattered reports suggested modest improvement. Inventories of available homes stayed quite high, putting continued downward pressure on prices and construction activity. By contrast, demand for rental space remained robust, prompting further increases in construction of multifamily units. Conditions in commercial real estate markets were largely unchanged, and vacancy rates for office and industrial space stayed high in most parts of the District. However, additional declines in vacancy rates were noted for selected geographic areas such as the San Francisco Bay Area and Seattle. Contacts also noted recent improvement in financing availability and investor activity for well-leased office buildings.\nFinancial Institutions\nReports from District banking and business contacts indicated that loan demand improved a bit overall compared with the prior reporting period. The volume of new commercial and industrial loans edged up. The reports suggested that businesses generally remained very cautious in regard to capital spending decisions, but many continued to invest in information technology equipment aimed at enhancing productivity. Moreover, many businesses expect to modestly increase their capital spending in the first half of the year compared with the second half of last year, suggesting that growth in business loan demand may continue. The reports also noted continued stiff competition among lenders to extend credit to well-qualified small and medium-sized businesses, placing further downward pressure on loan rates and fees. Strong recent financial performance by technology companies backed by venture capital reportedly has spurred further investments of late. On the consumer side, the reports suggested little change in loan demand. Contacts reported slight improvement in overall credit availability, although lending standards remained relatively restrictive for many types of business and consumer loans.\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\nFebruary 29, 2012\nDistrict economic conditions improved in most sectors since our last report. Manufacturing activity expanded further in January and early February. Retail sales picked up and shopper traffic moved higher. Revenue growth at services-providing firms slowed, while most tourism businesses continued to post moderate gains. Likewise, bankers reported that lending to both residential and commercial customers increased slightly, although the level of demand remained low. Both residential and commercial real estate contacts cited moderate gains in sales and leasing activity during the last six weeks, even though the overall level of demand was weak. District employment improved somewhat, but both manufacturers and professional services firms continued to report problems finding qualified workers. Both manufacturing and services prices received were up only moderately from our last report, while prices paid moved significantly higher.\nManufacturing\nDistrict manufacturing activity advanced further in recent weeks. An automotive parts manufacturer reported that sales remained strong, and the recent strength of sales had driven an increase in his capital spending for equipment. A textile producer saw a general pick up across all sections of his business. He added that his supply of raw materials was tight, due to the low levels of his suppliers' inventories at the end of the year. Similarly, an electrical components manufacturer described business as still reeling from the spillover effects of the flooding in Thailand; he stated that his backlog of orders was large because his suppliers were unable to fill his orders. A furniture manufacturer cited improvement in the past few months, noting that his business usually picks up with rising consumer confidence. Moreover, a fabricated metal producer indicated that business was strong, with January orders and shipments increasing by double-digit rates over December levels. According to our recent survey, raw materials prices grew moderately from a month ago, while finished goods prices grew at a slightly quicker rate than a month earlier.\nRetail\nRetail sales rose and shopper traffic increased in recent weeks. Big-ticket sales were generally flat, however, according to most contacts. Auto dealers in South Carolina and Maryland experienced a slowdown in sales since our last report. In contrast, a car dealer near Washington, D.C. said that his establishment was hiring more sales associates to handle the increase in customer traffic and sales. Store managers at big box department stores across the District indicated that sales were steady or slightly stronger, and remarked that television sales blipped up just before the Super Bowl. However, the warm winter resulted in mark-downs on a large quantity of winter apparel. A central North Carolina store manager reported that spring and summer apparel had arrived, but the lingering stock of winter clothing had left little room on the floor for new merchandise. According to our recent survey, home and garden retailers reported a pick-up in sales, as did department store wholesalers. Retail prices continued to rise at a moderate pace since our last report.\nServices\nRevenues grew a bit more slowly overall at services-providing firms over the last month. Contacts at professional, scientific, and technical businesses gave us somewhat mixed reports. However, an executive at a brokerage firm thought that account statements were \"looking better.\" Recruiters in the Carolinas reported increased demand for permanent employees, particularly \"technical talent.\" An executive at a nationwide trucking firm stated that freight demand increased over the last month. Finally, a North Carolina hospital contact reported a major increase in capital spending to meet new healthcare reform requirements. Prices at services firms moved up at a restrained pace.\nFinance\nLending to both residential and commercial customers increased marginally across the District over the last six weeks. However, the level of demand for loans was often described as weak, and several bankers were still reporting little change since the end of last year. While most mortgage applications continued to be for refinancing, loan officers around the District reported a slight increase for home purchases. Also, the average size of loans increased. One banker in Richmond stated that investors, taking advantage of low prices and interest rates, were a key source of such mortgage lending in his market. An official for a large bank also stated that his bank remained very cautious about any consumer loan application, especially for purchasing a home. On the commercial side, several bankers extended more merger and acquisition loans. A loan officer for a regional bank said that his bank had increased its lending for new equipment as well as for refinancing. A Virginia banker reported a slight uptick in lending for inventory. However, other bankers stated that loan demand in those categories was flat. While most construction loans other than for multi-family buildings remained limited, several bankers reported an increase in loans for owner-occupied facilities and their furnishings (mostly to medical professionals). Credit standards remained tight, but most bankers reported that their lending targets were increasing this year, even though competition for quality loans was intense.\nReal Estate\nResidential real estate activity showed modest improvement since our last report. Indeed, some contacts suggested that the sector had moved beyond the bottoming-out phase. For example, lower inventory of both new and existing homes was reported in the D.C. and Richmond areas, with some builders beginning to sell and even build again. A source from North Carolina said that a housing development was successful due to a \"rent-to-own\" plan. He added that new construction activity was also starting to occur in the Research Triangle area. While most Realtors reported that sales were either flat or up slightly, housing prices generally continued to decline. Several agents attributed the drop in sales prices, in part, to short or distressed sales being used as comparables. They noted, however, that many buyers were avoiding short sales and foreclosed homes due to often a six to eight month delay in closings. Most Realtors cited sales in the low-price range as faring better than sales in the high-price range. An exception, however, was an agent in the D.C. area, who said that home sales over $1,250,000 were outperforming all other price ranges. He added that he was starting to receive multiple offers that were well above listing prices, and he expected this trend to continue through the spring selling season.\nCommercial real estate activity improved slightly since our last report, especially for office space. A Realtor in the D.C. area reported that he had been very busy since the start of this year, but mostly with inquiries that had yet to turn into closed deals. He added that so far this year government-related activity was down. A Virginia real estate agent noted that while office building purchases remained weak, some clients had increased their leasing in hopes of purchasing at a later time. While office rents have stabilized in most areas of the District, many agents reported that concessions remained widespread. One Realtor said that, in order to retain struggling tenants, he had been making repairs and upgrades that would normally be left to the tenant. Retail leasing activity remained mixed, with one agent reporting that anchor stores at large malls were stable, but small boutiques in the same malls were having difficulty meeting their rent and some were closing. On the industrial side, data processing and distribution centers were a positive source of leasing activity, according to several agents around the District. While industrial demand generally remained weak, several contacts reported some improvement since the start of the year. An architectural firm reported an increase in demand related to site development, suggesting that industrial clients might be planning construction starts later this year.\nLabor Markets\nAssessments of labor market activity were somewhat more upbeat than in our last report. Several employment agencies stated that demand for temporary workers had increased and those contacts were optimistic about future demand. A Baltimore agent noted that the demand for temp workers had definitely increased, and his company was experiencing a pickup in recruitment demand for skilled and semi-skilled jobs in the manufacturing and distribution sectors. He added that the agency was beginning to see some upward pressure on wages for manufacturing and distribution center skills, as finding qualified workers remained difficult. A representative at a Richmond staffing agency reported that employers were starting to complain that they were not getting enough qualified applicants. He noted that even with growth in postings, matching of openings with qualified people continued to be challenging. According to our latest survey, District manufacturing employment improved over the last month, while wage gains were slightly lower than a month ago. Both retail and non-retail services employment picked up in recent weeks, while the pace of average wages in the service sector overall increased moderately.\nTourism\nTourism remained generally strong, with some contacts reporting further strengthening in recent weeks. A contact on the outer banks of North Carolina reported a good start to the year and strong vacation house rentals, with weekend travel up as a result of good weather. Businesses in that region expect a good tourism season ahead, supported by such scheduled events as music festivals, bike races, and marathons. A hotel general manager in the mountains of North Carolina, where weather was also mild this winter, noted an increase in bookings, and he expected modest growth to continue through the summer season. Elsewhere, several ski resorts have been adversely affected by the mild Mid-Atlantic winter, and a resort in western Virginia will cut jobs to reduce costs, according to an executive.\nAgriculture\nUnseasonably mild temperatures, coupled with below-normal precipitation held back crop yields in some areas of the District. In North Carolina, tobacco and cotton yields reached only 50 percent of historical averages as a result of damage caused by severe weather last summer. In South Carolina, dry weather late in the season significantly reduced what was previously expected to be an outstanding cotton crop. Moreover, results of our recent agricultural credit survey indicated that farmland values were slightly below the previous quarter and year-ago levels. In contrast, ample amounts of rain throughout Virginia, combined with above-normal temperatures, resulted in above-average yields and near-record commodity prices for most grain producers. An analyst in the Commonwealth described 2011 as a solidly profitable year for most grain producers due to increased export demand.\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\nFebruary 29, 2012\nEconomic activity in the First District continues to expand. With the exception of real estate, business contacts are generally upbeat about recent results, reporting similar or better growth than in the last couple of reports. Commercial and residential real estate markets are not much changed, with respondents citing weak but not disastrous conditions. While staffing firms note increased demand for labor, contacts in retail and manufacturing say they are hiring only modestly and plan limited pay raises. With a few exceptions, price pressures appear to have abated.\nRetail and Tourism\nFirst District retailers responding in this round report that business conditions in early 2012 have continued the improvement seen in the fourth quarter. Contacts ending their fiscal year in late December or early January say that fiscal 2011 sales ranged from down 2 percent to up 5 percent compared to 2010. These results are generally better than they expected at the start of 2011 and reflect strong same-store sales in the last few months of 2011 as compared to earlier in the year; indeed, December 2011 same-store sales ranged from high single-digit increases year-over-year to mid-teen increases. The range of results was wider in January 2012: One retailer reports same-store sales were down 8 percent to 9 percent year-over-year, which he attributes to mild weather depressing demand for winter hardware items as compared to a particularly snowy January 2011. Another saw January comparable-store sales up 7 percent compared to a year ago, and a third respondent enjoyed a 17 percent jump, which he credits in part to the mild winter not keeping customers at home. All contacts note that store traffic is up.\nResponding retailers report that furniture is selling very well, as is paint. As noted above, the mild winter has depressed sales of some seasonal items, and one retailer has steeply discounted winter clothing to get rid of inventory. Prices on furniture are generally flat, but retailers expect the cost of items made with copper or titanium oxide (paint) to reflect price increases in these commodities. Stores are doing light hiring for some full-time and part-time positions; they are budgeting 2012 merit pay increases between 2 and 3 percent. Retail respondents expect the U.S. economy to improve further in 2012. While remaining a bit cautious, they all note that economic conditions seem more favorable than last fall.\nManufacturing and Related Services\nManufacturing conditions in the First District appear to have improved since the end of last year. All respondents in this cycle report sales growth in the fourth quarter from a year earlier. Although many contacts express serious concerns about the situation in Europe, only two say that sales to Europe were actually down. In contrast to the last two rounds, this time few contacts mention weakness in Asia. Contacts among defense suppliers express concern about the budget. One had concluded that programs his firm worked on were largely insulated from cuts but said they are \"having trouble convincing our investors of that.\" Another said that budget issues are leading to delays but not to reductions in sales.\nRaw material prices have stabilized overall but remain an issue. On the one hand, a plumbing manufacturer said that copper is \"on the march again.\" On the other hand, low natural gas prices have been a boon to U.S. industry. A contact in the industrial membrane industry reports that a multimillion dollar project to switch to natural gas has already led to millions of dollars in savings. A petrochemical contact points out that the equivalent price of natural gas in terms of oil is approximately $25 a barrel, making the U.S. a low cost producer of petrochemicals; as he put it, we are \"exporting natural gas in the form of ethylene and polyethylene.\"\nAll of our manufacturing contacts are increasing investment and none cites any issues finding financing. Remarkably, almost all of our contacts say they have acquired at least one company over the last six months. Almost all responding manufacturers report increased employment and there are fewer complaints about difficulties finding qualified workers than in the past; at the same time, an equipment manufacturer is spending significant sums on training expenses for new hires. A pharmaceutical firm closed a facility in Philadelphia and offered jobs in Massachusetts to 20 employees, but reports that only six accepted, suggesting confidence in the availability of employment.\nEurope is a source of considerable concern but has not yet affected our contacts in a significant way. Two respondents report slower sales in Europe and one, a plumbing manufacturer, says Europe is \"in a recession.\" Another contact revised down their sales growth forecast for 2012 by 2 percentage points to 4 percent to 5 percent--with the subtraction attributed to weakness in Europe--but at the same time indicated the risks had shifted to the upside.\nSoftware and Information Technology Services\nFirst District software and information technology services contacts report that the upward trends of early 2011 continued through Q4 2011 and into Q1 2012. Year-over-year revenue increases in the fourth quarter, ranging from 10 percent to over 25 percent, were generally on par with those seen in the third quarter. Contacts report upticks in demand across a number of sectors and geographies, with a few noting that activity in Europe exceeds their expectations. Growing workloads have led most contacts to continue to add to their headcounts. Indeed, one contact is on track to expand its workforce by over 20 percent in 2012; another, by contrast, reports a modest decrease, with a number of management positions being eliminated in an ongoing realignment. Two contacts say they have increased capital and technology spending relative to a year ago in order to build office space in Massachusetts. Prices are holding steady, with contacts reporting little to no downward pressure. The outlook among software and IT contacts is not appreciably different from that of three months ago; most are cautiously optimistic and expect revenue growth in 2012 to be in the range of 10 percent to 20 percent.\nStaffing Services\nNew England staffing firms generally experienced a better-than-usual holiday season in 2011, with business picking up steam in early 2012. However, year-over-year revenue changes in the fourth quarter varied widely, from flat to up more than 25 percent. Labor demand is higher than three months ago, although a few contacts report signs of slowing in the light industrial sector. The growth in demand for permanent and temporary-to-permanent hiring has accelerated in recent months, with one contact noting that \"clients are definitely ready to hire permanent employees.\" Notwithstanding stronger demand, the hiring cycle remains elongated, and high-end skill sets are still difficult to find. Bill rates and pay rates have gone largely unchanged since November but remain above their year-earlier levels. Looking forward, New England staffing contacts are generally more upbeat than they were three and six months ago, with many expecting their rate of growth to pick up through the end of 2012.\nCommercial Real Estate\nCommercial real estate contacts around New England describe leasing fundamentals as largely unchanged since the last report, although some note modest positive developments. One Boston contact reports that some tenants are increasingly willing to pay top dollar for prime office space in Boston's Back Bay, but cautions that such instances do not necessarily reflect a broad-based increase in office demand in greater Boston. Another Boston contact describes the city's office leasing market as mostly flat, but grants that rents may have increased marginally in recent months. A Providence contact is more upbeat, noting a healthy increase in deal volume and significant office absorption since the last report. By contrast, office leasing volume slowed somewhat in both Portland and Hartford relative to December. For retail space, Hartford's vacancy rate held up better than expected despite weak holiday sales at some large chains, while in Portland some long-vacant retail properties have seen a rise in inquiries by potential tenants. Greater Hartford's industrial market also saw a modest uptick in tenant inquiries in recent weeks, including signs of life in the area's moribund warehousing and distribution sector.\nBoston continues to experience a surge of multifamily construction activity, with several large projects under way and more in the planning stages. Financing for such projects is available on attractive terms, with interest rates dipping below 4 percent in some cases. While investors and lenders are bullish on the multifamily sector and apartment rents have risen significantly in Boston in the past year, some contacts see a risk of overbuilding. Boston's science and technology sector is generating significant build-to-suit construction of laboratory/office space. At the same time, speculative office construction remains non-existent across the area, and one contact estimates that office vacancy rates would have to fall below 4 percent in Boston to warrant the creation of new office structures. While office construction is limited, the investment sales market for prime Boston office properties remains robust amid a highly liquid financing environment. Echoing similar comments in recent reports, however, some contacts perceive that sales prices for prime Boston office properties are too high in relation to expected fundamentals.\nThe outlook among contacts is tilted toward optimism. One Boston contact continues to expect only very slow improvement in leasing fundamentals in 2012, while another sees greater upside potential. Another contact expects Boston's multifamily construction boom to last another two to three years, but beyond that sees few prospects for any new construction activity. Our Providence contact expects solid improvement in fundamentals in 2012, barring risks to growth from local fiscal troubles and a possible spike in oil prices. The outlook in Hartford is moderately optimistic, but based more on sentiment than recent data. Portland's commercial market is expected to improve slowly in 2012, although prime office properties may see more robust gains.\nResidential Real Estate\nSales of single-family homes and condominiums increased in New England in January, with most reports indicating low to moderate growth in sales compared to a year ago. Contacts say recent sales growth reflects market activity more accurately than in previous reports, when year-over-year increases were distorted by the expiration of the tax credit in mid-2010. Meanwhile, the median sale price of homes in First District markets declined compared to a year ago, which contacts attribute to distressed property sales. Concerns surrounding the impact of labor market conditions on housing demand have abated slightly. Respondents note foreclosures and delinquencies continue to affect the housing market significantly, but say these factors play less of a role in New England than in other parts of the country. Contacts expect low mortgage rates and improving employment outlooks to help fuel buyer activity. In the Greater Boston area, rent pressures coupled with low interest rates may push more buyers into the home and condo market.\nContacts expect to see continued year-over-year growth in home sales in the region, but do not anticipate significant improvements in the near term, with prices remaining flat at best. Contacts also note that exceptionally mild winter weather may prompt spring sales activity to begin earlier than usual.\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\nFebruary 29, 2012\nOverall, business activity in the Third District has grown at a somewhat faster pace compared with the previous Beige Book. The overall sentiment has been more positive, although the very mild winter weather may have played a part. Since the last Beige Book, manufacturing activity has grown further with more broad sectors contributing to the gain. Retail sales maintained steady year-over-year increases. Motor vehicle dealers experienced unseasonably strong sales growth overall; however, results varied by state. Third District banks have reported slight growth in lending and continued improvement of credit quality since the last Beige Book. New home construction started the year strong with the warm weather assist. Commercial real estate contacts continued to report steadily improving markets for industrial, retail, and office space. Overall, service-sector firms reported continued growth. Price pressures have remained contained for most sectors, with little change from the last Beige Book.\nMost firms have expressed a brighter outlook since the last Beige Book. Manufacturers anticipate rising shipments and orders during the next six months. Retailers expect slightly stronger sales, and auto dealers are increasingly confident that the current surge in sales will carry into the spring selling season. Banking, real estate, and service-sector firms continue to plan for slow growth in 2012. In general, contacts seemed to prefer talking about recent positive trends rather than reiterating their uncertainty. However, their concerns continue to include the ongoing slow housing recovery, Europe's economic problems, and federal budget indecisions.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported further increases in new orders and shipments. Gains were widespread among the makers of food products, lumber and wood products, primary metals, instruments, and electronic equipment. A supplier to the broad industrial market stated that demand accelerated over the past several months and that the production capacity of many manufacturing clients was picking up. Contacts also reported that work was returning from overseas and that foundries were reaching capacity. The primary metals sector reported strong demand from the automotive and heavy equipment sectors. Among the makers of instruments and of electrical machinery, some contacts indicated that the level of demand seen recently has been the highest since near the beginning of the recession. Even the housing sector contributed to slight upticks in demand, according to contacts from two firms that produce housing-related products.\nAbout nine out of 10 Third District manufacturers expect business conditions to improve or stay the same during the next six months; most expect their business to increase. This optimism permeates nearly every broad manufacturing sector. Increasingly, our contacts cite signs of stronger economic growth, although some of the expected increase reflects seasonal trends. Risks from Europe's problems and constraints from a weak housing market continued to add uncertainty to the outlook, according to some contacts. Expectations of capital spending and future hiring have strengthened since the last Beige Book.\nRetail\nThird District retailers reported little drop-off from the holiday shopping season -- maintaining steady year-over-year sales increases. One industry contact reported better than normal sales for January; another reported perceptible, gradual improvement. All contacts conceded that the mild winter weather may have increased activity, although sales of winter clothes and gear have suffered. Price competition remains tough and shoppers are still very budget conscious, according to some contacts. Overall, retail contacts were a bit more optimistic but remain cautious.\nAuto sales strengthened further in January and February, especially for Pennsylvania dealers. New Jersey dealers had a stronger December, which may have pulled sales forward from January; this was in part due to financial-sector workers spending their year-end bonuses. The outlook for auto sales remains very strong. Industry contacts indicated that some larger dealers have begun hiring, mostly in sales. More hiring is expected if robust sales continue into the spring season.\nFinance\nOverall, loan volumes were flat to up slightly in the Third District since the previous Beige Book. The issuance of home equity lines and home mortgages, including refinancing, increased the most, although some contacts were unwilling to write 30-year mortgages at the current low rates. Commercial real estate and C&I lending remained flat. Banking contacts reported low demand for some lines and early paydowns in others. Overall, credit quality continued to improve. One financial contact reported that the pace of loans going into delinquency has slowed, although the rate being resolved by foreclosure or workout remained flat.\nReal Estate and Construction\nResidential builders reported strong activity and sales in January and early February. One Pennsylvania builder said it was the strongest January in several years. A New Jersey builder closed deals that had been initiated in November and then dragged through December; the builder also reports a good backlog of sales. The mild winter weather helped with production and may have boosted traffic. Contacts cited a more active resale market as a positive trend but expressed concern over higher gas prices and increased compliance costs in the mortgage market. A residential broker also reported a stronger January than last year. Builders reported hiring some sales staff. The outlook among builders and brokers is modestly more positive. However, a broker cautioned that increased sales activity will first spur the shadow inventory to emerge and add to the active inventory, before the active inventory can begin to shrink.\nBrokers and managers of nonresidential real estate have reported generally improving conditions for industrial, retail, and office space since the last Beige Book. The industrial market remains strong, and gains are spreading to the weaker South Jersey market area. High-end and low-end retail markets are especially strong. Mid-value retail, including grocery stores, which often locate in community shopping centers and street retail properties, is struggling, producing higher vacancies. Office market contacts reported that signs of pent-up demand are emerging that will lead to positive net absorption by year's end. The overall outlook for nonresidential real estate has improved since the last Beige Book, but growth will remain modest.\nServices\nThird District service-sector firms generally have reported further growth since the last Beige Book. A logistics firm reported very strong year-over-year results through the first six weeks of 2012. Despite some expressed concerns, the contact is hopeful that this strong pace is maintained or improves when \"freight season\" begins in March. Though somewhat skeptical of the sudden surge in confidence and market enthusiasm, one contact quipped, \"I won't fight the tide!\" Advertising dollars are expected to build through the year with the Olympics and the presidential election. One staffing firm reported a surprising dip in new orders compared with last year and a shift to short-term orders that are not indicative of growth. The majority of service-sector firms anticipate growth will steadily improve in 2012.\nPrices and Wages\nPrice levels have remained contained since the previous Beige Book. Auto dealers and freight shippers still command favorable pricing power. Price pressures are mixed among manufacturing firms, with some firms unable to pass their higher costs along. Retailers and homebuilders continue to report tight margins. Wages are reported to be flat, and some firms have substituted lower cost temporary contract workers to reduce their overall wage bill. House prices are expected to fall further; however, nonresidential rents are stabilizing and concessions are scarcer.\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\nFebruary 29, 2012\nThe Second District's economy has expanded at a somewhat slower pace since the last report. Labor market conditions have been little changed in early 2012. Prices remain relatively stable, although business contacts in various industries indicate some increase in cost pressures. Manufacturers report further improvement in general business conditions since the last report. Retailers indicate mixed sales results for early 2012, though auto dealers indicate some slowing. Tourism activity has strengthened somewhat since the last report. Home sales have been steady to slightly softer since the start of the year, but the rental market has continued to improve. Commercial real estate markets have been mixed but slightly improved, on balance. Finance-sector bonuses are reported to be down considerably from last year's levels. Finally, bankers report increased loan demand, some further tightening in credit standards for commercial borrowers, and lower delinquency rates across all categories of loans except home mortgages.\nConsumer Spending\nRetailers report mixed sales results for January and early February. One retail contact in upstate New York reports strong sales in January, buoyed by continued strong demand from Canadian shoppers. By contrast, another major retail contact indicates some slowdown in sales, with mild weather hampering sales of winter gear in particular. Retailers report that prices continue to be stable overall. Auto dealers in upstate New York report that sales activity slowed in January, despite unseasonably mild weather. Sales of new vehicles were down 3-5 percent from a year earlier, though the weakness was not quite as pronounced as the figures suggest because January 2011 was a particularly strong month for comparison. Inventories and product availability have improved and are no longer much of a factor in restraining sales. Rochester-area dealers report continued strength in used car sales, but dealers in the Buffalo area describe such sales as sluggish. Wholesale and retail credit conditions remain favorable.\nConsumer confidence continued to rebound in January. 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 rising for the third straight month and reaching its highest level since last spring. Tourism activity has strengthened since the last report. New York City hotels report that occupancy rates continued to run moderately ahead of a year earlier, with room rates up modestly. After a sluggish December, Broadway theaters report that attendance and revenues surged more than 30 percent above year-earlier levels in January--apparently boosted by a combination of unseasonably mild weather and a larger number of shows now running. Business appears to have remained relatively robust into the first half of February.\nConstruction and Real Estate\nThe home sales market has been mixed but, on balance, slightly softer since the last report, while the residential rental market has continued to firm. Northern New Jersey's home sales market has stabilized but has yet to show any significant signs of a pickup; one industry contact surmises that underlying concern about pending foreclosures and their potential impact on the market continues to weigh on potential buyers. Apartment rental markets in New York City and northern New Jersey have continued to strengthen, with effective rents (factoring in the withdrawal of concessions) up 9-10 percent in Manhattan over the past year. However, New York City's co-op and condo market has softened somewhat thus far in 2012: in Manhattan and Brooklyn, apartment prices have held steady but sales volume has tapered off a bit, while in the other boroughs both home prices and volume have edged down. On a somewhat brighter note, real estate contacts in western New York State report continued gradual improvement in home sales activity.\nCommercial real estate markets have been mixed but, on balance, somewhat improved since the last report. Office markets in New York City and on Long Island showed some further signs of strengthening in early 2012, with vacancy rates drifting down and asking rents increasing modestly. In contrast, northern New Jersey's market softened further, as vacancy rates rose to new highs, while asking rents drifted down. In Westchester and southwestern Connecticut, asking rents rose, even as office vacancy rates climbed to a multi-year high. Across upstate New York, office markets were mostly steady, though vacancy rates declined in the Albany area.\nOther Business Activity\nA major New York City employment agency specializing in office jobs reports little change in labor market conditions thus far in 2012; hiring activity and salaries remain flat. Uncertainty about the economic and regulatory outlook is said to be restraining hiring in the financial sector. An authority on New York City's securities industry indicates that Wall Street compensation remains under downward pressure and that bonuses are down 30 percent or more from last year's levels. Manufacturers across New York State report increasingly widespread improvement in business conditions in early 2012 and report steady growth in new orders, shipments and employment. Non-manufacturing contacts report a modest pickup in business activity and employment since the last report; both were reported to be flat during the final months of 2011. Manufacturers continue to report modest increases in both selling prices and prices paid. Non-manufacturing contacts also indicate modest increases in their selling prices but more widespread hikes in prices paid for inputs.\nFinancial Developments\nSmall to medium-sized banks report an increase in demand for all loan categories except consumer loans, for which demand was little changed. Bankers report a particularly widespread increase in demand for residential mortgages. Respondents also indicate a continued increase in demand for refinancing. Bankers' responses suggest a tightening of credit standards for commercial mortgages and commercial and industrial loans but no change for the other loan categories. No banker reports an easing of standards in any category. Respondents indicate a decrease in spreads of loan rates over costs of funds for all loan categories. Bankers also note decreases in average deposit rates. Bankers' responses point to steady delinquency rates on home mortgage loans but decreases in delinquencies for all other loan categories.\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\nFebruary 29, 2012\nSixth District business contacts described economic activity as expanding at a somewhat stronger pace in January and early February compared with late last year. Expectations were generally more positive, although firms continued to express caution with regard to the outlook.\nRetailers noted that sales and traffic increased compared with a year ago and auto sales remained robust. Hospitality contacts, with the exception of cruise lines, reported strong bookings for this year. Homebuilders and brokers reported that unseasonably warm weather has helped bolster residential real estate activity by pulling some activity forward. Nonetheless, overall home sales and construction levels remained weak apart from the generally robust multifamily sector. Manufacturers and transportation contacts continued to note positive activity on balance. Bankers reported a modest improvement in loan activity at larger institutions. More firms reported increased hiring, although contacts continued to signal they approached hiring decisions very cautiously. Concerns over increased input costs generally eased as most firms reported that input prices leveled off. Only a few contacts reported having significant pricing power.\nConsumer Spending and Tourism\nDistrict retail contacts noted that sales and traffic in January and early February were up from a year ago. Final holiday sales reports were generally positive as slightly over half of our retail contacts indicated that sales were better than last year. Roughly half noted that inventory levels were up slightly compared with last month, and most were satisfied with current levels. Most merchants expect overall sales to improve over the next three months. Retailers also expect overall sales to improve modestly over the course of 2012. Auto dealers noted that the warm weather experienced in January likely boosted sales for the month, and they anticipate new vehicle sales to continue to improve.\nHospitality contacts reported that tourism activity remained strong and most were optimistic regarding the outlook for leisure and hospitality spending in 2012. Attendance for major conventions increased and bookings and lead volume rose, according to business travel contacts. However, there were concerns about higher fuel costs and the adverse impact it may have on drive-to traffic at regional tourist destinations. Cruise line bookings have suffered in the wake of the maritime disaster in Italy.\nReal Estate and Construction\nThe majority of District residential brokers reported that home sales accelerated in January and early February and stand above levels from the same time period last year. However, reports from Florida brokers were more mixed. Contacts noted that inventory levels continued to decline on year-over-year basis and home prices were nearly even with a year ago. The outlook among brokers for sales growth continued to improve with most anticipating modest year-over-year gains over the next several months.\nMost District homebuilders indicated that new home sales and construction activity growth, measured year-over-year, increased slightly during January and early February; however, several contacts noted that unseasonably warm weather in the region likely pulled some activity forward. Builders continued to report downward pressure on home prices while new home inventories remained below year-earlier levels. Contacts noted that multifamily construction remained robust. Over the next several months, homebuilders anticipate new home sales and construction to be flat to slightly up compared with a year earlier.\nMost commercial real estate contacts indicated that conditions continued to improve slowly in the region. Contractors noted a slight improvement in demand but the market remained very competitive and activity remained at low levels. Brokers continued to report modest improvements in demand for space in several parts of the District with some noting that rent concessions had abated. The outlook among contacts was similar to our last report with most contractors and commercial real estate brokers anticipating that construction activity will improve slowly during 2012.\nManufacturing and Transportation\nManufacturers across the region noted more positive results in January and early February compared with previous reports. In particular, firms reported increased levels of new orders along with improved expectations for future orders. Most contacts also signaled that inventory levels have risen in line with these improved order expectations. Three major auto manufacturers announced plans to increase production at their facilities in Alabama and Georgia, and a foreign automaker also noted that a parts manufacturing facility will relocate to the Sixth District.\nTransportation contacts reported that inventory-building trends appeared to be similar to the end of last year. A freight forwarding company noted that orders were stable and a large railroad firm continued to report strong increases in auto shipments. Coal inventory levels declined at the end of last year, but in recent months have exceeded targeted levels as mild weather and low natural gas prices dampened demand for coal-fired electricity generation. Contacts noted that both imports and exports have leveled off since the beginning of the fourth quarter of 2011, although trade with Latin America continued to experience modest growth.\nBanking and Finance\nLiquidity levels remained high at regional banks as most continued to experience high deposit balances and soft loan demand. Several large banks noted some growth in outstanding C&I loans; in part, a result of loan acquisitions from other institutions and continued growth in areas such as energy and healthcare. Bankers also reported increased consumer lending attributed mainly to auto financing. Contacts remain cautious regarding the economic environment and most are forecasting low loan growth in 2012, but do not expect further deterioration in capital levels.\nEmployment and Prices\nFirms indicated that hiring expectations going into 2012 are better than they had been going into 2011. However, many contacts noted that plans to increase profits still revolved around further efficiency gains from improvements in internal operations. Several businesses reported plans to increase payrolls because they expect an improvement in sales going forward. They appeared to have regained their customer base, and these expectations seem to be transmitting into plans for expansion. Some firms still indicated a preference for contract workers for short-term projects, but several expressed increased willingness to consider them for permanent positions. Aside from optimism about future sales, some contacts also reasoned that their current employees do not always possess the necessary skills, leaving firms with no choice but to hire new workers.\nConcerns over increased input costs eased further, although several manufacturing firms did note an increase in commodity prices since the last report. Few contacts reported having significant pricing power. According to the firms surveyed in the Atlanta Fed's January Business Inflation Expectations (BIE) survey, unit costs were expected to rise 1.8 percent for the year ahead, down slightly from December expectations. Firms continue to operate in an environment of below normal sales and depressed margins, according to the survey, though both have been slowly improving since October of last year.\nNatural Resources and Agriculture\nContacts in the energy exploration sector noted that recent lease auctions have helped stimulate more industry optimism, contributing to an improvement in investment conditions. Regional gasoline inventories remained above their seasonal norms for this time of year as national and global gasoline consumption remain relatively soft, although contacts reported ongoing concern about the impact of geopolitical uncertainty in some OPEC countries on energy prices going forward.\nSignificant rains have eased drought conditions in parts of Alabama, Mississippi, and Louisiana, while parts of Georgia and Florida have seen drought conditions worsen. Mild temperatures throughout the region are of concern to peach and other fruit crop growers hoping for adequate conditions for the current growing season. On a year-over-year basis, prices received by farmers were higher for many of the region's agricultural products. Contacts reported that some farmers in Alabama and Georgia were reviewing their planting plans in light of their concerns of labor shortages.\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\nFebruary 29, 2012\nPrepared at the Federal Reserve Bank of St. Louis and based on information collected on or before February 17, 2012. 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 overall economic activity continued to increase at a modest to moderate pace in January and early February. Activity expanded at a moderate pace in the Cleveland, Chicago, Kansas City, Dallas, and San Francisco Districts. St. Louis noted a modest pace of growth and Minneapolis characterized the pace of growth as firm. Economic activity rose at a somewhat faster pace in the Philadelphia and Atlanta Districts, while the New York District noted a somewhat slower pace of expansion. The Boston and Richmond Districts, in turn, noted that economic activity expanded or improved in most sectors.\nManufacturing continued to expand at a steady pace across the nation, with many Districts reporting increases in new orders, shipments, or production and several Districts indicating gains in capital spending, especially in auto-related industries. Activity in nonfinancial services industries remained stable or increased. Reports of consumer spending were generally positive except for sales of seasonal items, and the sales outlook for the near future was mostly optimistic. Tourism remained strong in some reporting Districts, but declined in the Minneapolis and Kansas City Districts because of reduced snowfall. Residential real estate market conditions improved somewhat in most Districts, with several reports of increased home sales and some reports of increased construction. Commercial real estate markets also showed positive results in some Districts. Banking conditions generally improved across the Districts. Agricultural conditions were mixed, while extraction activity generally increased.\nHiring increased slightly across several Districts, and contacts in a variety of industries faced difficulties finding skilled workers. Wage pressures were generally contained, and prices of final goods remained stable, although contacts in some Districts anticipate passing rising input prices through to consumer prices.\nManufacturing and Other Business Activity\nManufacturing has continued to increase across all twelve Federal Reserve Districts since the previous report. Most Districts reported gains in new orders, shipments, or production. Contacts reported increased capital spending in the Boston, Richmond, Chicago, Kansas City, St. Louis, Minneapolis, and Dallas Districts; contacts in Philadelphia and Cleveland also anticipate higher capital spending. Manufacturing contacts in San Francisco also continued to invest in information technology equipment. Auto-related manufacturers in the Richmond, Atlanta, St. Louis, and Minneapolis Districts reported increased activity and announced plans to expand operations and open new plants. Primary metal manufacturing showed strong growth in the Philadelphia, St. Louis, and Dallas Districts. Fabricated metal manufacturing increased in the Richmond, Kansas City, and Dallas Districts but was essentially flat in the San Francisco District. Steel producers reported that shipping volume was trending higher in the Cleveland District and specialty metal contacts reported solid order bookings in the Chicago District. In contrast to the many positive reports, contacts in some Districts reported plans to decrease operations and close plants. Contacts in chemical and paper product manufacturing in the St. Louis District reported plans to close plants and lay off workers, while manufacturers of household goods and building materials reported soft demand on average in the Chicago District. Manufacturing contacts in the Boston, Philadelphia, and Cleveland Districts expressed concern about the risks posed by the situation in Europe.\nNonfinancial services activity was stable or increased in the New York, Philadelphia, Richmond, Atlanta, St. Louis, Minneapolis, Dallas, and San Francisco Districts. Transportation services were stable or trending higher in the Cleveland, Richmond, Atlanta, and Dallas Districts. In contrast, freight transportation contacts in the St. Louis and Kansas City Districts reported that business had slowed. Information technology service firms in the Boston, St. Louis, Kansas City, and San Francisco Districts have experienced increased demand since the previous reporting period. Additionally, contacts in health care announced plans to increase capital spending or expand operations in the Richmond and St. Louis Districts.\nConsumer Spending and Tourism\nRetail sales in the Philadelphia, Atlanta, St. Louis, Minneapolis, and Kansas City Districts were higher than year-earlier sales. The Boston District reported strong same-store sales in the last few months of 2011, but mixed results for same-store sales in January. Retail sales increased in the Richmond and San Francisco Districts, but were mixed in the New York and Cleveland Districts and weakened in the Kansas City District. Retail sales growth in the Dallas District was tepid and consumer spending growth slowed in the Chicago District. The Boston, New York, Philadelphia, Cleveland, Chicago, and Dallas Districts noted that mild winter weather had depressed sales of seasonal items. Mark-downs on winter merchandise to clear inventory were reported in the Boston, Chicago, and Richmond Districts. Aside from unsold seasonal items, inventories were more broadly reported to be at satisfactory levels. All Districts reporting sales expectations for the coming months indicated optimism among contacts that sales will improve.\nGains in auto sales were reported in the Philadelphia, Atlanta, St. Louis, and Minneapolis Districts. Chicago also reported sales increases in January, but noted that sales were down slightly in early February. Auto dealers in the New York, Cleveland, and Richmond Districts reported a slowdown in recent auto sales, while auto sales held steady in the Dallas District and contacts in the Kansas City District reported a post-holiday lull in sales. All Districts reporting on sales outlooks conveyed optimism. Dealers in the Kansas City District expect demand for smaller, fuel-efficient cars to spur sales in coming months, while contacts in the Cleveland District were optimistic but uncertain that sales increases in 2011 could be repeated in 2012.\nTourism strengthened or remained strong in the New York, Richmond, Atlanta, and San Francisco Districts. The Minneapolis and Kansas City Districts reported a decrease in tourism largely attributed to below-average snowfall.\nReal Estate and Construction\nResidential real estate activity increased modestly in most Districts. Boston, Cleveland, Richmond, Atlanta, Kansas City, and Dallas reported growth in home sales, while New York noted steady to slightly softer home sales. Philadelphia reported strong residential real estate activity. In contrast, home sales declined in St. Louis and San Francisco noted that home demand persisted at low levels. Contacts' outlooks on home sales growth were mostly optimistic. Contacts in Boston, Philadelphia, Atlanta, and Dallas expect home sales to rise further. Home prices declined or held steady in many areas. Cleveland and Atlanta reported little movement in house prices, while contacts in Boston, New York, Philadelphia, Richmond, Chicago, and Kansas City reported some declines. Single-family residential construction was weak in Chicago and declined in St. Louis; Cleveland noted that the year-end uptick seen in construction has abated somewhat, and Minneapolis noted increased single-family building permits. In contrast, Boston, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco reported increased multifamily construction activity.\nCommercial real estate markets displayed positive results in some Districts, as leasing showed overall improvement. Minneapolis, Richmond, Chicago, and Dallas noted increased leasing. Boston, however, reported mostly unchanged leasing fundamentals with some modest improvement since the previous report. Commercial vacancy rates were mixed in New York, decreased in Chicago, increased in St. Louis, and stayed high in San Francisco. Boston and Dallas noted limited levels of nonresidential construction, while Cleveland and Chicago noted improved nonresidential construction.\nBanking and Finance\nReports on banking conditions were generally positive across Districts. Lending increased to varying degree in the New York, Philadelphia, Richmond, Chicago, Dallas, and San Francisco Districts. Lending was little changed in St. Louis and Kansas City, while loan demand was described as weak in Richmond and soft at regional banks in Atlanta. Demand for business credit was flat to slightly higher in Cleveland and increased slightly in Richmond, San Francisco, and at some large banks in Atlanta. Dallas reported strength in middle-market and large corporate lending, and Chicago noted that business loan growth continued at a moderate pace. On the consumer side, loan demand saw little change in New York and San Francisco. Cleveland and Atlanta noted increased auto lending, while Kansas City reported slightly weaker consumer installment lending. Consumer lending in St. Louis ranged from moderately weaker to unchanged. Demand for residential mortgage loans increased in New York, Richmond, and Kansas City; mortgage demand was flat to moderately stronger in St. Louis and softened in Kansas City. Cleveland noted increases in requests for commercial real estate lending, while contacts in Chicago and San Francisco noted improvement in the availability of credit for this sector. Meanwhile Philadelphia and Kansas City reported flat or steady commercial real estate lending. Demand for commercial real estate loans was flat to moderately stronger in St. Louis.\nOverall lending standards remained restrictive in San Francisco and Richmond and were largely unchanged in St. Louis and Kansas City. Lending standards tightened further for commercial borrowers in New York. Credit conditions in Chicago improved slightly, while quality improved in Philadelphia and Kansas City. Delinquencies were steady or declined in Cleveland. Mortgage delinquencies were steady in the New York District but delinquencies decreased in other loan categories.\nAgriculture and Natural Resource Industries\nDrought conditions and warm temperatures affected agricultural conditions in some Districts. However, recent rainfalls in parts of the Richmond, Atlanta, Kansas City, and Dallas Districts helped ease the dry conditions. Crop yields for St. Louis were mixed, with only winter wheat, rice, and tobacco showing positive gains for 2011. Tobacco and cotton yields in Richmond were lower than historical averages. San Francisco reported growth in orders and final sales for agriculture products. Farm values and incomes were stronger in Minneapolis and Kansas City, while Richmond saw a slight drop in farmland values.\nKansas City, Dallas, and San Francisco noted higher crude oil extraction activity. Similarly, Chicago and Minneapolis reported robust activity in energy and mining, and energy-related service firms in Dallas reported very strong demand. Mining for various metals also increased in the San Francisco District. Cleveland reported flat conventional oil and natural gas drilling and production, and San Francisco observed lower demand for natural gas. The Dallas District noted drilling cuts by a few gas-directed firms, but contacts anticipate that oil-directed activity will offset losses. Compared with a year ago, current coal production is lower in St. Louis and higher in Kansas City.\nEmployment, Wages, and Prices\nOf the Districts reporting on hiring, most indicated a slight increase. Boston, New York, Cleveland, Richmond, St. Louis, and Minneapolis reported increased hiring in manufacturing, and contacts in Philadelphia and Kansas City anticipate future hiring in the sector. Several businesses in the Atlanta District also reported plans to increase payrolls. Philadelphia, Kansas City, and Dallas noted increased hiring among auto dealers. Contacts in Boston, Cleveland, Richmond, Chicago, Kansas City, and Dallas were having difficulties finding skilled or specialized workers in a variety of industries. In contrast, Boston manufacturing contacts reported fewer complaints about being unable to find qualified workers. Chicago noted that hiring remains selective and long-term unemployment elevated, while San Francisco noted limited demand for new workers. Staffing firms in Boston noted that the hiring cycle remains \"elongated\" despite stronger demand. Staffing firms in Dallas also noted high demand, while a major employment agency in New York indicated flat hiring.\nAmong Districts commenting on wages, upward pressures appeared limited. Boston noted limited pay rises in retail and manufacturing. Richmond reported some upward wage pressures in the service sector and manufacturing. Dallas and San Francisco reported minimal wage pressures, although upward pressure for certain specialized positions was reported in both Districts. Similarly, wage pressures remained largely subdued in Kansas City except for high-tech and energy positions. Wage pressures were modest or largely contained in Cleveland and Dallas, while Philadelphia noted flat wages and Minneapolis reported modest wage increases. New York noted that Wall Street compensation remains under downward pressure.\nPrices of final goods and services were relatively stable in most Districts. Retail prices increased at a moderate pace in the Richmond and Kansas City Districts. Contacts in the New York District reported modest increases in selling prices and prices paid. Contacts in the Cleveland, Richmond, Kansas City, and Dallas Districts noted rising input prices with some expectation of pass-through to consumer prices. Cost pressures were largely unchanged in Chicago and input prices have stabilized in the Boston District, while business contacts noted some increase in cost pressures in the New York District. Minneapolis and San Francisco noted increases in the costs of employee benefits. Philadelphia noted mixed price pressures among manufacturing firms, with some firms unable to pass their higher costs along. Atlanta reported that concerns over increased input costs eased, although several manufacturing firms noted an increase in commodity prices since the previous report.\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\nFebruary 29, 2012\nThe Ninth District economy grew at a firm pace since the last report. Strength was noted in consumer spending, professional services firms, commercial and residential real estate and construction, manufacturing, energy and mining, and agriculture. Lack of snowfall reduced tourism activity. Some more firms announced plans to expand hiring, while wage increases were modest. Overall prices were level, but some increases were noted.\nConsumer Spending and Tourism\nConsumer spending was solid. Same-store sales at a Minnesota-based retailer increased about 4 percent in January compared with a year ago. A Minneapolis area mall manager reported relatively strong traffic during January. A Minnesota-based restaurant and bar chain reported that same-store sales were off to a good start in January and February. A fast food chain recently announced plans to add more restaurants in Minnesota. A representative of an auto dealers association in Montana noted that recent vehicle sales were higher than a year ago and that availability of new and used cars has improved. Repair shops in eastern Montana were very busy repairing oil-drilling-related vehicles. However, due to the surprisingly mild winter, many District auto repair shops reported a decrease in business because of fewer snow- and ice-related accidents.\nTourism was down due to low snowfall in much of the District. The lack of snow in Minnesota and Wisconsin has stymied snowmobiling and cross-country skiing. Snowmobile dealerships reported a sharp drop in sales from a year ago. However, a Minnesota travel company reported strong demand for both corporate and leisure travel in January; interest in traveling to Europe and other overseas destinations was up. Another travel agency noted that recent corporate travel sales were up almost 25 percent compared with a year ago.\nConstruction and Real Estate\nThe unusually warm weather aided construction activity. The value of commercial building permits in the Sioux Falls, S.D., area was up in January from January 2011. A major Minnesota-based commercial real estate company expects more construction of retail and warehouse structures. Residential construction increased from a year ago. The value of residential building permits increased significantly in the Sioux Falls area in January. The number of single-family building permits increased in Minnesota and North Dakota in December 2011, compared with December 2010. Multifamily construction in the Minneapolis area is in a \"boom,\" according to a major real estate firm.\nCommercial real estate market activity increased. A large warehouse property manager noted increased transaction activity over the past few months. A major Minnesota-based broker noted increased leasing of office space. Home sales in January were up from the same period a year ago in the Minneapolis-St. Paul area, and the inventory of homes for sale continued at low levels. Several brokers noted that the low end of the market appeared to shift to a \"sellers' market.\" The multifamily market continued to strengthen in the fourth quarter of 2011 as rents increased and vacancy rates decreased in many markets, according to a real estate research firm.\nServices\nActivity at professional business services firms increased at a solid pace since the last report. Of the 33 firms that responded to a mid-February ad hoc survey, 63 percent saw revenues increase over the past three months, while only 16 percent experienced revenue drops. Over the next three months, 59 percent expect increased revenues and only 6 percent expect sales to drop. A human resources consulting firm noted increased activity with \"more proposals and opportunities.\" An architectural firm noted increased activity and demand, but said the competition remains \"fierce.\"\nManufacturing\nDistrict manufacturing expanded at a firm pace. A January survey of purchasing managers by Creighton University (Omaha, Neb.) found that manufacturing activity increased in Minnesota and the Dakotas. An electrical equipment producer is opening a new facility in Minnesota. An aerospace firm announced plans to locate a plant in Montana. A producer of automotive cooling systems is expanding operations in South Dakota.\nEnergy and Mining\nActivity in the energy and mining sectors continued at strong levels. District oil and gas exploration increased since the last report. In Montana, construction began on what will be the state's largest wind energy development. In addition, regulators in Montana approved an $86 million wind energy project. Iron mines in northern Minnesota were operating at near capacity. A Canadian mining company discovered large iron and titanium deposits near Duluth, Minn., but any mining operations are several years away.\nAgriculture\nAgriculture remained strong. January prices received by farmers for corn and cattle increased. Prices declined somewhat for wheat, soybeans, hogs, dairy products, eggs and poultry, but all prices were above their January 2011 levels. According to preliminary results from the Minneapolis Fed's fourth-quarter (January) survey of agricultural credit conditions, 67 percent of District lenders reported that farm incomes increased in the previous three months; 10 percent reported decreases. However, drought conditions spread in Minnesota, the Dakotas and District portions of Wisconsin. Low snowfall combined with erratic temperatures were having an uncertain effect on the District's winter wheat crop.\nEmployment, Wages, and Prices\nSome more firms announced plans to expand hiring. An airplane manufacturer announced plans for a new facility in northwestern Wisconsin that will initially create 300 jobs. A marketing company plans to expand its operations in Minnesota and eventually hire 200 more workers. Also in Minnesota, a clothing supplier will add 150 employees at a new facility, and a boat manufacturer expects to rehire former employees laid off during the recession.\nHowever, some employment cutbacks were announced. A Minnesota-based food retailer will cut about 200 jobs at the company's headquarters. A bank will lay off almost 70 employees at an auto-debt-collection unit in South Dakota.\nWage increases were modest. Workers at two food operations recently agreed to a new contract that includes some wage increases over a five-year period. Bank directors recently reported that business contacts expected wage increases between 2 percent and 3 percent in 2012 compared with 2011 after remaining level over the past couple of years. Larger increases were noted in the oil-drilling area of western North Dakota and eastern Montana, particularly for welders who were in short supply.\nOverall prices were level, but some increases were noted. Minnesota gasoline prices were up 15 cents per gallon since early January. Bank directors noted that health insurance costs were up between 6 percent and 8 percent over a year ago, with some reports of steeper increases.\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\nFebruary 29, 2012\nThe Tenth District economy expanded moderately in January and early February. Despite a seasonal decline, consumer spending was stronger than expected and retailers anticipated rising sales in coming months. District manufacturing activity rebounded with stronger expectations for production, hiring, and capital spending. Residential and commercial real estate activity improved, and District contacts were optimistic regarding spring sales and construction activity. District banks reported steady loan demand and improved loan quality. Agricultural growing conditions improved with recent precipitation, and farmland values soared with high commodity prices. High crude oil prices fueled a rebound in District drilling activity with further gains expected during the next three months. More contacts reported passing higher raw materials prices through to finished goods prices. Many District contacts planned to hire additional workers during the next quarter. Still, wage pressures remained largely subdued except for specialized positions in high-tech and energy industries.\nConsumer Spending\nConsumer spending weakened in January and early February but was expected to rebound in the months ahead. District retailers reported a slowdown in sales after the holidays as consumers shopped for bargains. Still, store owners noted sales exceeded expectations by rising above year-ago levels and many remained optimistic that sales would improve in the coming months. Clearance items moved quickly, and appliance sales ticked up while demand for furniture and electronics was weak. Auto dealers reported a post-holiday lull in sales that boosted inventory levels, especially for SUVs and more expensive car models. However, auto dealers expected stronger demand for smaller, fuel efficient cars would spur sales in the coming months. Some dealerships were hiring salespeople and service technicians. Restaurant sales were down from the previous survey but remained higher than year-ago levels and were expected to pick up with warmer weather. Tourism activity slowed after the holidays and below-average snowfall hurt bookings at Colorado ski resorts. District hotel owners, however, reported an uptick in occupancy at slightly higher average room rates and expected business to strengthen further during the next three months.\nManufacturing and Other Business Activity\nManufacturing activity rebounded, and sales at high-tech service firms rose sharply while transportation activity edged down in the survey period. Manufacturing activity expanded at both nondurable and durable goods factories, particularly those producing chemicals, fabricated metals, and aircraft equipment. After falling in late 2011, the volume of new orders and shipments rebounded in January and February and finished goods inventories held steady with increased production. Plant managers expected production, hiring, and capital spending to strengthen during the next six months. The high-tech industry reported a sharp increase in sales, and some contacts were worried about losing future business due to a shortage of specialized labor, particularly software developers. Transportation activity slowed further but was expected to improve in the months ahead. Trucking firms remained concerned about high fuel costs and a lack of qualified drivers.\nReal Estate and Construction\nResidential and commercial real estate activity picked up in January and early February. Existing home inventories declined as lower prices spurred a modest increase in sales, particularly for low- and mid-priced homes. Real estate contacts expected that a seasonal upswing in sales this spring would stabilize home prices in the coming months. Residential mortgage lenders reported an uptick in loans for home purchases and higher average loan amounts while home loan refinancing activity was expected to slow further. Residential lot prices fell further, and new home starts were on par with year-ago levels. Builders planned to ramp up construction in the coming months and sales rose at building supply firms. New commercial construction increased and was expected to rise further with more projects in the pipeline. Commercial real estate prices and rents dipped during the survey period but were expected to firm as vacancy rates improved. After edging up in January and early February, commercial real estate sales were expected to strengthen further during the next few months. Developers reported little change in access to credit.\nBanking\nIn the recent survey period, bankers reported generally steady loan demand, slight improvements in loan quality, and a modest increase in deposits. Most respondents reported steady loan demand for commercial and industrial loans and commercial real estate loans. However, loan demand was slightly weaker for consumer installment loans and residential real estate loan demand softened with slower home mortgage refinancing activity. Bankers reported that interest rates on commercial and industrial loans declined further. Credit standards remained largely unchanged in all major loan categories, and most respondents reported stable or increased deposits. The majority of bankers reported improved loan quality compared with a year ago, and many bankers expected loan quality to improve further during the next six months.\nAgriculture\nAgricultural growing conditions fluctuated with precipitation levels. After warm, dry weather in January, recent precipitation kept agricultural growing conditions from deteriorating further. The winter wheat crop remained in fair to good condition. Soil moisture levels were low across the District with western Oklahoma and Kansas experiencing severe drought. Ranchers in the southern Plains continued to liquidate herds due to poor pasture conditions and record high cattle prices. In the northern Plains, the lack of harsh winter weather allowed cattle feedlot operators to reduce feed usage and still maintain livestock growth. District contacts expressed concerns about 2012 profit margins due to rising feed, fuel, and fertilizer costs. Still, a rebound in crop prices fueled additional gains to record high farmland values and more bankers expected farmland prices to move higher in the next few months.\nEnergy\nEnergy activity rebounded in January and early February and District contacts expected additional expansion in coming months. After slowing at the start of the year, District drilling rig activity rebounded with higher crude oil prices. Energy contacts, however, noted that a lack of equipment and services and qualified labor were constraints on current drilling activity. District contacts expected crude oil and natural gas prices to hold at current levels and anticipated further expansion in oil drilling activity. Bucking national trends, Wyoming's coal production rose above year-ago levels in January and early February. Ethanol profits dropped sharply as ethanol prices declined with the year-end expiration of the federal ethanol subsidy.\nWages and Prices\nWage pressures remained low during the survey period, and more contacts reported raising finished goods prices in light of higher raw materials costs. More businesses planned to hire workers during the next three months, and contacts in low- and moderate-income communities reported a slight improvement in job opportunities. However, most firms did not plan to raise wages except for specialized positions, particularly in the high-tech and energy fields. After edging up during the past survey period, more retailers expected to raise selling prices over the next three months. Restaurateurs expected further increases in menu prices due to soaring food costs. Hotel operators planned to increase room rates with higher occupancy rates. Manufacturers paid higher prices for raw materials, and more manufacturers planned to pass on higher costs to finished goods prices. Builders and construction supply companies noted rising prices for construction materials, especially drywall and asphalt shingles. Transportation companies paid high fuel prices, and some were raising shipping 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\nFebruary 29, 2012\nEconomic activity in the Seventh District continued to expand at a moderate pace in January and early February. Growth in consumer spending slowed, but business spending increased. Manufacturing production increased, and construction, while still subdued, was also up. Credit conditions improved. Price increases slowed, while wage increases remained moderate. Prices for corn, soybeans, wheat, hogs, and cattle moved higher, while milk prices drifted lower.\nConsumer Spending\nGrowth in consumer spending slowed in January and early February. Contacts indicated that activity was boosted by clearance sales and noted an increase in consumers turning to discount retailers. There was also some isolated improvement in the luxury segment, with jewelers and high-end boutiques reporting higher sales. However, the mild winter depressed sales of apparel and other weather-related items, and contacts noted that many retailers were running heavy promotions on unsold winter merchandise to make room for spring inventory. Auto sales were up in January, but down slightly in early February reflecting in part a decline in incentives.\nBusiness Spending\nBusiness spending increased in January and early February. Most retailers indicated their inventories were at comfortable levels. However, a number of auto dealers continued to report lower than desired levels for some models. Several manufacturers also noted that they were tightly managing their input inventory levels to avoid being caught off-guard were commodity prices to decline further or activity slow substantially from the pace of the fourth quarter. Capital spending increased, with reports of capacity expansions in manufacturing and renovations of existing facilities in the retail sector. Labor market conditions improved, although hiring remained selective. A staffing firm reported an increase in growth in billable hours that was largely driven by gains in industrial and office positions. Contacts indicated that many manufacturers were increasingly moving away from contracting with temporary agencies to direct hiring, focusing on higher skilled positions where attracting job candidates has remained difficult. Long-term unemployment remained elevated. Labor market analysts reported that it was becoming increasingly difficult for these workers to find a job, and several contacts indicated that they were hesitant to hire individuals who had been out of work for an extended period of time.\nConstruction and Real Estate\nConstruction activity was up slightly in January and early February. Multi-family construction continued to be an area of strength. In contrast, single-family construction remained weak, and homebuilders indicated that it will likely continue to be until home prices stabilize from their recent declines. Nonresidential construction continued to trend up moderately, although a contact noted a decline in funding for new public infrastructure. Demand for industrial facilities increased, especially in the automotive sector as suppliers are expanding to meet the higher pace of vehicle production. Commercial real estate conditions continued to improve with vacancy rates edging lower from their elevated levels. The demand for office space picked up and rents increased. In contrast, contacts continued to report excess availability of retail space.\nManufacturing\nAfter a strong close to 2011, manufacturing production increased further in January and early February. Contacts in the sector remained cautiously optimistic about 2012. Exporters continued to benefit from advantageous terms of trade, and contacts noted an increase in interest by foreign manufacturers in moving production to the U.S. as well as increasing utilization of domestic suppliers. The auto industry continued to be a source of strength. Contacts expected that auto sales in 2012 would hold near the pace seen in January, which, while still below pre-recession levels, would mark another year of recovery for the industry. Demand for heavy equipment also remained strong, led by robust activity in the energy and mining sector. An aging fleet of heavy trucks and machinery and tightening emission standards for such equipment were noted as reasons for the likely continued strength in demand in 2012. Manufacturers of specialty metals also reported solid order books and robust quoting activity. Outside of these industries, however, activity was again weaker. Manufacturers of household goods and building materials continued to experience soft demand, although a few noted a small improvement since the beginning of the year.\nBanking and Finance\nCredit conditions were slightly improved from the previous reporting period. Financial market volatility declined and risk premia moved lower across a number of asset classes. Improvements in the availability of credit were noted for both subprime auto lending and commercial real estate, particularly for large apartment buildings. Banking contacts indicated that loan growth continued at a moderate pace with demand from larger businesses being stronger than that from small to mid-sized companies. Even though contacts thought the economic outlook was more positive, they indicated that borrowers and investors remain cautious, citing uncertainty about future tax code changes and risks abroad, in particular those emanating from Europe. That said, concerns about Europe were reported to have become milder in recent weeks.\nPrices and Costs\nCost pressures were largely unchanged in January and early February, but the volatility of commodity prices remained a concern for many contacts. Natural gas prices remained at historic lows, while prices increased for fuel and metals such as copper and brass. Raw materials surcharges declined and lead times shortened with a few exceptions such as carbide and some hydraulic products. Wholesale price changes were mixed by category, but little changed on balance. Most of the cost increases were being passed on to consumers, but retailers reported that, overall, pricing power remained limited. Wage pressures continued to be moderate, with most contacts indicating that wage increases were expected to keep pace with inflation. Contacts continued to report a shortage of skilled manufacturing workers, and noted that increased competition among firms had led to some upward pressure on their wages.\nAgriculture\nCorn, soybean, wheat, hog, and cattle prices rose during January and early February. Input costs for agriculture continued to increase, led by sharply higher rental rates for cropland. The increases in these costs have pressured farmers' margins. In order to offset the risks of price declines or poor harvests, farmers have been willing to spend more on revenue insurance policies. Estimates of corn stocks have come down and are below where they were a year ago. Given current rates of use, the expected supply of corn in stock just before the next harvest is around three weeks, about as tight as last year. Cattle operations are working to build herd sizes, even though bid prices for cattle are very high. Contacts expected farmers to boost their capital expenditures in 2012 compared with 2011.\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\nFebruary 29, 2012\nThe Eleventh District economy continued to grow at a moderate pace, and outlooks were more positive than in the last report. Manufacturers reported increased activity. Demand for business services was solid, and activity in transportation services rose modestly. Housing and commercial real estate markets continued to improve. Overall building activity remained subdued, with the major exception being robust multifamily construction activity. Contacts said retail sales growth was tepid and automobile sales held steady. Financial services respondents said overall loan demand edged up. Energy activity was strong, and agricultural conditions improved. Employment levels were flat to up slightly. Price and wage pressures were modest.\nPrices\nContacts across most industries said prices held steady. The exceptions were some producers of transportation equipment, fabricated metals and food who noted slight increases in selling prices to partially offset higher input costs. Airlines reported higher fares, and shipping firms noted an increase in express package and freight delivery rates.\nThe price of WTI was near $100 per barrel during the reporting period. Natural gas prices fell from $3 per thousand cubic feet in early January to near $2.50 in mid-February. Gasoline prices rose by about 22 cents per gallon over the past six weeks, and the price of diesel rose by 7 cents. Prices of petrochemicals and plastics increased since the last report.\nLabor Market\nEmployment levels were unchanged at most responding firms but some contacts noted increases. Staffing firms continued to report high levels of demand. Oil services and machinery firms continued hiring at a rapid pace, and slight employment increases came from some auto dealers, airlines, and transportation, food and high-tech manufacturers. Shortages of skilled workers continued to be reported, particularly for the energy industry. Wage pressures remained minimal, although upward pressure for certain positions such as auto mechanics and software engineers was reported. Several firms said annual cost-of-living adjustments took effect at the start of the year.\nManufacturing\nOverall demand for construction-related materials improved, and several contacts noted that orders were up from year-ago levels. Mild winter weather, robust multifamily construction and booming oil field activity provided a boost to some producers of lumber, stone, clay and glass. Fabricated metals manufacturers noted a pick-up in growth since the last report, in part due to government projects. Producers of primary metals reported a broad-based increase in orders, and one contact said they were adding a new manufacturing plant. Construction-related outlooks were more positive than in the last report, and several contacts expect a slight rebound in activity this year.\nHigh-tech manufacturers said orders edged up moderately since the last report. Demand for semiconductors and other electronic products improved, largely due to a pickup in demand for automobiles, mobile devices and cloud computing. In addition, one respondent noted that retailers of electronic goods had been paring down inventories in the second half of 2011 and that orders picked up as retailers ended the inventory reduction. Most contacts expect a gradual improvement in demand over the next three to six months.\nEmergency vehicle, automobile and aviation equipment manufacturers said demand was flat to up since the last report, and expectations are for strong sales growth this year. Food producers noted an uptick in orders from the prior report, largely due to stronger consumer demand. Overall conditions in the paper products sector were mostly unchanged.\nPetrochemicals producers reported several large planned and unplanned outages at ethylene and polyethylene production facilities, which led to a sharp increase in prices. Export demand for polyethylene and caustic soda continued to trend up, while domestic PVC demand remained weak due to low levels of housing construction and infrastructure projects. Refiners noted weak demand for petroleum products nationally, although refineries on the Gulf Coast were seeing slightly higher margins than some other parts of the country. Contacts noted Gulf Coast refineries were investing heavily on repairs and maintenance during the current spring turnaround season.\nRetail Sales\nRetailers said overall sales growth was tepid during the reporting period, largely due to unseasonably warm weather. However, sales of non-seasonal items like menswear and home furnishings remained strong. Eleventh District sales trended roughly in-line with the nation over the reporting period, according to three large retailers. Inventories were at desired levels. Contacts noted that the retail environment had improved, and expectations are for moderate sales growth this year.\nAutomobile sales held steady from the prior report. The used car market remained tight. Vehicle inventories were somewhat lighter than normal. Expectations are for moderate increases in new car sales this year.\nServices\nDemand for business services was solid and outlooks were generally more optimistic than in the last report. Staffing firms continued to report high levels of demand, noting more direct hires than temporary placements. Demand for skilled professionals, particularly IT workers was strong, while orders from the banking sector and demand for clerical staff declined. Legal firms reported steady demand, with an uptick in corporate activity and continued strength in intellectual property, energy and real-estate related services. Accounting firms reported strong seasonal demand for tax related services.\nReports from transportation service firms were positive. Air cargo volumes rose, while container shipments were flat during the reporting period. Railroads noted a broad-based increase in shipments, with particularly strong growth in petroleum products, motor vehicles and equipment, nonmetallic minerals, crushed stone, metals and metallic ores. Shipping service firms reported an increase in small parcel shipments from the prior report.\nAirlines reported passenger demand improved over the past six weeks. Domestic demand and travel to Latin America were solid, while travel to Mexico and the Pacific was weak. Contacts said business travelers remained price sensitive and were purchasing restricted discount fares. Responding firms expect passenger demand to remain stable over the next three months.\nConstruction and Real Estate\nHousing demand continued to firm since the last report. Sales of existing homes increased moderately and new home sales were flat to slightly up. Some contacts noted that in January, which is usually a slow month, buyer interest and activity was strong due to favorable weather and record low interest rates. In addition, a fast-declining inventory of homes was reported. Respondents expect the positive trend in sales to continue, and outlooks suggest a modest increase in new home construction in 2012. Apartment leasing activity remained strong since the last report, and responding firms said Texas markets were outperforming the U.S. average. Investor interest in sales and development of multifamily complexes continued to increase. The pace of current multifamily construction was said to be catching up with historical norms.\nNonresidential real estate activity continued to pick up, although construction remained at low levels. Contacts said recent reports on leasing for office and industrial space suggest moderate gains, thanks to demand from the energy and high tech sectors. Investment sales activity continued to improve, in part, due to very attractive interest rates. Contacts were optimistic in their outlooks.\nFinancial Services\nFinancial firms reported a modest uptick in loan demand. National banks reported strength in middle-market and large corporate lending activity, and several regional banks noted energy-related activity was robust. Outlooks were generally more optimistic than at year-end 2011. Contacts said loan pricing remained moderately aggressive, loan quality continued to improve and problem loans were declining. Respondents noted they were willing to make loans, and borrowers' financial positions were reportedly better than last year.\nEnergy\nEnergy-related service firms reported very strong demand over the past six weeks, despite a small dip in the rig count due to low natural gas prices. A few gas-directed drilling firms have announced drilling cuts, but respondents expect oil-directed activity to offset the losses. Oil service firms expect strong orders, high investment activity and good overall prospects in 2012.\nAgriculture\nRecent rainfall eased drought conditions in several areas, particularly in the northeastern parts of the District. The rain helped refill stock tanks and benefitted pasture conditions. Farmers were a little more optimistic about spring planting. Demand for agricultural products remained strong. Contacts said cattle prices climbed to record levels, largely due to tight supplies. High commodity prices have helped agricultural producers' margins, but elevated input costs have erased some of those gains.\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\nFebruary 29, 2012\nThe economy in the Fourth District grew at a moderate pace during the past six weeks. Manufacturers reported that business conditions have improved. Activity in residential and nonresidential construction picked up slightly. Comments by retailers about January sales were mixed, while auto sales dipped along seasonal trends. Activity in shale gas drilling and production expanded. Freight transport volume trended higher. And the demand for business and consumer credit improved slightly.\nOur contacts indicated that hiring by manufacturers and energy producers has increased, though the recruitment of high-skilled workers remains difficult. Reports from staffing-firm representatives tended toward the negative. Two of our contacts noted a slight decline in the number of permanent job openings, while others observed a small drop in the number of placements. Wage pressures were largely contained. Price increases were mainly limited to metals and to materials and equipment used by energy producers and freight carriers.\nManufacturing\nNew orders and production at District factories were generally stable or moderately higher during the past six weeks. A few manufacturers told us that growth was being tempered by lessening demand from European customers. The majority of our contacts saw a moderate improvement in output compared to year-ago levels. Manufacturers are cautious in their outlook and anticipate modest gains in demand. Most steel producers and service centers reported that shipping volume was trending slightly higher. Demand is being driven by the oil and gas, transportation, and industrial equipment industries. Steel representatives are cautiously optimistic about shipments during the second quarter of 2012, and they expect the positive growth trend to continue. District auto production showed a substantial rise during January on a month-over-month and year-over-year basis. Increases were attributed, in part, to the abatement of supply chain issues.\nCapacity utilization remains below normal for the majority of our contacts, with little change expected in the near term. A few manufacturers said that they have been building inventories to meet approaching seasonal demand; otherwise, inventories were balanced with orders. Nearly half of our contacts reported that their capital budgets for 2012 will be higher than in 2011. A slight rise in raw material prices was noted--especially for metals, with increases being passed through to customers. New hiring by manufacturers has become more widespread, though the average number of hires per company is fairly low. Those adding to payrolls found it difficult to recruit professional and high-skilled production workers. Wage pressures are contained.\nConstruction\nThe uptick we saw in single-family home construction toward the end of last year has abated somewhat. Nonetheless, builders reported that January sales were above year-ago levels and traffic and inquiries have picked up. Sales contracts were mainly in the move-up price-point categories. Builders' outlook for single-family construction can best be described as uncertain. In contrast, activity in multi-family construction and the conversion of existing properties to rental units is expected to be strong. One of our contacts noted a significant upturn in remodeling and maintenance. Little movement was seen in the list prices or discounting of new homes. A few builders commented that they would like to increase their spec inventory, but they are unable to obtain financing. Employment and wages were stable.\nActivity in nonresidential construction for small to medium-size contractors has improved during the past few weeks. Inquiries have shown a modest increase, and backlogs are starting to grow. Construction contracts were primarily with industrial and retail customers. One contact described pockets of significant activity in large commercial construction projects across the District, noting particular strength in northeast Ohio. The outlook by small to medium-size builders has brightened since our last report. One contractor observed that while business is slowly returning to pre-2008 levels, profit margins are still very tight compared with this point in past recoveries. Other than rising prices for steel and drywall, the cost of building materials was steady. We heard two reports about project financing being easier to obtain. Payrolls were little changed, but they are expected to rise slightly in the near future.\nConsumer Spending\nReports on January retail sales were mixed. According to several of our contacts, the warm winter weather is negatively impacting purchases of seasonal merchandise. However, products used outdoors, such as sporting goods, are selling better than expected. Sales for the first quarter of 2012 are generally expected to improve over prior-year levels, mainly in the low- to mid-single digits. Looking at vendor pricing, reports were also mixed. Retailers told us that lower costs attributable to declining cotton prices were offset by a rise in overseas labor costs. Retailers are satisfied with their inventories except for cold-weather apparel, which is higher than desired. Capital budgets for 2012 will be slightly greater than in 2011 for a majority of our contacts. Outlays will be used mainly for technology enhancements, remodeling, and new store construction. Payrolls at existing stores were stable.\nAuto dealers reported a slowdown in new-vehicle sales during January that followed normal seasonal trends. On a year-over-year basis, sales were somewhat higher. A few dealers noted that their inventories are now on the high side but are manageable; others said that inventories are light. The outlook for 2012 was generally optimistic. However, several of our contacts were uncertain about whether or not the sales increases seen during 2011 would be repeated this year. Purchases of used vehicles showed a modest improvement, but inventories were low and prices elevated. On the financing side, interest rates remain competitive, and at the same time it is difficult to arrange financing for customers with low credit scores. Auto dealers looking to hire reported that it is not easy to find qualified candidates, especially sales representatives and service technicians.\nBanking\nDemand for business credit was described as either stable or slightly higher. Any drop-off was attributed to seasonal factors. Requests are being driven by commercial real estate, including spec building, and healthcare. On the consumer side, most of our contacts said that installment loan activity is flat, although auto lending (direct and indirect) continued to show strength. A few bankers reported a decline in the use of credit cards or home equity lines of credit during January. Some stabilization in interest rates for business and consumer credit was observed. In the residential mortgage market, real estate appraisals remain on the conservative side, and a majority of applicants are looking to refinance. No changes were made to loan application standards. Delinquencies were steady or declined across loan categories. Overall core deposits grew, with continued runoff from CDs into more liquid assets. Payrolls were stable, and little hiring is expected in the near term.\nEnergy\nConventional oil and natural gas drilling and production were generally flat since our last report, with little change expected in the upcoming weeks. Our contacts attributed these conditions to eroding natural gas prices and the regulatory environment. Well-head prices for oil were mainly steady. We heard two reports of energy companies redeploying drilling resources from dry gas to the wet gas areas of the Marcellus shale in Pennsylvania and West Virginia. The Ohio Department of Natural Resources has issued 32 Utica shale drilling permits since January 1 and 39 Utica wells are currently being drilled in Ohio. The outlook for coal production during 2012 is similar to 2011 levels. However, output may decline due to lessening demand from electric utility companies and offshore markets. Spot prices for metallurgical and steam coals continued to decline. Almost all of our contacts reported upward pressure on the cost of production equipment and materials. Energy payrolls are trending higher, especially in shale gas. A few small oil and gas producers are experiencing wage pressures brought on by competition from large firms engaged in shale gas exploration and production.\nTransportation\nFreight transport volume has been trending higher during the past few weeks, and for the month of January it was above year-ago levels. Strong demand was seen from automotive, food, and shale gas producers. Our contacts expect volume to grow at a moderate pace during 2012. We continued to hear numerous reports about rising prices for parts, diesel fuel, and other materials. Most of the cost increases were recovered via fuel surcharges and rate adjustments when contracts came due. Capital outlays reached targeted levels for 2011. Almost all of our contacts expect to increase their capital budgets during 2012 over prior year amounts for fleet expansion, replacing aging equipment, and infrastructure improvements. One executive noted that his capital budget for 2012 will be at a pre-recession level. Operators reported hiring for driver replacement or adding capacity, although recruiting qualified drivers is difficult. Some wage pressure exists due to a tightening of the driver pool.\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 11, 2012\nOverall business activity in the Third District has continued to grow modestly since the previous Beige Book, with various sectors experiencing typical seasonal patterns--positive and negative. Since the last Beige Book, manufacturing activity has continued to grow modestly with some signs of a seasonal slowdown. Retail sales overall generally increased for the holiday season, meeting seasonal expectations. Motor vehicle dealers experienced further strong sales growth and strong pricing power, overcoming some of the typical seasonal drag. Third District banks have reported slight growth in loan volume outstanding since the last Beige Book. New home construction slowed further, driven by seasonal trends and falling prices for existing homes. Commercial real estate contacts continued to report slow growth year-over-year, although anticipated seasonal slowing has been a factor since the last Beige Book. Service-sector firms reported generally modest growth. Price pressures remained contained for most sectors, with little change from the last Beige Book.\nThe general outlook seems to have improved for most firms since the last Beige Book. Manufacturers anticipate rising shipments and orders during the next six months. Retailers expect slightly stronger sales, and auto dealers are increasingly confident that pent-up demand will carry well into the spring selling season. Banking, real estate, and service-sector firms continue to plan for slow growth in 2012. Many have voiced concerns over the ongoing lack of a housing recovery, the threat from Europe's economic woes, and the indecision on numerous federal budget issues.\nManufacturing\nSince the last Beige Book, Third District manufacturers have reported further modest increases in new orders and shipments. Gains were widespread among the makers of industrial machinery and equipment, and of food products. Similarly, a supplier to the broad industrial market confirmed continued growth but noted some softness of a seasonal nature. Some makers of lumber and wood products and of electrical machinery reported seasonal slowing. However, one electrical equipment firm logged the worst month of orders in five years. Several contacts attributed additional slowing to end-of-year inventory adjustments. Contacts in primary metals reported mixed results dependent upon their firm's market orientation, for example, to Europe or to the domestic auto industry.\nMost Third District manufacturers remain split between expecting business conditions to improve during the next six months and expecting conditions to stay the same. This overall positive tendency has pervaded more sectors since the last Beige Book. However, the currently low seasonal demand, cited by many firms, may be a large factor in the anticipation of near-term gains. Manufacturing contacts continued to cite weak housing markets as a drag, Europe's woes as a threat, and rising auto demand as a positive factor. Expectations of capital spending and future hiring also remain positive but have moderated since the last Beige Book.\nRetail\nThird District retailers reported strong holiday sales in November and positive, but softer, sales in December. An outlet operator recounted that the typical budget-conscious, discount-driven consumer shopped early, then faded somewhat. The longer shopping season and added store hours produced greater overall sales volumes but also increased the wage bill for hourly workers. Profits for the season were maintained by closely watching inventories and markdown levels. Unseasonably warm weather dampened sales of cold-weather goods, but \"rain boots sold well.\" Prospects beyond this holiday season are expected to follow recent trends with high-end, online, and outlet market segments attracting the most consumer spending.\nAuto sales remained unseasonably strong through November and December, according to a Third District industry contact. With still a little more demand than supply, dealers continue to offer less discounting and earn better grosses. Also, pent-up demand remains strong. An industry contact indicated that dealers may begin hiring if robust sales continue into the spring season.\nFinance\nOverall loan volumes continued to expand slightly in the Third District since the previous Beige Book; however, many bankers reported difficulty maintaining loan volumes. Some reported turning down deposits for lack of sufficient lending opportunities. The strongest loan growth continued to emerge in home mortgages, including refinancings. Commercial real estate and C&I lending were flat. Credit quality continued to improve somewhat. Third District bankers expressed several concerns, including Europe's economic problems, a lack of recovery in the housing market, uncertainty and a lack of confidence with Washington, and uncertainty over the renewal of federal contracts.\nReal Estate and Construction\nResidential builders are \"glad to have 2011 behind\" them. Builders reported that the year closed with sales activity slowing somewhat more than seasonal trends would predict due to lack of confidence, as existing home prices continued to fall in most markets. Some of the activity reported in the last Beige Book dissipated, as builders were unable to close on contracts. New construction activity continues to shift from the single-family market toward the multifamily market. Some builders are planning for growth in 2012, even some hiring. However, their plans assume an increase in market share and an expectation that some competitors will not endure a seventh consecutive year with little or no growth.\nDuring a seasonally slow period for most nonresidential real estate activity, contacts have reported no significant changes since the last Beige Book. The seasonal lull should generate a little pickup in leasing in early 2012. The sudden announcement in early December of an immediate refinery closing, not anticipated until early 2012, sent hundreds of workers home, including construction workers with jobs associated with facility maintenance and repair. A few weeks later another refinery, currently in the process of restarting, announced expansion plans. New construction and renovation plans remain mostly limited to institutional, life sciences, multifamily, and warehousing sectors in select markets. A portion of the new construction, especially for warehousing, represents market shifts among regions, rather than net overall market growth. The overall outlook for demand of nonresidential space is for continued slow growth.\nServices\nThird District service-sector firms have continued to report modest growth since the last Beige Book. A staffing firm noted that firms appear busier, based upon an end-of-year uptick in short-term contracts to provide coverage for vacations and extra holiday business--a pattern not observed since the recession began. The overall trend toward temporary or contract basis for new placements, rather than permanent, full-time hires, remains unchanged. Contacts indicated that financial services will face challenges in 2012, and many sources expressed concern for defense-related activity in the wake of recent and ongoing federal budget indecisions. The majority of service-sector firms anticipate slowly improving growth rates through 2012.\nPrices and Wages\nOn balance, price levels have changed little since the previous Beige Book. Auto dealers and freight shippers still command favorable pricing power. Several manufacturing firms recently raised prices and have yet to observe any pushback from their customers. Retailers and homebuilders continue to report very tight margins. Builders are worried about ongoing closures along their supply chain as the recession in construction continues. Substantial cost increases are anticipated when a recovery emerges and triggers demand for more building materials. Although exceptions exist within specific submarkets, concessions are still expected of many bankers, builders, and leasing agents. Most firms reported no significant upward wage pressure. While most firms are anticipating greater increases in health benefit costs, a few have indicated a significant rollback from last year's large rate hike.\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 11, 2012\nThe economy in the Fourth District grew at a slow pace during the past six weeks. Manufacturers reported that new orders and production were stable. Single-family home construction improved slightly, while nonresidential builders saw a drop-off in inquiries and weak backlogs. November retail and motor vehicle sales were little changed from the prior month. Activity in shale gas drilling and production expanded. Freight transport volume slowed along seasonal trends. The demand for credit by businesses and households was characterized as either steady or increasing slightly.\nLabor market reports indicated that hiring remains at a low level, while recruiting high-skilled workers was difficult. Staffing-firm representatives saw growth in the number of new job openings, with vacancies concentrated in healthcare and energy. Wage pressures were largely contained. Other than a boost in steel prices, upward pressure on raw material prices has abated.\nManufacturing\nNew orders and production at District factories were mainly stable during the past six weeks. Any declines were attributed to seasonal factors or lessening demand from European and Chinese customers. Compared to year-ago levels, the majority of our contacts noted a moderate improvement in output. However, they are cautious in their outlook and expect little change in demand during the upcoming months. Most steel producers and service centers reported that shipping volume was steady along seasonal trends, although two of our contacts noted an unexpected pickup for this time of year. Demand is being driven by autos, energy, and heavy equipment industries. Steel representatives are hopeful about the first quarter of 2012, and most expect to see at least modest growth. District auto production showed a substantial decline during November on a month-over-month basis, more so for foreign nameplates. Most of the decline was attributed to supply chain issues. Year-over-year, domestic auto producers' output rose significantly, while their foreign counterparts posted moderate declines.\nCapacity utilization was below normal at most factories, while steel producers saw their utilization rates at or near normal levels. Inventories were in line with sales for the majority of our contacts. Manufacturers told us that their capital outlays have reached targeted levels for the year. Only a few respondents indicated that they expect to significantly raise their capital budgets for 2012. Other than steel, raw material prices were steady during the past few weeks. We heard several reports about steel producers raising their prices and the possibility of a second round of increases early in 2012. New hiring remained at a low level. Those adding to payrolls found it difficult to recruit professional and high-skilled production workers. Wage pressures are contained.\nConstruction\nSingle-family home construction was described as better during the past couple of months, with sales contracts distributed across all price-point categories. Builders were slightly more optimistic in their outlook, but they are not expecting an industry turnaround in the near term. We heard a report that homebuilders' inventories are on a decline in some parts of the District, which should help boost new-home construction during 2012. Not much change was seen in the list prices of new homes, though two of our contacts noted a greater use of discounting. A few subcontractors attempted to raise billing rates, but they were unsuccessful. Employment and wages were stable.\nActivity in nonresidential construction for small to medium-size builders was steady, although the number of inquiries has fallen off during the past few weeks. The biggest challenges facing nonresidential contractors continue to be financing projects and adding to backlog. Construction contracts were primarily with manufacturers and health-care providers. Builders are uncertain about future prospects. One contractor noted that he does not expect a major pick-up through at least the first half of 2012. On balance, building material prices were stable. The number of reports about sub contractors going out of businesses rose, while general contracting payrolls showed a slight decline.\nConsumer Spending\nRetailers reported that November sales were stable or slightly higher relative to October sales. According to a few of our contacts, a milder than expected autumn was holding back purchases of cold weather-related items, while purchases of electronics and home furnishings were better than expected. On a year-over-year basis, results were mixed. Sales for the first quarter of 2012 are generally expected to improve over prior-year levels, mainly in the low- to mid-single digits. Some retailers expressed caution about 2012 given the fragility of household balance sheets. Upward pressure on supplier costs has abated during the past six weeks. Inventories were characterized as good except for apparel items, which are higher than desired. Capital budgets were on plan. Most of our contacts said that outlays during 2012 will not change appreciably from this year's levels and that outlays will be used mainly for technology enhancements and remodeling. Other than seasonal hiring, there was little change in employment at existing stores.\nAuto dealers reported that new-vehicle sales during November remained strong. On a year-over-year basis, sales volume was largely higher. Dealers saw robust demand for all vehicle types. A few dealers noted that their inventories are now adequate. Others said that inventories are low, which they attributed to brisk sales. The outlook for 2012 is somewhat tentative, mainly because of uncertainty. Purchases of used vehicles have fallen off slightly, due in part to a supply shortage. We heard reports about some easing of credit restrictions, while interest rates were very competitive. Dealers are investing in manufacturer-mandated facility upgrades and imaging programs. The few dealers looking to hire reported that it is difficult to find qualified candidates, especially sales representatives and service technicians.\nBanking\nDemand for business loans was characterized as either stable or increasing. Requests are being driven by commercial real estate, notably multifamily housing, and healthcare. On the consumer side, our contacts described installment loan activity as flat or up a bit. Auto lending (direct and indirect) and home equity lines of credit continued to show strength. Bankers said that they have not seen a bump up in the use of credit cards during the holiday shopping season. Interest rates for business and consumer credit were very competitive. Activity in the residential mortgage market has been solid in the fourth quarter, driven by low interest rates. Most applicants are looking to refinance. No changes were made to loan application standards. Delinquencies were steady or declined across most loan categories; any stress was found in real estate portfolios and credit cards. Overall core deposits grew, although a few bankers commented that growth is being driven by business customers. Payrolls were stable, with little hiring expected in the near term.\nEnergy\nConventional oil and natural gas production was mainly steady during the past few weeks, with little change expected in the upcoming months. Our contacts were uncertain about future gas drilling due to eroding natural gas prices. Well-head prices for oil were flat, but remained elevated. Activity in shale-gas extraction expanded. Coal output was stable, though it may decline during 2012 due to an easing in demand for thermal and metallurgical coals from European customers and domestic power producers. The latter was attributed to abundant supplies of low-priced natural gas and regulatory compliance issues for coal-fired generators. Spot prices for several types of coal have fallen off. Capital outlays are on target, with moderate increases projected by oil and gas companies in the upcoming months. The cost of production equipment and materials was generally flat during the past six weeks. Energy payrolls held steady. A few small oil and gas producers are beginning to experience wage pressures brought on by competition from large firms engaged in shale gas exploration and production.\nTransportation\nFreight transport volume has slowed during the past few weeks, following seasonal trends. Strong demand was still seen from the energy and manufacturing sectors. Our contacts expect volume to grow at a slow, steady pace during 2012, with predictions in the mid-single digits. We heard numerous reports of rising prices for parts, especially tires, and of some volatility in fuel prices. Much of the cost increase was recovered via fuel surcharges and rate adjustments when contracts came due. Capital outlays were on plan for 2011. Most of our contacts expect to increase their capital budgets during 2012 for fleet expansion and to replace aging equipment. Operators reported hiring for driver replacement or adding capacity, although recruiting qualified drivers is difficult. Wage pressures exist due to a tightening of the driver pool.\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 11, 2012\nThe economy of the Eighth District grew at a modest pace since our previous survey. Manufacturing activity has increased since the previous report and activity in the services sector has also increased. Residential real estate activity, in contrast, has continued to decline. Commercial and industrial real estate activity has been sluggish, although contacts noted improvement in some areas. Overall lending at a sample of small and mid-sized District banks declined slightly in the three-month period from mid-September to mid-December.\nManufacturing and Other Business Activity\nManufacturing activity has increased since our previous report. Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to close plants or decrease operations. Firms in the industrial gas, metallic component, automotive parts, primary metal, and clothing manufacturing industries announced plans to increase operations and hire new workers. In contrast, firms in the speaker component, medical equipment, furniture, and dye manufacturing industries announced plans to decrease operations and lay off workers.\nActivity in the District's services sector has increased since our previous report. Firms in distribution services, consulting services, and health services announced plans to expand operations and hire new workers. Several general retail contacts in the District reported stronger holiday sales compared with last year. District auto dealers reported strong sales of luxury automobiles and pickup trucks.\nReal Estate and Construction\nHome sales continued to decline throughout most of the Eighth District. Compared with the same period in 2010, November 2011 year-to-date home sales were down 3 percent in Memphis, 4 percent in St. Louis, 5 percent in Louisville, and 7 percent in Little Rock. Residential construction also continued to decrease throughout the District. November 2011 year-to-date single-family housing permits decreased in the majority of the District's metropolitan areas compared with the same period in 2010. Permits decreased 1 percent in Memphis, 17 percent in Louisville, and 21 percent in Little Rock and St. Louis.\nCommercial and industrial real estate activity was slow throughout most of the Eighth District. Contacts in central Kentucky reported that commercial real estate activity continues to be sluggish, while contacts in central Arkansas reported soft demand for commercial real estate loans. Contacts in Louisville noted that the health care industry is providing most of the current demand for office spaces. Commercial and industrial construction activity remained unchanged throughout most of the District. Contacts in south-central Kentucky reported that construction activity is modest but noted new commercial construction projects in the Scottsville and Bowling Green areas. Contacts in St. Louis reported continued limited construction, while contacts in Louisville noted that speculative development has still not recovered. Contacts in western Kentucky reported that construction firms are experiencing little activity with the exception of government-related projects.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks decreased 0.2 percent in the three-month period from mid-September to mid-December. Real estate lending, which accounts for 73.4 percent of total loans, decreased 0.5 percent. Commercial and industrial loans, accounting for 15.5 percent of total loans, decreased 0.2 percent. Loans to individuals, accounting for 4.7 percent of loans, increased 2.0 percent. All other loans, accounting for 6.4 percent of total loans, increased 8.0 percent. Over this period, total deposits increased 0.3 percent.\nAgriculture and Natural Resources\nAs of the beginning of December, the number of bales of cotton ginned (separated from the seed) in the District states was up by 11.9 percent over the same period in 2010. Monthly output of commercial red meat for October 2011 increased compared with September 2011 and October 2010. However, the District's total live weight and number of young chickens slaughtered decreased between September and October 2011. The District's monthly coal production for November 2011 was 2.7 percent lower compared with November 2010; however, the District's year-to-date coal production at the end of November 2011 was 2.8 percent higher than the same period in 2010.\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 11, 2012\nSixth District business contacts described economic activity as expanding at a modest pace from late November through December. Reports from most sectors were positive, yet expectations remained guarded. Holiday sales were described by most retailers as generally positive and the pace of sales was stronger than last year by most accounts. Auto sales remained strong as well. Tourism-related spending was solid as international visitors continued to bolster activity. Weakness persisted in the residential real estate sector as both brokers and homebuilders continued to report downward pressure on prices for new and existing homes. Commercial contractors noted a slight improvement in demand compared with earlier in the year. Most manufacturers and transportation contacts noted positive activity, especially related to exports. Bankers noted that deposit growth continued to outpace loan demand. Employment growth was positive but tepid across the District as employers remained cautious with regard to hiring. Concerns over increased input costs eased further as most commodity prices leveled off and business' inflation expectations remained in check. Few contacts reported having significant pricing power.\nConsumer Spending and Tourism\nDistrict retail contacts noted that sales and traffic in late November and December were up from a year ago. Post-Thanksgiving reports were generally positive; nearly sixty percent of contacts polled indicated that sales were better than the same time period last year. Almost half of contacts reported that inventory levels were up slightly compared to last month, but most were satisfied that current levels were appropriate. High-end and outlet stores were specifically identified as doing well and were posting improved profits. Most merchants polled expect overall sales to improve over the next three months. Auto dealers indicated that sales continued to be strong because of pent-up demand and are better positioned to obtain financing; the pace of sales during early November and December was reportedly the strongest in over two years.\nHospitality contacts reported that holiday activity slightly exceeded cautiously optimistic projections. Occupancy and room rates were up throughout the District. South Florida in particular experienced greater travel activity from Canada and South America. Airport traffic remained above year-ago levels in most major District cities with international travelers helping boost overall arrivals in many Florida destinations. Cruise line reservations remained solid into the first quarter of 2012 as international passengers took advantage of deals. Business travel improved over year-ago levels, although reservations were being made closer to departure dates.\nReal Estate and Construction\nResidential brokers indicated that sales continued to soften in late November and December but remained ahead of last year's weak levels. However, sales growth varied somewhat across the region. Florida brokers reported that sales growth, measured year-over-year, rebounded in November after moderating slightly in the previous two months. These sales continued to be driven by international and cash sales. Elsewhere in the District, most brokers reported that sales were similar to weak levels seen a year ago. Many contacts noted that appraisals remained problematic. Inventories declined on a year-over-year basis. Brokers continued to report downward pressure on home prices across most of the District. Many anticipate modest sales growth over the next several months with the most positive expectations coming from Florida brokers.\nReports from District homebuilders indicated that new home sales and construction activity growth, measured year-over-year, were flat to slightly up. Builders also continued to report downward pressure on home prices with most reporting that prices were flat or down on a year-over-year basis, in spite of inventories that remained below year-earlier levels. Builders indicated a strong pickup in buyer traffic compared with the same time period as last year. Homebuilders anticipate new home sales and construction to improve modestly in the coming year.\nThe majority of District commercial real estate contacts continued to report improving demand from earlier in the year. Brokers indicated modest improvements in demand for space with some noting that rent concessions had abated. Contractors continued to report improvements in construction activity from earlier in the year. However, financing remained challenging and most projects were build-to-suit. The outlook among contacts improved modestly from early November with most contractors and commercial real estate brokers anticipating that construction activity will improve slowly during 2012.\nManufacturing and Transportation\nOn balance, District manufacturing contacts showed notable improvements in both levels of new orders and production in November after reporting several months of decelerating activity. In addition, more contacts reported improving expectations for future production than in previous reports. Export manufacturers and auto producers, in particular, reported strong activity. Auto producers noted that recent flooding in Thailand would likely have a modest, negative impact on production of some models as several plants in that region were damaged or forced to curtail operations for several weeks.\nReports from transportation industry contacts remained positive in late November and December. Port authorities cited volume increases over last year with notable strength in exports. Trucking firms continued to report increased demand for their services but were struggling to meet customer needs because of a significant shortage of long-haul drivers.\nBanking and Finance\nLiquidity levels at depository institutions remained high as many banks reported strong deposit growth coupled with continued weak loan demand. Some banking contacts noted that they cut loan prices to attract new customers and offered loan concessions proactively to retain existing clients. There was also little demand for new housing loans, although bankers reported mortgage refinancing and automobile loan activity increased. In terms of commercial lending, loan growth among community banks and credit unions was primarily limited to owner-occupied enterprises, while some larger banks reported growth in areas such as energy and healthcare.\nAvailability of credit/capital was not an issue for most large firms because of positive cash flow, adequate cash reserves, or a strong, long-standing relationship with their bank. Small business contacts, however, continued to report difficulty in obtaining credit from banks and some have turned to non-bank institutions for financing.\nEmployment and Prices\nContacts across most sectors continued to report modest hiring activity across much of the District. Most of the hiring has been temporary in nature and tied to seasonal employment. However, there were some scattered reports among healthcare and hospitality contacts in South Florida that hiring was occurring as a result of increased demand or expansion. Agriculture contacts reported labor shortages across Alabama, citing newly enacted immigration legislation as the culprit. Firms also noted reluctance towards adding new full-time employees because of uncertainty surrounding healthcare reform, a large pool of both over and under qualified applicants, and because productivity enhancements have made several positions redundant.\nContacts were generally not as concerned with input costs as they had been in previous months, noting that commodity prices had leveled off or eased somewhat. Notable exceptions included reports of restaurants facing elevated food costs and ongoing price pressures from high transportation and shipping costs. Many businesses reported slightly improved margins in late November and December. However, with the exception of high-end apparel retailers and hospitality contacts, firms reported having little pricing power.\nIn the Atlanta Fed's monthly business inflation survey of firms in the Sixth Federal Reserve District, respondents indicated in December that their inflation expectations for the coming year are 1.9 percent, down slightly from November. Looking forward, businesses indicated that costs for materials and labor may influence them to raise prices. Respondents did not expect changes in productivity, sales, or margin adjustments to have a significant influence on prices over the coming year.\nNatural Resources and Agriculture\nEnergy industry contacts indicated that they continued to add to their workforces and that plans to invest in increased production capacity were proceeding. Permitting for shallow water rigs in the Gulf of Mexico picked up slightly. The first lease auction for deepwater exploration since last year's Gulf oil spill occurred in December with 191 tracks being sold for $337.7 million.\nWhile much of the District witnessed various degrees of drought ranging from \"abnormally dry\" to \"exceptional\" in late November and December, both Georgia and Louisiana experienced the most severe conditions. Demand for cotton was flat as a result of global economic concerns and competition from synthetic fibers. Prices for cattle and hogs continued to increase because of strong foreign demand. Several regional agritourism contacts noted plans to expand next year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nJanuary 11, 2012\nMost business contacts in the First District report modest revenue growth from a year earlier. Retailers are somewhat more positive than in preceding months, with 2011 sales projected to come in higher than 2010. Manufacturers' reports are similar to the last round; most firms cite somewhat slower sales growth than earlier in the year, while a couple of semiconductor-related firms saw sales fall off (they believe temporarily). Commercial and residential real estate markets remain weak, but are not expected to deteriorate further. Advertising and consulting firms, by contrast, say business improved noticeably between the third and the fourth quarters, bringing a strong 2011 to a close. Some firms are hiring, but modestly; wage increases, if occurring, remain moderate. Price pressures continue to ease. Most contacts expect a continuation of current modest growth trends, notwithstanding uncertainties related to Europe and U.S. budget deliberations.\nRetail and Tourism\nAs in mid-November, retail contacts for this round report a slight improvement in business conditions from earlier in the year. Comparable-store sales in the fourth quarter for most contacts range from flat to up 2 percent from a year earlier; one retailer saw a drop in in-store foot traffic for December but a tripling in Internet sales. One is projecting annual sales for 2011 will be down about 5 percent, but this represents an improvement compared with sales declines of 10 percent in the first half of the year. Contacts with a web-based presence report sales strength in this area, and some are adding staff and making investments to better service customers buying online. Planned salary increases for 2012 range from 2 percent to 3 percent for merit-related raises; none of the retail contacts is planning to offer a cost-of-living adjustment.\nThe travel and tourism sector continues to project a 5 percent to 8 percent increase for 2011 over 2010. Data from the first week of December show strong performance. The industry foresees a robust 2012, taking heart from Q1 projections based on advance bookings. Preliminary predictions are that 2012 hotel revenue per available room will increase 10 percent to 12 percent over 2011. Restaurant sales, while much harder to project, are estimated to grow 3 percent in 2012 over 2011, an improvement over the 1.5 percent estimated for 2011 over 2010.\nManufacturing and Related Services\nNot much has changed since our last manufacturing report in mid-November. Most contacts report growing sales and some are hiring, albeit in small numbers. Two contacts in the semiconductor industry report a substantial weakening of business in the summer and fall but both seem optimistic that the decline is transitory. Overall, the mood remains cautious.\nOf the 13 manufacturing contacts in this cycle, nine report higher sales, two cite flat sales and two declining sales. The two firms with falls in sales are in the semiconductor business and both depend heavily on Asia for demand. Of these two, a manufacturer of analog semiconductors says orders peaked in the June quarter and bottomed out in September; since sales follow orders with a lag, sales declined in the fourth quarter, ending an 11-quarter streak of quarter-on-quarter sales growth. The two contacts differ on the source of the problem, with one attributing it to China-specific issues and the other arguing that the underlying causes are broad-based.\nFor contacts reporting higher sales, growth recently is moderate compared to the rapid growth they experienced in the last few years. One firm said that while sales were likely to be up about 15 percent for the year, the fourth quarter would clock in at only about 5 percent. Europe is cited as a problem, although two contacts say that they have yet to see evidence of a recession in northern Europe. One contact at a medical equipment supplier says that debt problems in Europe do not appear to have affected the health care sector; another contact at a large diversified manufacturing firm argues that there is an incipient credit crunch in Europe.\nOn pricing, the complaints about escalating input prices have more or less stopped; contacts say even food prices have ceased rising. A year ago, virtually every contact talked about high commodity prices and, in some cases, shortages, but now the only comments relate to limited pricing pressure.\nFive contacts report that they are hiring, eight report flat to maybe a small decline and none reports any significant staff reductions. Several contacts mention that they are having trouble finding qualified staff, but some have come up with more creative ways to bring in the right people. Firms continue to devote resources to capital expenditures. None reports any problems raising money to pay for needed investment and, in fact, many are able to finance all capital spending with retained earnings.\nThe outlook remains guarded; general concerns about \"macroeconomic uncertainty\" remain. The two firms reporting lower sales are fairly optimistic that the dip is transitory. In general, firms with greater exposure to Europe are more concerned than firms focused on the domestic market.\nSelected Business Services\nConsulting and advertising contacts in the First District report strong growth in the fourth quarter after a generally weaker third quarter. Marketing and advertising contacts indicate that 2011 growth has averaged 8 percent to 9 percent (annual rate), driven largely by an increase in large orders from large clients. Strategy and business consulting contacts report low double-digit annualized growth, driven by strong private equity business, mergers and acquisitions, and corporate consulting. Contacts note that many clients have a lot of cash and are becoming more confident that--despite risks--the U.S. economy will \"muddle through\" and thus are willing to spend. In addition, consulting firms have seen a shift in demand towards services that can be directly tied to the bottom line such as sales and process efficiency rather than strategy and management.\nThe majority of consulting and advertising contacts reports minimal increases in the prices they charge, held down by both competitive pressures and modest cost increases. Compensation increases are generally in the mid single digits and contacts report steady or growing profit margins. By exception, two contacts raised prices by 5 percent to 10 percent because of strong demand for their services.\nHiring activity continues to be mixed. Two consulting contacts report strong 2011 employment growth, while three firms kept employment flat and one continued a year-long downsizing process. The two firms reporting job growth expect hiring to remain strong (about 10 percent) in 2012, while a marketing firm plans to increase employment modestly, and the other firms expect flat 2012 employment. Firms that increased employment did so to keep up with a growing workload, while firms downsizing in the third or fourth quarter emphasized cost controls.\nAll respondents are more optimistic now than when contacted in the third quarter, with the exception of one firm that has done exceptionally well all year. The improved outlook is mostly due to the strong fourth quarter indicating that the third quarter was only a temporary rough patch.\nCommercial Real Estate\nCommercial leasing activity across the First District was flat to down in recent weeks, in line with typical seasonal patterns. In Hartford, leasing activity saw a modest seasonal slowdown in December and business sentiment held steady. Activity slowed modestly in Providence as well, also in line with year-end expectations, but deals in the works as of the previous report moved forward as expected and pending deals are set to boost absorption of Class A office space in the first quarter of 2012. Greater Portland also registered a modest seasonal leasing slowdown in December, but saw a decline in the office vacancy rate on a year-over-year basis, to 10.8 percent from 11.2 percent. Boston's leasing market held roughly steady, with modest positive absorption in suburban corridors as well as in the sought-after neighborhoods of Back Bay and East Cambridge. Rents remain flat for downtown office space on lower floors of buildings but are rising for upper-floor space in prime high-rise structures. Despite positive absorption in 2011, one contact says Boston's downtown office vacancy rate remains undesirably high at about 16 percent.\nConstruction activity remains limited across the region, with the ongoing exception of multifamily construction in greater Boston. The lack of speculative office construction is attributed to the fact that building costs continue to exceed expected rents. The investment sales market remains active in Boston as prices signal an ongoing willingness of buyers to accept low rates of return for prime properties. A Portland contact predicts an increase in sales activity in that market in the coming months as borrowers seek to take advantage of very low mortgage interest rates.\nThe outlook among contacts is unchanged since the last report, with forecasts calling for modest improvements in office fundamentals in 2012, roughly on par with the experience of 2011. While some see upside potential in office rents, downside risks are also noted, such as possible closures in the retail sector and ongoing political gridlock.\nResidential Real Estate\nSales figures in the New England single-family home and condominium market increased in November compared to a year ago, with the growth largely reflecting lackluster year-earlier sales numbers following the expiration of the tax credit in mid-2010. Contacts reiterated concerns about weak demand, citing poor labor market conditions and stricter lending requirements. A contact from Greater Boston contrasts the local market with the rest of the New England region, saying that the Greater Boston area showed possible signs of improvement due to strengthening employment conditions in the city. Meanwhile, throughout New England, the median sale price of homes and condos fell in November compared to a year ago; contacts attribute the declines to a rise in sales of distressed properties. The price decreases were uneven across the region, with Maine slipping by less than 1 percent and Connecticut prices falling by over 10 percent. The median price of condos fell more sharply than home prices.\nThe outlook remains largely the same as in previous reports. Contacts expect sales activity to remain slow in the coming months, but believe prices will stabilize in the region. They do not expect further weakening in the market but also do not anticipate significant recovery in the near term.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nJanuary 11, 2012\nThe rate of growth of economic activity in the Seventh District picked up in late November and December. Contacts were generally optimistic about the economic outlook for 2012, but many also expressed concern about potential weakness in demand from abroad, particularly from China and Europe. Consumer spending increased, while business spending was steady. Manufacturing production increased. Construction was again subdued, although conditions in real estate markets improved slightly. Overall, credit conditions were little changed from the last reporting period. Wholesale price increases slowed, but there was some further pass-through to the retail level. Corn, soybean, and cattle prices increased, while milk and hog prices decreased.\nConsumer Spending\nConsumer spending continued to increase in late November and December. Compared to last year's holiday season, store traffic volumes were up significantly while nominal spending was up only moderately as consumers reportedly were making more shopping trips and aggressively bargain hunting to obtain the lowest prices. Several contacts noted an increase this year in online shopping and a greater prevalence of flexible and low-cost shipping options. Traditional holiday retail items such as electronics, sporting goods, hobby items, music, books, toys, and apparel all sold well. Contacts additionally reported more spending on luxury items this year. Auto sales increased since the last reporting period. Dealers reported that showroom traffic volumes were up, and many expected sales to continue to improve further in 2012. Importantly, contacts cited a continued boost from replacement demand in light of the record high average age of vehicles in the U.S.\nBusiness Spending\nBusiness spending was steady in late November and December. Contacts reported that inventory levels were generally in-line with sales, although inventory rebuilding continued in the auto industry in the aftermath of the supply chain disruptions earlier in the year. Capital investment plans were largely unchanged, with several manufacturers moving ahead with planned increases in capacity. Hiring remained selective, but the majority of contacts indicated plans to increase employment next year. A staffing firm noted slower growth in billable hours and below-average seasonal hiring in office and clerical positions. However, they also indicated that permanent placement activity continued to increase for industrial positions. Manufacturers again cited difficulties in attracting job candidates with ideal skill sets in technical fields such as engineering. Many of these firms indicated that they would rather postpone hiring a candidate until economic conditions improve to a point that would clearly warrant them doing so.\nConstruction and Real Estate\nConstruction activity was subdued in late November and early December, but there was some improvement in overall real estate conditions. Builder showroom traffic picked up slightly, although in general residential real estate market conditions remained depressed as foreclosed properties continued to put downward pressure on prices and single-family construction remained at low levels. In contrast, multi-family construction continued to be an area of strength. The number of residential leases being signed increased from the previous reporting period and rents rose. Nonresidential construction was also up moderately with the strongest gains in Class A properties. Contacts noted greater demand for both industrial and healthcare facilities. In addition, commercial real estate conditions improved slightly with commercial rents stabilizing and a decline in the available amount of sublease space.\nManufacturing\nManufacturing production increased in late November and December. Contacts in the manufacturing sector were more optimistic for 2012 given the pace at which their order books are filling through the first quarter. Auto production increased over the reporting period. However, some contacts still are concerned about the ability to ramp up production much further over the near-term because auto suppliers may be approaching capacity constraints. Demand for heavy equipment remained strong, led by robust activity in the energy and agriculture sectors. Exports also continued to be a source of strength, although slower growth in China and Europe was noted to have held back sales at some firms. In the steel sector, inventories at service centers remain near desired levels, and given the continued strength in the auto, energy, machinery, and mining sectors, steel production was expected to increase in the first quarter of 2012.\nBanking and Finance\nCredit conditions were little changed during the reporting period. Corporate funding costs, while variable, were largely unchanged on balance. Liquidity remained relatively scarce in the high yield debt markets. Banking contacts indicated that business loan demand continued to be subdued, with the exception of some large multinational mining corporations. Businesses utilization of credit lines was only up a bit. Because lenders continue to see their clients' balance sheets growing stronger, they speculated that uncertainty about future business conditions was restraining the demand for credit. However, contacts also noted that some larger manufacturers are making loans to sub-tier suppliers out of retained earnings, thus reducing these suppliers' typical demand for credit from financial institutions.\nPrices and Costs\nCost pressures eased in late November and early December. While pressure on costs remained from commodities such as steel and food, it moderated significantly for cotton and energy goods. Pass through of elevated material costs to consumers continued. Wage pressures remained moderate, with contacts noting that annual increases in wage and non-wage benefits were largely in-line with last year's increases.\nAgriculture\nFarm income for 2011 was higher than in 2010; and farmland values and cash rental rates were reported to be higher once again. After falling initially during the reporting period, corn and soybean prices rose in the last half of December. More generally, crop prices fell during the harvest period. However, most crop deliveries involved sales at pre-harvest prices, as many end users found it necessary to ensure sufficient supplies prior to the harvest. In contrast, for those who didn't pre-sell, more of their crop ended up being put into storage. Milk and hog prices fell during the reporting period, while cattle prices increased. Still, export demand helped keep prices for both dairy and meat products higher than they were at the end of 2010. Input costs have risen for the coming planting season.\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 11, 2012\nEconomic activity in the Twelfth District continued to grow at a moderate pace during the reporting period of late November through the end of December. Upward price pressures remained very modest overall, and upward wage pressures were quite limited. Holiday retail sales reportedly were up over last year's season, and demand edged up for business and consumer services. District manufacturing activity grew further on net. Production activity and sales remained robust for agricultural producers and rose a bit further for providers of energy resources. Activity in District housing markets stayed at very low levels, and demand for nonresidential real estate generally was weak. Reports from financial institutions indicated a slight increase in business loan demand.\nWages and Prices\nPrice inflation remained quite limited for most final goods and services during the reporting period. Contacts noted recent price increases for selected commodities such as oil and for assorted food items at the retail level, in particular for meat. However, intense supplier competition for existing customers kept a lid on final sales prices for the majority of retail goods and services.\nContacts in most sectors reported that upward wage pressure were modest, although they continued to note rising costs for employee health benefits. Elevated unemployment rates and limited hiring kept compensation gains modest across most regions and sectors, with the exception of significant wage increases for workers with specialized skills in selected manufacturing and technology sectors. Looking ahead, most businesses expect little change in the pace of hiring and wage gains next year.\nRetail Trade and Services\nRetail sales were up compared with last year's holiday season, with gains reported by traditional department stores as well as discount chains. Inventories generally were at or near desired levels given the pace of sales, although contacts reported an excess of winter apparel resulting from unusually mild weather. Demand remained largely unchanged compared with prior reporting periods for retailers of major appliances, furniture, and electronics. Sales improved somewhat for grocers. Sales of new automobiles rose further overall during the reporting period, although slightly softer demand was noted for the last few weeks. Demand for used vehicles remained robust, and dealers reported marked improvement in the quality of trade-ins compared with earlier in the year.\nDemand for business and consumer services was mixed but appeared to expand slightly on net. Demand for transportation services remained largely flat, as did demand for professional services such as legal services and accounting. Sales were largely stable on a seasonal basis for restaurants and other food-service providers. For providers of health-care services, demand softened a bit further, as higher emergency room visits were more than offset by declines in inpatient admissions and surgeries. By contrast, sales continued to expand for providers of technology services to businesses and consumers, although the pace of growth continued to slow. District travel activity picked up further, with additional growth in demand reported for the tourism and business segments of the market alike.\nManufacturing\nDistrict manufacturing activity expanded further on balance during the reporting period of late November through the end of December. Makers of commercial aircraft and parts reported further expansion in production activity, with ongoing growth in new orders attributed in part to rising demand for fuel-efficient aircraft. Activity remained largely stable for metal fabricators and is expected to remain so for the foreseeable future. For manufacturers of semiconductors and other technology products, demand growth continued to slow, and capacity utilization dipped a bit from existing high levels as companies sought to hold down inventory growth. Capacity utilization rates for petroleum refiners remained largely stable or rose somewhat as robust global demand for distillate products, such as diesel and jet fuel, offset weak domestic demand for gasoline. Activity remained exceptionally sluggish for manufacturers of wood products.\nAgriculture and Resource-related Industries\nDemand was robust for agricultural producers and grew a bit for natural resources used for energy production. Final sales and orders for most agricultural products, including livestock and a variety of crops, continued to expand. Elevated price levels for a range of metals supported further expansion of mining activity in parts of the District. Overall demand for crude oil rose slightly, largely reflecting robust foreign demand, while mild winter weather has kept demand for natural gas subdued and caused extraction activity to wane a bit.\nReal Estate and Construction\nHome demand in the District remained at very low levels, and demand for commercial real estate stayed weak. The sales pace for new and existing homes was somewhat mixed across the District but sluggish overall. In response to slow sales and continued high numbers of financially distressed properties, home construction activity remained moribund and prices were mostly flat. Demand for commercial real estate remained weak overall, keeping vacancy rates for office and industrial space elevated in most parts of the District. However, in selected geographic areas, such as the San Francisco Bay Area and Seattle, expansion in the information technology sector continued to spur demand growth for office and industrial space.\nFinancial Institutions\nReports from District banking contacts indicated that loan demand improved a touch relative to the prior reporting period. The volume of new commercial and industrial loans inched up, although contacts noted that businesses remain very cautious in their approach to capital spending. Contacts again noted stiff competition among lenders to extend credit to well-qualified small and medium-sized businesses, causing sustained downward pressure on loan rates and fees. Contacts from the venture capital sector noted a slight pickup in IPO and investment activity, on the heels of a slowdown in the prior reporting period. On the consumer side, loan demand remained largely unchanged. In general, lending standards stayed relatively restrictive for many types of business and consumer loans, despite further modest improvements in overall credit quality.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nJanuary 11, 2012\nThe Eleventh District economy grew at a moderate pace since the last report. Manufacturing activity was mixed. Contacts said retail sales were robust and automobile sales held steady. Demand for business services was solid, and activity in transportation services rose modestly. Housing and commercial real estate markets continued to improve slightly. Construction activity remained subdued, with apartment construction being the major exception. Financial services respondents said overall loan demand was flat to up slightly. Energy activity slowed somewhat, but respondents expect strong growth in activity in 2012. Agricultural conditions remained weak. Employment levels were mostly unchanged. Price and wage pressures were subdued.\nPrices\nContacts across industries said prices held steady or declined. The exceptions were producers of paper, fabricated metals and food who noted increased prices for some inputs. Crop commodity prices were generally lower than six weeks ago, while cattle prices held fairly steady.\nThe price of WTI moved in a narrow range between $95 and $100 per barrel during the reporting period. Natural gas prices remained low, near $3.50 per thousand cubic feet, due to unseasonably warm weather and large inventories. Diesel and gasoline prices declined by 20 cents per gallon over the past six weeks, and prices of petrochemicals and plastics held steady or fell slightly.\nLabor Market\nEmployment levels were flat to up slightly at most responding firms. Staffing firms continued to note high levels of demand. Energy industry respondents said labor shortages for skilled workers, such as engineers, geologists, and machinists, remained a barrier to expansion. Some producers of food, fabricated metals and transportation equipment noted moderate employment increases, and auto dealers said they continue to look for additional workers. Wage pressures remained minimal, although staffing firms noted modest increases in billing rates for skilled workers. Several firms noted plans to give employees cost-of-living adjustments next year.\nManufacturing\nConstruction-related manufacturers' responses were mixed. Stone, clay and glass producers said demand was below expectations, while lumber producers noted no change in activity. Fabricated metals producers said demand had increased since the last report, and some reported a pickup in private nonresidential projects, especially from foreign investors. Primary metals demand was mostly stable and was characterized as \"decent but not great.\" Construction-related firms' outlooks are cautiously optimistic for 2012.\nRespondents in high-tech manufacturing reported that sales grew at a weak to moderate pace since the last report. Sales and prices for DRAM continued to be very weak, while demand and prices for processors were holding up much better. Respondents said that increased demand for mobile devices and data storage should drive up demand for semiconductors by the second quarter of 2012. Respondents noted, however, that economic uncertainty remains very high.\nConditions in the paper industry were mixed. Most contacts noted weakness, although one reported an unusually busy December with strong orders from the auto and construction industries. Respondents expect conditions to remain about the same in 2012 as in 2011. Automobile and aviation equipment manufacturers said demand had picked up slightly since the last report. Expectations are for stronger sales of automobile equipment in 2012, but aviation manufacturers expect only modest growth. Food producers noted a pickup in demand since the last report, in part due to stronger consumer demand, and partly due to increased market share. Outlooks among food industry contacts remain positive.\nPetrochemical producers noted a seasonal slowdown in demand for most products. Producers of plastics and plastic feedstocks said prices and inventories stabilized after sharp declines in October and November. Demand for chlorine showed weakness beyond the normal seasonal slowing, and some contacts attributed the weakness to slower global growth. Contacts in the refining industry noted weak domestic consumption of refined products, especially gasoline, although export markets were still strong. Inventories were said to be near expectations for this time of year. While both gasoline and diesel prices slipped over the past six weeks, refiners' margins remained at healthy levels, according to contacts.\nRetail Sales\nRetailers said sales activity was robust during the reporting period, and retail sales growth saw moderate gains over the comparable year-ago period. However, contacts noted consumers remain cautious and value-driven. The Eleventh District and Midwest in general exhibited stronger sales growth than other parts of the nation, according to the responding firms. Inventories have increased over the prior year, but are at desired levels. Jewelry, small electronics and apparel were areas of strength in retail this holiday season.\nAutomobile sales held steady from the prior report and have increased year-over-year. The used car market remains tight. Contacts expect 2012 will be another good year, with moderate increases in sales. Vehicle inventories are back to normal levels for the most part, although some contacts reported light inventories due to increased activity.\nServices\nStaffing firms continued to report high levels of demand. However, some contacts noted a slight slowdown in activity as some clients delayed hiring until the start of 2012. Direct hires continued to drive business, with particularly strong demand for professional and technical workers. One contact noted a shortage of skilled IT professionals. Outlooks were more optimistic than in the last report, with contacts expecting demand to remain robust or improve next year. Demand for accounting services remained flat, and overall growth this year has been slightly weaker than expected. Legal firms reported steady activity, with continued strength in demand for intellectual property, energy, litigation and some real-estate services and a slight pickup in corporate activity.\nReports from transportation service firms were positive. Intermodal firms reported steady cargo volumes during the reporting period, and outlooks are positive for the first half of 2012. Railroad firms noted a broad-based increase in shipments, with particularly strong growth in petroleum products, motor vehicles and equipment, nonmetallic minerals, crushed stone, metals and metallic ores. Small parcel shipments rose strongly during the reporting period.\nAirlines reported steady passenger demand over the past six weeks. Domestic demand and travel to Latin America remained solid, and travel to Europe and Asia improved slightly. Airline contacts expect demand to remain stable in the short term.\nConstruction and Real Estate\nHousing industry contacts continue to report improving conditions overall, although sales activity remains at low levels. Home sales rose at a modest pace over the reporting period and new and existing home inventories continued to decline. Contacts are hopeful that the housing industry is poised for a recovery in 2012. Apartment demand remained steady since the last report and contacts characterize Texas markets as tight. Apartment construction continues to increase, and contacts noted that multi-family properties are the favored property type among real estate investors.\nConditions in nonresidential property markets continue to firm, according to most contacts. Demand for office space continued to rise modestly since the last report, and there were some reports of improvement in demand for warehouse and retail space. Nonresidential construction activity remains at low levels, and some contacts noted concern about 2012 as public projects come to a close. One contact noted that while conditions have improved overall, real estate financing remains a challenge due to weak consumer sentiment and higher investment risk.\nFinancial Services\nFinancial firms reported flat to modest increases in loan demand. National banks noted a pickup in both middle- and large-market corporate lending activity. Regional banks said loan demand was mixed, with strength in energy-related lending and weakness in other loan activity. Loan pricing remained competitive. The quality of loans outstanding continued to improve, with contacts noting a decline in problem loans. Outlooks are uncertain given mostly sluggish loan demand.\nEnergy\nOil field activity slowed seasonally at year end, with the District rig count edging down. However, respondents expect a high level of activity to resume early in 2012 and increase throughout the year. Respondents cited strong orders, growing backlogs, and good pricing for their products as evidence of future growth.\nAgriculture\nThe District remained largely in drought, although recent rainfalls have lessened the drought's severity in most parts and benefitted the winter wheat crop. There is still very little grazing available, resulting in costly supplemental feeding of livestock. Demand for agricultural products receded slightly over the reporting period, although beef exports remained strong.\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 11, 2012\nThe Tenth District economy expanded at a modest pace in late November and December. Consumer spending softened, with weakness in auto, restaurant, and tourism sales. District manufacturing activity contracted slightly, though factory operators remained optimistic about growth in the coming months. High-tech firms reported continued strong growth, while transportation activity was flat. Residential and commercial real estate conditions remained broadly weak, but contacts expressed increased optimism about sales and prices in the coming months. District banks reported generally steady loan demand and improved loan quality. High crude oil prices buoyed activity in the District's energy sector. Agricultural growing conditions improved, but higher input and production costs constrained farm profits. Rising input costs were reported in several sectors, but few District contacts noted either hiring shortages or wage pressures.\nConsumer Spending\nConsumer spending softened in late November and December, with a slowdown in the auto, restaurant, and tourism sectors. Many District contacts attributed the weakness in spending to ongoing regulatory and political uncertainty. Most retailers, however, expected spending to rise over the next three months. Following several months of strong activity, auto dealers reported a dip in sales with slower sales expected in coming months. Auto inventories increased over the previous survey period, and most dealers reported satisfaction with current levels. Restaurant sales were flat despite larger average check amounts. However, restaurant contacts expected sales to rebound over the next three months. Tourism activity slowed, as winter storms hampered some tourist activity but helped ski resorts. Hoteliers reported lower occupancy rates but stable average room rates.\nManufacturing and Other Business Activity\nManufacturing activity contracted slightly during the survey period, but factory operators remained optimistic about the coming months. Activity was broadly weaker, with production, shipments, and new orders lower relative to the prior survey. The weakest sectors were food processing and fabricated metals, while growth in machinery and high-tech manufacturing remained strong. Order backlogs, manufacturing employment, and average hours worked declined. Despite weaker activity, expectations were positive for the coming months for production, shipments, and orders. Transportation firms reported mostly unchanged conditions as activity remained well above year-ago levels. Most high-tech services firms reported sales gains and increased capital spending. Contacts in both the transportation and high-tech sectors reported continued difficulty finding skilled workers.\nReal Estate and Construction\nResidential and commercial real estate activity remained sluggish in late November and December. District home prices were flat, but most real estate contacts expected prices to rise along with home sales over the next three months. Multiple contacts reported multi-family housing as a source of strength in the housing market. Mortgage lenders reported weak mortgage demand with fewer home purchases and refinancings relative to the previous survey period. Lenders cited stricter mortgage lending requirements as a key factor underlying weak loan demand. Housing starts declined further, and expectations about future construction activity remained subdued. Construction supply firms reported weak sales over the survey period, and most expected little change in activity over the coming months. Commercial real estate sales, prices, and vacancy rates improved, and District contacts were more optimistic about the coming months. Rents on commercial properties were stable and expected to rise over the next three months. Developers reported little change in access to credit.\nBanking\nAlmost all bankers reported generally steady loan demand, stable or improving loan quality, and increased deposits. Loan demand by category was mixed. Most respondents reported steady loan demand for commercial and industrial loans, commercial and residential real estate loans, and consumer installment loans. Remaining respondents were split between stronger and weaker demand within each of these categories. Credit standards remained largely unchanged in all major loan categories and deposits increased for the eighth straight survey. Bankers generally reported loan quality as steady or improving compared to a year ago and reported the outlook for loan quality over the next six months as steady or improving.\nAgriculture\nAgricultural growing conditions improved in late November and December but farm income prospects dimmed with high input costs. Timely rains eased drought conditions in the Southern Plains. Most of the winter wheat crop emerged in good condition, though more protective snow cover was needed for the winter dormancy period. Volatile crop prices and high input costs tempered crop profit expectations for the coming year. High production costs trimmed margins for livestock operators even though strong export demand underpinned prices. Still, with historically high profits, many farmers were repaying operating loans, buying farmland and purchasing additional machinery and equipment. District contacts reported an increase in the number of farmland auctions as record high land prices enticed more landowners to sell.\nEnergy\nDistrict energy and mining contacts reported continued strong activity in late November and December and remained optimistic about the coming months. Drilling rig counts were flat in most District states but remained well above year-ago levels. Drilling continued to shift away from dry natural gas and toward liquid-rich formations. However, crude exploration in the Niobrara formation in Wyoming slowed as contacts reported better opportunities in other areas. Producers expected stable crude prices but relatively weak natural gas prices over the next three months. Attracting qualified workers and finding adequate equipment remained a concern for oil and gas contacts. District coal production declined slightly in November and December and remained below year-ago levels. A recent drop in ethanol prices trimmed margins for ethanol producers despite lower input costs and strong export demand.\nWages and Prices\nDistrict contacts reported higher prices for both inputs and finished goods, but wage pressures remained confined to select industries and occupations. Manufacturers reported an uptick in input prices in late November and December, but relatively few reported higher finished goods prices. Manufacturers expected further price increases for both inputs and finished goods in the coming months. Most restaurants reported a continued rise in food costs and expected further increases over the next three months. Retailers and transportation firms increased prices in the latest survey period, while construction suppliers reported falling prices due to weak building demand. Few contacts outside of the energy, high-tech, and transportation sectors reported either hiring shortages or upward wage pressures, and most expected little wage pressure in the coming months. Rising employee benefit costs, particularly for health care, remained a concern for many 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\nJanuary 11, 2012\nThe Ninth District economy grew at a modest pace since the last report. Solid growth was reported in some areas of consumer spending and in the energy and mining sectors. Slight to moderate growth was noted in commercial and residential real estate, professional services, manufacturing, and agriculture. Activity in the construction sector was down from a year ago, while the unexpected lack of snowfall dampened tourism. Labor markets showed continued signs of modest strengthening, while wage increases remained subdued. Prices generally remained level.\nConsumer Spending and Tourism\nConsumer spending increased during the holiday season. Holiday sales at a Minneapolis area mall were up more than 10 percent compared with a year ago. Sales at a North Dakota mall during late November and December were up about 8 percent over last year. A mall manager in Montana noted heavy traffic at the mall during the week before Christmas and the day after Christmas. Same-store sales at a Minnesota-based retailer increased about 2 percent in November compared with a year ago; Black Friday sales were particularly strong. A Minnesota-based sporting goods store reported that Internet sales on Cyber Monday (Nov. 28) increased 50 percent over last year. Warm weather set back some sales of winter apparel, but clear roads allowed shoppers to get to stores. A domestic auto dealer reported strong sales in December.\nTourism activity was down. A lack of snow and surprisingly warm weather stymied snowmobiling, ice fishing, and skiing in many areas. Tourism officials in Minnesota noted that the lack of snow was affecting businesses that cater to winter recreation. Low snowfall in Yellowstone National Park was affecting nearby businesses that offer winter tours of the park on snowmobiles and in snowcoaches. However, a ski resort in Minnesota reported strong preseason sales; the number of visits through the end of December was at expected levels. In western South Dakota, a snowmobiling-related business and a ski resort both have received calls from a number of people who are ready to visit once more snow falls.\nConstruction and Real Estate\nCommercial construction activity decreased modestly over the past year. The value of commercial building permits in the Sioux Falls, S.D., area was down slightly in November from November 2010. Respondents to the University of St. Thomas's semiannual Minnesota Commercial Real Estate Survey (November) expected higher land and building costs, which should dampen construction. However, several commercial construction projects are under way or planned in Montana. Residential construction decreased from last year. The number of permitted residential units in the Minneapolis-St. Paul, Sioux Falls, and Billings, Mont., areas was down in November from a year ago, but increased in Fargo, N.D.\nCommercial real estate market activity increased. According to the aforementioned University of St. Thomas survey, respondents expected growth in rents and occupancy but flat rates of return on investment. Industrial real estate activity increased since the last report, according to a large Minnesota commercial broker. Home sales in December were up from the same period a year ago in the Minneapolis-St. Paul area, and the inventory of homes for sale was at six-year lows; however, prices continued to decline. In the Sioux Falls area, November new listings were down, sales activity was flat, and prices decreased from a year ago.\nServices\nActivity at professional business services firms increased since the last report. An information technology consulting firm noted a solid backlog of business for 2012. An architectural firm noted more potential projects up for bid, but said many projects never become reality. An accounting firm reported flat activity over the past month.\nManufacturing\nThe District manufacturing sector expanded slightly since the last report. A November survey of purchasing managers by Creighton University (Omaha, Neb.) found that manufacturing activity increased in Minnesota and North Dakota, and was flat in South Dakota. A number of factory expansions were reported in eastern South Dakota, including at a plastics producer and a packaging firm. In southern Minnesota, a firm that produces pressurized storage tanks for the natural gas industry is expanding into a currently empty building, and a large plant that makes electronically shaded glass began operations after several years of development.\nEnergy and Mining\nActivity in the energy and mining sectors continued to increase. A new wind energy project was announced in western Wisconsin. While District oil and gas exploration activity decreased slightly since the last report, it remained well above year-earlier levels. An oil transport facility expansion is planned in North Dakota that will add a rail car loading area and increase holding capacity by 80,000 barrels per day. Mining activity remained strong. A new venture on Minnesota's Iron Range to extract material for steel production from old mining dumps recently began operations at one site and made its first shipments; two more sites are planned.\nAgriculture\nGrowth in the agricultural sector moderated, as some commodity prices declined. Prices received by farmers for wheat, corn, hogs, and dairy products decreased in December from the previous month. Cattle, poultry, egg, dry bean, and hay prices increased in December from the previous month. Meanwhile, a partnership announced the development of a large grain-loading facility in Minnesota.\nEmployment, Wages, and Prices\nLabor markets showed continued signs of modest strengthening. A pharmacy benefits management company recently announced plans to add 300 jobs in Minnesota. A bank is hiring almost 80 more workers at a call center in South Dakota. Bank directors noted that in the Dakotas and some parts of Montana, employers would hire if they could find workers; some of these employers have started to offer relocation packages as an incentive. According to a recent survey by an employment services firm, 15 percent of respondents in Minneapolis-St. Paul expect to increase staffing levels during first quarter 2012, while 8 percent expect to decrease staff. A year ago, 10 percent expected to increase hiring, while 6 percent expected decreases. Minnesota initial claims for unemployment benefits decreased 18 percent in November compared with a year earlier.\nWage increases were subdued. Several contacts noted small wage increases at their firms. A Minnesota manufacturer of residential windows reported that its employees will go without an annual bonus for the third straight year, but the company also hasn't laid anyone off during those three years.\nPrices generally remained level. End-of-December Minnesota gasoline prices were flat since the last report, and only 18 cents per gallon more than a year ago. Overall metals prices were level since the last report and lower than a year ago. A Minnesota-based electronics retailer heavily discounted products at its stores during the early part of the holiday shopping season. However, a bank director noted that a number of District manufacturers were planning to raise prices in 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\nJanuary 11, 2012\nDistrict economic activity generally flattened or improved slightly since our last report. Manufacturing activity was little changed in late November through mid December, while port activity slowed. Retail reports were mixed; notably, several car dealers reported higher sales of used and new vehicles. Non-retail services firms also reported stronger revenues in recent weeks. In addition, most tourism contacts indicated bookings were up. In finance, however, loan demand continued to be weak, with the exception of commercial loans. Likewise, residential real estate activity generally declined. We received mixed reports on commercial real estate activity. Manufacturing employment declined somewhat, while the average workweek ticked up and wages advanced in line with our last report. Retailers reduced their payrolls and wages flattened, while non-retail services providers added to their payrolls and average wages increased in that subsector.\nManufacturing\nDistrict manufacturing activity remained flat since our last report. Our latest survey showed little change in shipments, but a slight increase in new orders. A producer of residential doors reported that business at his firm remained depressed. Similarly, a furniture manufacturer said that demand was generally sluggish across all categories, particularly for residential furniture. In contrast, a fabricated metal producer cited an improvement in December's order volume, which he attributed to customers placing orders in advance of higher basic metals prices. That increase in orders allowed his company to operate at capacity and avoid employee layoffs. Moreover, an automobile parts manufacturer ordered new manufacturing equipment due to increased demand and the need to reduce employee overtime. According to our survey respondents, both raw materials prices and finished goods prices grew at a notably slower pace than a month ago.\nPort activity in the Fifth District slowed in recent weeks, with imports coming in below earlier expectations. Several officials reported that imports have turned flat on a year-over-year basis, after modest gains during the summer had raised hopes of continued improvements through the remainder of the year. One analyst stated that the typical autumn \"bump\" in retail orders did not occur this year. A modest uptick of imports is still expected in January, ahead of Asian plant closings for the Chinese New Year in February. In contrast, most port officials expected robust exports, especially for non-container goods. A late harvest has led to increases in grain exports, according to one official. Nonetheless, shipping rates are low and carriers are losing money, causing several analysts to expect increased pressures among carriers to consolidate.\nRetail\nRetail merchants gave mixed sales reports, while wholesalers generally indicated a pickup. The manager of a chain discount store in North Carolina described sales as \"erratic,\" and a contact in the Tidewater area noted that sales were unchanged, even with increased foot traffic. Unusually warm weather in the District depressed sales of winter apparel. Toys and electronics, particularly televisions, moved briskly in recent weeks. A retailer told us that customers have returned as much as a third of the items previously placed on lay-away before finishing the payments, because, customers said, they \"need the money.\" Although big-ticket sales were down slightly, there were reports of improvement. Jewelers generally reported robust sales. Although higher prices for gold and precious gems damped sales at some stores, other items such as silver remained in demand. Rising cotton prices continued to push up apparel prices. According to several car dealers, strong used-vehicle demand increased trade-in equity. Low interest rates and the rising average age of vehicles on the road also helped move new cars. On the whole, retail price increases were smaller since our last report.\nServices\nRevenues at non-retail services firms accelerated in recent weeks. Hospital and other healthcare contacts noted that mergers have increased among smaller hospitals and physician practices, as changes in healthcare roll out. Nursing home executives also expressed concern about reduced Medicare payments and the inability of potential resident-care patients to sell their homes. Revenues rose more quickly at medical records management firms, temp staffing agencies, and telecommunications firms. In addition, a pickup in business at engineering firms was noted in recent weeks. An engineering contact in West Virginia commented that old projects that \"have been on the shelf\" were proceeding. Prices at services firms increased at a somewhat faster pace since our last report.\nFinance\nLoan demand in the District continued to be generally weak. A West Virginia banker reported that local lending was weak, with no increase for some time. A South Carolina banker cited a decline in the number of outstanding loans. Also, several bank officials around the District noted that, except for multi-family building and refinancing, real estate lending continued to be quite soft. Several bank officials attributed weak loan demand to a lack of confidence on the part of businesses. However, a number of commercial developers noted greater difficulty getting their loans approved. In contrast, an analyst for a large bank in the District reported that commercial lending improved slightly over the last few months, led by small business needs for new capital equipment. A lending officer in Richmond also noted improvement in consumer borrowing for autos, home improvement, and debt consolidation. And several small commercial bankers around the District stated that they were picking up loans from customers who were dissatisfied with the service they were getting from large banks. Most bank contacts stated that interest rates were little changed, and the quality of loans continued to improve modestly.\nReal Estate\nResidential real estate activity softened since our last report, although a few pockets of strength remained. Several Realtors reported that sales fell considerably and housing prices had declined from a month ago. Many agents attributed the drop in sales prices to short/distressed sales being used as comparables. Most Realtors cited sales in the low-price range as faring better than sales in the high-price range. An exception, however, was an agent in the D.C. area who said that sales in the $1,500,000 plus range were up 31 percent. Brokers in Richmond and Charlotte noted that the rental market was heating up. A builder in Charleston, South Carolina described residential construction as very weak, with a rise in the average number of days on the market for new homes, even as the number of homes for sale declined. In central Virginia, a real estate agent indicated most shoppers were serious about buying, although foot traffic had slowed down quite a bit in recent months. He added that, while closed sales were down, pending sales were up from a year ago.\nWe received mixed signals from commercial real estate and construction markets in the District. A contractor in the Baltimore area reported that commercial permits over the last month were up on a year-over-year basis for the first time this year. Several contractors in Virginia and Maryland experienced a small pickup in demand and were hoping to increase their prices. And, while some architecture firms in the D.C. area had more signs of stress, one firm reported its best backlog of orders since the recession. In contrast, another D.C. contractor said that projects in the area were few, and each had many bids that were too low for most contractors and their subcontractors to make a profit. A contact in West Virginia noted a dramatic slowdown in local leasing activity. In addition, a developer in South Carolina stated that office and retail space was abundant and no new building was needed except for very specialized structures, such as medical facilities. A commercial Realtor in South Carolina also noted that, although office vacancy rates were high, a significant portion of those buildings were obsolete.\nLabor Markets\nAssessments of labor market activity changed little since our last report. A representative at a Charlotte staffing and recruiting company for accounting and finance reported an increase in corporate hiring. A staffing services contact from Charleston, South Carolina indicated that 2011 has been an exceptionally strong year for temporary placements, but noted the pool of sufficiently qualified candidates was relatively small and many applicants were disqualified by drug tests. Several contacts cited examples of workers who had declined employment opportunities in favor of unemployment benefits. Looking ahead, employment agencies expected stronger demand for temporary workers during the next six months, along with improving economic activity. A Maryland contact said that he expected employers to utilize temp help to a greater extent than last year, because of economic uncertainty. A commercial architect in Charlotte also reported a trend toward the use of contract labor instead of hiring full time employees. A source from a management consulting group in Maryland stated that businesses believe that regulation and tax increases are impeding full-time hiring. According to our latest survey, hiring at non-retail service firms picked up briskly in December and average wages strengthened. In contrast, retailers cut jobs and average retail wages flattened. Manufacturing employment edged lower over the last month, while the average workweek held steady; wages increased on pace with a month ago.\nTourism\nA majority of hotel and resort contacts indicated bookings have been solid since our last report. The manager of a western Virginia hotel and resort described a very busy Thanksgiving weekend. He remarked that they were booked full through the Christmas weekend, even though the unseasonably warm weather limited the number of open ski slopes. A contact on the North Carolina Outer Banks cited good autumn and early winter tourist activity, and added that bookings were equal to or better than a year ago. Owners of vacation rental property there expected a surge in reservations by early January, when people typically act on decisions made during the winter holidays. A hotel manager in central Virginia also reported increased bookings, and a contact at a North Carolina amusement and recreation venue noted a pick-up in revenues. In contrast, a hotelier in the Piedmont region of South Carolina indicated bookings have been flat. In addition, hotel contacts on the Virginia coast reported that bookings have not increased as expected, owing to the difficult economy and cuts in federal government spending on travel. One hotel representative noted that government employees are now sharing rooms rather than booking individually. Rates were generally unchanged.\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 11, 2012\nPrepared at the Federal Reserve Bank of San Francisco and based on information collected on or before December 30, 2011. 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.\nContact reports from the twelve Federal Reserve Districts suggest that national economic activity expanded at a modest to moderate pace during the reporting period of late November through the end of December. Seven Districts characterized growth as modest; of the remaining five, New York and Chicago noted a pickup in the pace of growth, Dallas and San Francisco reported moderate growth, and Richmond indicated that activity flattened or improved slightly. Compared with prior summaries, the reports on balance suggest ongoing improvement in economic conditions in recent months, with most Districts highlighting more favorable conditions than identified in reports from the late spring through early fall.\nConsumer spending picked up in most Districts, reflecting significant gains in holiday retail sales compared with last year's season, and activity in the travel and tourism sector expanded in most areas. Demand strengthened further for nonfinancial services, including professional and transportation services. Manufacturing activity generally continued to expand, although the pace of growth has slowed for selected subsectors such as technology products. Agricultural producers and extractors of natural resources reported generally robust conditions. Activity stayed sluggish in residential real estate markets, and conditions in commercial real estate markets remained somewhat soft overall but showed signs of ongoing improvement in several Districts. Reports from financial institutions generally indicated a slight uptick in loan demand by businesses, along with improvements in overall credit quality.\nUpward price pressures and price increases remained quite limited for most categories of final goods and services, as the effects of prior increases in the costs of selected inputs have eased. Upward wage pressures were modest overall, although a few Districts noted substantial compensation increases for workers with specialized skills in selected sectors and regions.\nConsumer Spending and Tourism\nReports on consumer spending were favorable in general. Most Districts reported that holiday retail sales were up noticeably over last year's season, with New York and Dallas describing sales as \"brisk\" and \"robust,\" respectively. Consumer spending and confidence generally were characterized as firmer than in recent reporting periods, although Kansas City reported that spending softened. Items identified as the strongest holiday sellers by various Districts included consumer electronics and jewelry, and Chicago noted that luxury items in general sold well during the holiday season. By contrast, many Districts reported weak sales and excess inventories of warm clothing, due to unusually mild weather. Retail inventories more broadly were reported to be at or near desired levels, consistent with retailers' sales expectations. Boston, New York, and Minneapolis noted exceptional growth in Internet sales for selected items. Sales of new automobiles continued to pick up in most Districts. Among the more favorable reports, Atlanta noted that the pace of auto sales in November and December was \"the strongest in over two years,\" and strong demand and sales were reported as well by New York, Philadelphia, Cleveland, and Minneapolis.\nReports from most Districts pointed to solid gains or high levels of travel and tourist activity, with pickups evident in both the business and leisure segments. Tourism activity was reported to be above the levels from twelve months earlier by Boston, New York, Richmond, and Atlanta, and Boston contacts expect double-digit growth in hotel revenues in 2012. By contrast, Minneapolis reported that tourist activity was down because limited snowfall has stymied outdoor activities such as skiing and snowmobiling, while Kansas City reported a decline because winter storms hampered some tourist activity. Business travel activity also has expanded of late and is above levels from twelve months earlier, according to Atlanta and San Francisco.\nNonfinancial Services\nDemand generally strengthened further for nonfinancial services. Providers of professional and business services such as consulting, advertising, engineering, and legal services expanded their activities according to Boston, Richmond, St. Louis, and Minneapolis. Sales of technology services to businesses and consumers grew further, according to Minneapolis, Kansas City, and San Francisco, although the pace of growth slowed from earlier in 2011. Providers of temporary staffing services saw strong and rising demand in the Philadelphia, Cleveland, and Richmond Districts but below-average seasonal hiring in the Chicago and Dallas Districts. Reports from the health-care sector generally pointed to growth as well, with Cleveland, Atlanta, Chicago, and St. Louis highlighting construction activity and bank lending aimed at health-care providers. The exception to growing demand for health-care services was San Francisco, which reported an ongoing decline in hospital admissions. Demand for shipping and transportation services generally expanded. New York and Atlanta reported a significant increase in shipping tonnage by truck, and Dallas noted a broad-based increase in shipments by rail. Atlanta reported that port activity was up over twelve months earlier due to \"notable strength in exports,\" while Richmond reported a decline in port activity that was largely attributed to reduced imports. Air travel was above year-ago levels in the Atlanta District but unchanged over the past six weeks in the Dallas District.\nManufacturing\nManufacturing activity expanded in most Districts, generally continuing its steady overall expansion or, in the case of Atlanta, reversing a slowdown in prior periods. For the sector as a whole, further growth or improved conditions were reported by almost all Districts, except for Cleveland, Richmond, and Dallas, which reported that activity was largely stable or mixed, and Kansas City, which noted a slight decline. The strongest reports came from subsectors such as heavy equipment manufacturing and steel, for which demand has been boosted by robust growth in the energy, agricultural, and auto manufacturing sectors. Reports from Cleveland, Richmond, Atlanta, Chicago, and St. Louis confirmed vibrant activity for auto manufacturers, primarily for domestic makes. By contrast, demand remained somewhat weak for firms in housing-related subsectors, such as a door manufacturer in the Richmond District, furniture manufacturers there and in the St. Louis and San Francisco Districts, and makers of lumber and wood products in the San Francisco District. Demand for computers and related electronic components rose further, according to Kansas City, Dallas, and San Francisco. However, the pace of growth has slowed significantly from earlier in 2011, and Boston noted declining sales of semiconductors, mainly due to weaker demand from Asia. According to Dallas and San Francisco, aircraft makers saw further demand increases. Those Districts also noted weak domestic demand for refined petroleum products that was largely or completely offset by robust foreign demand. Demand grew smartly for food producers in the Philadelphia and Dallas Districts, but in the Kansas City District food processing was one of the weakest performers within the manufacturing sector. Export sales of assorted manufactured products generally performed well according to Atlanta and Chicago, although slower economic growth in China and Europe held back sales for some manufacturers.\nCleveland reported that capacity utilization remained below normal in most subsectors, with the notable exception of steel producers, who were operating at or near normal levels. Similarly, Chicago noted that some auto suppliers appear to be approaching capacity constraints, which may limit further production increases in the near term. Atlanta reported that recent flooding in Thailand was likely to exert modest restraint on auto production. Ongoing capital investments and increases in capacity were reported for various manufacturing concerns in the St. Louis and Minneapolis Districts and for an auto producer in the Richmond District.\nReal Estate and Construction\nActivity in residential real estate markets largely held steady at very low levels, with the exception of further increases in the construction of multifamily residences. The pace of single-family home sales remained quite sluggish throughout the country, although the Dallas District reported a modest increase over the prior reporting period. Some Districts, such as Boston and Atlanta, noted that home sales exceeded levels from twelve months earlier, but mainly because the earlier levels reflected a substantial drop following the expiration of the homebuyers' tax credit in mid-2010. Prices were largely stable on a short-term basis in most areas but in many instances were below their levels from twelve months earlier. Extensive inventories of distressed properties were reported to be a source of price restraint in the Boston, Richmond, Chicago, and San Francisco Districts. Construction of single-family homes remained at depressed levels in most areas and fell further in some, such as the Philadelphia, St. Louis, Minneapolis, and Kansas City Districts. However, Cleveland reported that activity improved during the past couple of months. In contrast to the soft market for single-family residences, the market for rental units tightened in some areas such as the New York and Richmond Districts, and construction of multifamily residences rose in the Boston, Philadelphia, Chicago, Kansas City, and Dallas Districts.\nDemand for nonresidential real estate remained somewhat soft overall but improved in a number of Districts. Vacancy rates and other indicators in markets for office space were largely unchanged in the major metropolitan markets in the Boston, Philadelphia, Cleveland, Richmond, and St. Louis Districts. By contrast, New York reported that demand for office space \"picked up in late 2011,\" causing vacancy rates to edge down and asking rents to rise. Minneapolis, Kansas City, Dallas, San Francisco, Atlanta, and Chicago all reported stronger demand for commercial real estate compared with earlier in 2011, and the latter two Districts also noted a pickup in nonresidential construction activity. Cleveland and Chicago reported that the strongest demand and most extensive construction activity has been for industrial and health-care facilities, while Minneapolis highlighted growing demand for industrial space and San Francisco stressed growing demand emanating from the information technology sector.\nBanking and Finance\nLending activity edged up overall, primarily due to increased loan demand by businesses. Most Districts that commented on lending activity indicated little or no change in overall loan demand, but the remaining Districts identified increases rather than decreases. New York reported a pronounced increase in demand for commercial mortgages, and Cleveland also noted increased demand in this category. Both Dallas and San Francisco noted a slight uptick in commercial and industrial lending. Consumer lending was largely flat compared with the prior reporting period, although auto loans rose in Cleveland. New York, Philadelphia, and Cleveland reported demand growth or continued strength for refinancing of residential mortgages.\nLending standards were largely unchanged across all lending categories. However, New York reported slight tightening for commercial and industrial loans. Moreover, a few reports highlighted that small businesses continued to struggle with credit access through banks. In the Atlanta District, some small businesses have turned to nonbank institutions for financing, and in the Chicago District some manufacturers have been financing loans to their suppliers from retained earnings. Credit quality improved in many Districts: New York reported a decline in delinquency rates for all loan categories, while Philadelphia, Richmond, Kansas City, Dallas, and San Francisco all reported general improvement in loan quality.\nAgriculture and Natural Resources\nDemand for agricultural products was strong during the reporting period, but growing conditions and input prices were mixed. Farm income and profits were reported to be at very high levels by Chicago and Kansas City, enabling many farmers to repay loans and expand their operations, and San Francisco reported further sales growth for a variety of agricultural products. Rising foreign demand was noted as a source of strength for livestock sales in the Atlanta and Dallas Districts and for dairy and meat products in the Chicago District. Growing conditions were somewhat mixed across areas. Farmers and livestock producers in the Atlanta and Dallas Districts have been struggling with ongoing droughts, which have required costly responses such as supplemental feeding of livestock. While timely rains eased drought conditions somewhat in the Dallas and Kansas City Districts, wheat farmers in the latter are hoping for more protective snow cover for the winter crop's dormancy period. In addition, high or rising prices for some inputs were noted by Chicago and Kansas City, tempering farmers' profit expectations for the coming year.\nDemand and extraction activity rose further for producers of natural resource products. Energy extraction has been on the upswing. Atlanta reported that companies have been expanding their workforces and increasing their production capacity and exploration plans in the Gulf of Mexico. Minneapolis and Kansas City reported that oil and gas exploration and extraction activity were well above their levels from twelve months earlier, and Dallas noted that a high level of activity is expected to resume in early 2012 following a year-end seasonal lull. Minneapolis and San Francisco reported expansion of mining capacity and activity for a range of industrial and precious metals.\nPrices and Wages\nUpward price pressures and price increases were very limited during the reporting period. Reports from various Districts, including Boston, Atlanta, and Chicago, indicated that upward price pressures from rising commodity and input prices have eased substantially, with Boston noting that \"even food prices have ceased rising.\" Atlanta reported that firms have limited pricing power in general, and San Francisco pointed to intense supplier competition as a factor holding down prices. Similarly, Kansas City reported a recent uptick in input prices but noted that few manufacturers passed these increases on to the prices of their finished goods.\nWage pressures remained modest overall. The combination of limited permanent hiring in most sectors and numerous active job seekers has continued to keep a lid on general wage increases. However, reports from a few Districts highlighted significant supply constraints and in some cases large compensation increases for workers with specialized skills in selected sectors, including the energy sector in the Dallas District and the technology sector in the San Francisco District. On a related note, Minneapolis reported that employers have increased relocation pay for employees willing to settle in parts of that District where worker availability is limited. Increases in the costs of employee health benefits continued to put significant upward pressure on overall compensation costs, although some employers in the Philadelphia District reported significant rollbacks from past increases.\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 11, 2012\nThe Second District's economy has grown at a somewhat faster pace since the last report, led by brisk holiday-season spending. Labor market conditions, as well as prices, have remained generally stable. Manufacturers report modestly improved general business conditions and steady employment since the last report, along with increased optimism about the near-term outlook. Retailers generally characterize holiday season spending as robust, particularly in the final days before Christmas and right after. Auto dealers report that sales have remained strong since the last report. Tourism activity has held steady at a high level. Conditions have generally remained stable in the housing market, though the rental market has continued to improve. Commercial real estate markets have been stable to moderately stronger in late 2011. Finally, bankers report increased loan demand, steady to somewhat tighter credit standards, and lower delinquency rates across the board.\nConsumer Spending\nRetailers generally characterize holiday-season spending as strong and most report that sales were on or above plan. A trade association survey of retailers across New York State points to robust spending, particularly in the final week before Christmas and on the day after; most contacts indicated that sales were at least as strong as in 2010, led by electronics--particularly video games and consoles. One large retail chain reports that November-December sales were above plan and up moderately from a year earlier, while another major chain indicates that sales were down from 2010 levels but still roughly on plan. Both contacts note that unseasonably mild weather hampered sales of outerwear and other seasonal apparel. However, two major malls in upstate New York say that mild weather--along with brisk demand from Canadian shoppers--contributed to strong sales in November and early December. A number of contacts also note exceptional strength in on-line sales, with some reporting year-over-year gains in excess of 40 percent. Retail prices are reported to be generally stable.\nAuto dealers in upstate New York report that sales activity continued to be robust in November and early December, running well ahead of comparable 2010 levels--particularly for used vehicles. Inventories have risen along with sales but remain tight for some of the more popular models. Wholesale and retail credit conditions remain favorable.\nConsumer confidence has rebounded from its October lows. The Conference Board's survey of residents of the Middle Atlantic states (NY, NJ, PA) shows consumer confidence rising sharply in both November and December, back up to the levels seen last spring. Results from Siena College's November survey of New York State residents (latest available) shows consumer confidence rebounding moderately. Tourism activity has held generally steady at a strong level since the last report. New York City hotels report that occupancy rates continued to run at just over 85 percent in November and the first few weeks of December--up moderately from a year earlier. Room rates were up 2-3 percent from a year earlier, and total revenues per room were up about 6 percent, though total revenues in the local hospitality industry are up considerably more due to an increased number of hotel rooms. On a more negative note, though, Broadway theaters report that attendance continued to run roughly 5 percent below year-ago levels in December, while revenues fell below comparable 2010 levels for the first time since the August hurricane.\nConstruction and Real Estate\nResidential rental markets continue to strengthen, while real estate sales have shown little change since the last report and new development activity continues to be sluggish. New York City's rental market remains tight: rents continue to rise, as the inventory of available units remains lean. Manhattan co-op and condo prices were little changed in the fourth quarter, while sales activity slowed from its fairly brisk third quarter pace. Market conditions were reported to be similar in Brooklyn but a bit softer in the other boroughs and on Long Island. On a more positive note, one industry expert in New Jersey sees improved fundamentals in the housing market and foresees a pickup in market conditions in 2012. Real estate contacts in other parts of the District also note some increase in optimism among developers.\nCommercial real estate markets have been steady to somewhat stronger since the last report. New York City's office market has picked up in late 2011, with office vacancy rates edging down and asking rents rising. There were also modest signs of improvement in Westchester and Fairfield counties and in the Albany area, whereas office markets in northern New Jersey and western New York State appear to have slackened modestly. Industrial leasing markets were generally steady overall: conditions firmed in Long Island but showed some signs of softening across upstate New York; in the rest of the District, conditions were little changed.\nOther Business Activity\nA major New York City employment agency reports that hiring activity has slowed somewhat since October, particularly in the financial services sector, but notes that it is difficult to gauge the underlying climate during this typically slow season. Contacts at major retail chains indicated that they hired more seasonal workers this year than last. More broadly, both manufacturers and service-sector firms continue to report that employment levels at their firms remain steady, on average, though a growing number of manufacturing contacts across New York State plan to hire more workers in the months ahead.\nManufacturers across New York State report that general business conditions improved since the last report, and respondents have grown considerably more optimistic about the near-term outlook. Both manufacturers and other firms report that their selling prices remain flat, though a growing number expect to raise prices in the months ahead. Separately, a contact in the trucking industry reports that shipping tonnage (volume) has picked up considerably in recent months and was up 6 percent from a year earlier in November.\nFinancial Developments\nBankers report an increase in demand for all loan categories except consumer loans, where demand held steady. The increase was most prevalent for commercial mortgages where four times as many bankers reported rising than falling demand. Respondents also indicate widespread increases in demand for refinancing. Bankers' responses suggest some tightening of credit standards for commercial and industrial loans, but no change for the other loan categories. No banker reported an easing of standards in any category. Respondents note a decrease in spreads of loan rates over costs of funds for all loan categories. Bankers also indicate widespread decreases in the average deposit rate. Delinquency rates are reported to have decreased for all loan categories. The improvement was most prevalent in commercial and industrial loans, where nearly three times as many respondents reported lower than higher delinquencies.\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 30, 2011\nPrepared at the Federal Reserve Bank of Minneapolis and based on information collected before November 18, 2011. 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 slow to moderate pace since the previous report across all Federal Reserve Districts except St. Louis, which reported a decline in economic activity. District reports indicated that consumer spending rose modestly during the reporting period. Motor vehicle sales increased in a number of Districts, and tourism showed signs of strength. Business service activity was flat to higher since the previous report. Manufacturing activity expanded at a steady pace across most of the country. Overall bank lending increased slightly since the previous report, and home refinancing grew at a more rapid pace. Changes in credit standards and credit quality varied across Districts. Residential real estate activity generally remained sluggish, and commercial real estate activity remained lackluster across most of the nation. Single family home construction was weak and commercial construction was slow. Districts mostly reported favorable agricultural conditions. Activity in the energy and mining sectors increased since the previous report.\nHiring was generally subdued, although some firms with open positions reported difficulty finding qualified applicants. Wages and salaries remained stable across Districts. Overall price increases remained subdued, and some cost pressures were reported to have eased.\nConsumer Spending and Tourism\nDistrict reports indicated that consumer spending increased modestly, on balance, during the reporting period. Kansas City reported that consumer spending strengthened, while retail sales rebounded in Richmond. Gains in retail sales were noted in Philadelphia, Cleveland, Minneapolis, and San Francisco. Boston reported that retailers' estimates of 2011 sales were generally more positive than they were at the beginning of October, while same-store sales in New York were mostly on or ahead of plan. Meanwhile, in Dallas, retail sales growth moderated, and Atlanta and St. Louis reported weaker activity. A few Districts noted that recent colder weather had spurred apparel sales. Inventory levels were generally at desired or comfortable levels in New York and Dallas. Retailers in Atlanta continued with tight inventory management practices, and retailers in Richmond were cautious regarding inventory and expansion. In Kansas City, inventories were above year-earlier levels. Holiday sales were generally expected to be flat or to increase modestly over a year ago in Cleveland, Atlanta, St. Louis, Minneapolis, Dallas, and San Francisco. In Philadelphia, high-end, online, and outlet retailers were the most optimistic for holiday sales, while retailers in Chicago expected to use extended promotional periods and heavy discounting to keep traffic volumes steady.\nMotor vehicle sales increased in a number of Districts. Gains in auto sales were noted in Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, and Minneapolis. Chicago also reported gains in sales during October, but noted the pace of sales slowed in November and that dealers suspected consumers may be waiting for potential end-of-year deals. Upstate New York dealers reported that sales were steady to stronger and that dealers' service and parts departments continued to perform well. Auto sales were solid in Kansas City, while demand held steady in Dallas. Inventory levels were generally lean or lower than dealers would like in Philadelphia, Cleveland, and St. Louis. In Dallas, vehicle inventories had mostly normalized, while inventory levels increased in Kansas City. Both Philadelphia and Dallas noted supply disruptions for some foreign nameplates due to the flooding in Thailand.\nTourism showed signs of strength. New York and Atlanta described tourism as robust and strong, while activity increased in Minneapolis and posted moderate improvement in Richmond. Boston noted that the travel and tourism sector continued to see strength in overseas and business travel, while discretionary domestic leisure spending was fueled by the affluent customer. In Richmond, tourism was largely flat, but some contacts were cautiously optimistic about the winter season. Airline contacts in Dallas expected to see stable demand through year-end. Strength in hotel bookings and occupancy were noted in Boston, New York, Richmond, Atlanta, Minneapolis, and San Francisco.\nNonfinancial Services\nBusiness service activity was flat to higher since the previous report. Boston, New York, Philadelphia, Minneapolis, and Kansas City reported increased activity. St. Louis was mixed, while Richmond, Chicago, and San Francisco indicated overall flat activity. Dallas reported that demand for staffing services held steady at high levels. St. Louis reported that firms in business support services, medical research services, and transportation services announced plans to expand operations and hire new workers, while contacts in temporary help services, government services, and education services announced plans to decrease operations. San Francisco noted that sales continued to grow for providers of technology services, in particular for software applications used for mobile computing and communication devices.\nManufacturing\nManufacturing activity grew at a steady pace across most of the country, with all Districts other than St. Louis reporting increases in orders, shipments, or production. Chicago, St. Louis, and San Francisco reported positive results in metals and fabrication, while Cleveland saw flat steel production and Philadelphia noted decreased demand for primary metals. Cleveland and Chicago reported increased auto production year over year, but Boston noted signs of slower auto component production. Dallas saw steady demand for electronics, computers, and high-technology goods, but San Francisco reported that demand for consumer electronics continued to decrease. Philadelphia, Cleveland, and Chicago saw increased production of energy-related products. For construction-related goods, Chicago and Minneapolis reported declining demand, while Dallas said demand was stable. Overall, St. Louis saw more plant closures than plant openings or expansions. Freight transportation volumes increased in Cleveland, held steady in Atlanta and Kansas City, and were mixed in Dallas.\nBanking and Finance\nOverall bank lending activity increased slightly since the previous report. New York, Philadelphia, Cleveland, and Kansas City reported increased loan demand. Several Districts reported an increase in home refinancing activity. Richmond reported mixed loan activity. Boston noted plentiful financing and favorable terms for premier properties, while financing remains harder to obtain for riskier properties and for those in secondary and tertiary markets. Chicago, St. Louis, Dallas, and San Francisco noted relatively unchanged loans. Atlanta saw soft loan demand as companies continued to reduce their debt loads and limit expansion and capital improvement plans.\nChanges in credit standards and credit quality varied across Districts. Philadelphia noted that credit quality continued to improve but at a slower rate. Kansas City saw stable or improving loan quality. Dallas noted that the quality of loans outstanding continued to improve, with contacts reporting a decline in problem loans. San Francisco saw a slight improvement in overall credit quality. Cleveland, Chicago, and St. Louis noted relatively unchanged credit quality. Boston, Richmond, and Atlanta saw some tightening of standards. In New York, bankers reported declining delinquency rates for commercial and industrial loans, but no change in delinquencies for other loan categories.\nReal Estate and Construction\nOverall residential real estate activity increased, but conditions were varied across Districts. Philadelphia, Richmond, Minneapolis, Kansas City, and Dallas noted increased activity. New York, Boston, Cleveland, and San Francisco reported flat activity at relatively low levels. Atlanta and St. Louis indicated decreased sales. Residential construction remained sluggish. Single-family home construction remained weak, while multifamily construction picked up in New York, Philadelphia, Cleveland, Chicago, and Minneapolis. San Francisco remained \"anemic,\" while St. Louis and Kansas City reported decreased activity.\nCommercial real estate markets remained sluggish across most of the nation. Boston, New York, Chicago, Minneapolis, and San Francisco indicated roughly unchanged activity. Atlanta and Kansas City noted slight improvement. Philadelphia and Dallas indicated mixed activity. However, Richmond and St. Louis noted that vacancy rates increased. Commercial construction was somewhat mixed. Cleveland saw steady to slowly improving commercial construction; Chicago and Minneapolis experienced modest to moderate increases. New York and Philadelphia noted generally weak conditions; Richmond and St. Louis reported slow activity, although industrial construction picked up.\nAgriculture and Natural Resources\nDistricts mostly reported favorable agricultural conditions. Harvests were ahead of pace or completed in Richmond, Atlanta, Chicago, Minneapolis, and Kansas City. The corn harvest was even with last year in Chicago and Minneapolis, while soybean production decreased. Wheat production was down dramatically in parts of the Minneapolis District. Corn and soybean yields were above average in the northern portions of the Kansas City District, but drought conditions severely cut crop production in the District's southern regions, and the winter wheat crops were in poor to fair condition. The severe drought in the Dallas District continued but eased slightly. Prices for most agricultural commodities except soybeans remained above year-earlier levels, and farm income increases were reported by Chicago, Minneapolis, and Kansas City. Export demand remains strong for agricultural products, particularly meat, but Dallas reported a recent decrease in demand for grain exports.\nActivity in the energy and mining sectors increased since the previous report. Cleveland, Minneapolis, Kansas City, Dallas, and San Francisco saw increases in oil exploration. Cleveland and Dallas also reported growth in shale gas extraction. Coal production was flat in Cleveland and decreased slightly in St. Louis, though it is still up for the year. Minneapolis reported that more wind energy projects were planned. Mining activity increased in San Francisco and remained at elevated levels in Minneapolis.\nEmployment, Wages, and Prices\nHiring was generally subdued, but some firms with open positions reported difficulty finding qualified applicants. Stable employment levels or subdued hiring were mentioned by New York, Philadelphia, Cleveland, Atlanta, Chicago, and Dallas. Assessments of labor market conditions were mixed in Richmond and St. Louis, while labor markets showed some signs of reduced availability of labor in Minneapolis. In Boston, demand for workers at services firms grew, but hiring among manufacturers was limited. In Kansas City, hiring plans among manufacturers remained solid, while expectations of future hiring among manufacturers in Philadelphia nearly doubled. Meanwhile, Boston, Philadelphia, Cleveland, Richmond, Atlanta, and Minneapolis noted that some firms looking to fill open positions were having difficulty finding qualified workers, particularly for high-skilled manufacturing and technical positions. Atlanta noted there was growing concern that the skills of the unemployed were deteriorating.\nWages and salaries remained stable across Districts, although some exceptions were noted. In Cleveland, wage pressures emerged for truck drivers as the pool of available drivers shrank relative to job openings. Manufacturing wage growth strengthened in Richmond, while hiring stabilized and the average workweek was unchanged. Some wage growth was noted among the highly skilled trades in Atlanta. In Minneapolis, wages increased sharply at some fast food restaurants in western North Dakota. Kansas City reported that some energy and information technology firms raised wages for skilled workers; Dallas reported the same for airlines and a few construction-related manufacturers. San Francisco noted persistent upward pressure on benefit costs, especially for employee health care.\nOverall price increases remained subdued, and some cost pressures were reported to have eased. Boston, Atlanta, Chicago, and Kansas City noted a moderation in input cost pressures. In Cleveland, manufacturers' reports on changes in raw materials prices were mixed; the transportation sector noted higher prices for tires, parts, and equipment; and fuel prices exhibited some volatility. Richmond reported that raw materials, retail, and services prices grew at a somewhat faster pace. Restaurants in Kansas City expected higher menu prices due to rising food costs. In Dallas, prices for new cars rose slightly, and staffing and legal services firms noted modest increases in billing rates, but natural gas prices remained low. San Francisco reported a recent uptick in the prices for energy inputs, particularly oil, and for assorted food items at the retail level. Atlanta noted that most businesses had limited ability to pass on increases in input prices from earlier in the 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\nNovember 30, 2011\nThe Eleventh District economy grew at a modest pace since the last report. Manufacturing activity held steady or declined, while demand for business services was flat. Activity in the transportation services sector was mixed. Retailers said sales growth moderated. The single-family housing sector saw continued improvement, and activity in the multifamily sector was strong. Office, retail and industrial leasing activity increased, but commercial real estate investment activity remained sluggish. Financial services respondents said overall loan demand was soft during the reporting period. The energy industry continued to expand at a robust pace, while agricultural conditions remained weak. Employment levels were stable at most responding firms and price pressures were mostly subdued.\nPrices\nPrice pressures were minimal across industries. Most contacts said prices were stable or down, although prices for new cars rose slightly and staffing and legal services firms noted modest increases in billing rates. The majority of respondents reported that raw materials prices were unchanged or down. The exceptions were producers of paper and of food who noted increased prices for some inputs. Contacts in the agricultural sector said cattle prices rose since the last report.\nThe price of WTI was near $76 per barrel in early October, and has risen to nearly $100 per barrel. Demand for gasoline has been soft. Diesel demand, in contrast, has strengthened on a year-over-year basis and prices have climbed much faster than gasoline. Prices of petrochemicals and plastics declined due to weak domestic demand and a stronger dollar. Natural gas prices remained low, near $3.50 per thousand cubic feet throughout the survey period.\nLabor Market\nMost firms reported steady employment levels, although there were reports of slight hiring activity. Staffing firms continued to note high levels of demand. Some oil services firms, primary metals and transportation manufacturers reported moderate employment increases, and said they continue to look for additional workers. Retailers said holiday hiring was ramping up, and one firm noted that they planned on hiring more seasonal workers than last year. Contacts in the auto sales and airline industries noted slight payroll increases. Wage pressures remained minimal, although upward pressure for certain skilled positions was noted by airlines and a few construction-related manufacturers.\nManufacturing\nMost construction-related manufacturers reported stable demand, although there were reports of stronger sales related to commercial, government and apartment construction projects. Construction-related outlooks were mostly unchanged, but a few contacts said they expect conditions to improve next year.\nRespondents in high-tech manufacturing report that sales have been flat since the last report, with the exception of demand for mobile devices, cloud computing and data storage which continues to increase. Several contacts expect strength in demand for mobile and productivity enhancing devices to accelerate, and thus improve overall activity in the high-tech manufacturing sector by mid 2012, even if global output remains sluggish or weakens. Most respondents said employment levels have held steady and inventories are at desired levels.\nOverall conditions in the paper products sector were mixed, but all contacts described outlooks as weak. Automobile and aviation equipment manufacturers said sales had softened since the last report but remained significantly up from year-ago levels. Outlooks are optimistic, with contacts expecting sales to remain strong through next year. Food producers reported a seasonal increase in demand, and outlooks were positive, although they are not hiring due to concerns about current economic conditions.\nContacts described demand as seasonally weak for petrochemicals and plastics. Sales in domestic markets continued to be sluggish. The recent rise in oil prices together with lower petrochemical prices is making Texas' natural gas based products more competitive, spurring exports. Refiner margins were strong and over $25 per barrel in October, but have narrowed in recent weeks with the rise in crude prices. Refinery utilization rates were low, as production declined for the fall maintenance period.\nRetail Sales\nRetail sales growth moderated since the last report but showed continued gains over the comparable period a year ago. Cooler weather spurred winter clothing sales, and one retailer reported strong online sales. Contacts indicated that they are comfortable with level of inventories. Eleventh District retail sales growth trended roughly in-line with the nation over the reporting period, according to two large retailers. Overall, expectations are for modest growth this holiday season.\nDemand for automobiles held steady. Vehicle inventories have mostly normalized from the tsunami-related shortage experienced earlier in the year, but some foreign manufactures have been recently affected by the flooding in Thailand. The used car market continued to be tight. Contacts expect sales to slow seasonally through year end, and then to rise moderately in 2012.\nServices\nDemand for staffing services held steady at high levels. One contact reported engineering, IT and healthcare as strong sectors, and another mentioned solid demand for steel workers. Outlooks remain cautious but were more optimistic than the previous reporting period, with contacts expecting demand to remain flat or improve by mid-2012. Demand for accounting services was flat, and outlooks were unchanged. Legal firms reported steady demand, with a slight pickup in litigation activity and continued strength in intellectual property, energy and some real-estate related services.\nReports from transportation service firms were mixed. Railroad firms reported a broad-based increase in shipments during the reporting period, but said that the numbers were somewhat artificially inflated due to capacity coming back online after the flooding in the northern U.S. Overall container volumes declined during the reporting period, and outlooks were slightly less optimistic than the last report. Small parcel shipments rose in October partly due to growth in retail trade activity. Airlines reported solid and steady demand over the past six weeks. A major airline noted that business travelers were more price sensitive than earlier in the year. Domestic demand and travel to Latin America remained strong, but travel to Europe and Asia was weak. Airline contacts expect to see stable demand through year end.\nConstruction and Real Estate\nContacts in the housing sector continued to note improvement. Inventories of existing homes fell further since the last report, and new home inventories remained lean. Single-family home sales are better according to contacts, but economic uncertainty is keeping many would-be buyers on the sidelines.\nApartment demand rose even more since the last report, and contacts are very positive in their outlooks. Some respondents noted increased sales of apartment complexes to investors.\nContacts that lease to industrial, retail and business firms noted an increase in demand. However, sales of commercial properties were sluggish given the current financial environment.\nFinancial Services\nFinancial firms reported steady but soft demand for loans. National banks noted strong demand from large corporations but flat or declining middle-market lending activity. Regional banks said loan demand was flat, and loan pricing remained somewhat aggressive. The quality of loans outstanding continued to improve, with contacts noting a decline in problem loans. Outlooks are cautious, although contacts were less pessimistic than they have been over the past few months.\nEnergy\nDrilling activity remains strong, with 20 new land rigs added in Texas since the last report. Shale-directed activity continues at high levels. Revenues are growing and backlogs remain solid. Activity in the Gulf of Mexico also rose by six rigs, with new permits issued for deep water drilling.\nAgriculture\nThe District remained in drought, although severity lessened slightly in parts of Texas and New Mexico that received some rain in recent weeks. Planting of winter wheat continued at a fairly normal pace but the crop was in poorer condition than last year due to very low soil moisture. Livestock sell-offs continued at a slower pace, as many producers have already liquidated much of their herds. Grain prices fell slightly over the reporting period, largely due to lower export demand. By contrast, cattle prices were higher than six weeks ago and beef exports remained very strong.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

/beige-book-reports/2011/2011-11-kc

"Beige Book Report: Kansas City\nNovember 30, 2011\nGrowth in the Tenth District economy edged higher in October and early November but remained moderate overall. Consumer spending improved further, and manufacturing activity rose modestly. High-tech firms reported generally strong growth, and the energy industry continued to expand at a robust pace. Bankers reported mostly steady loan demand, better loan quality, and rising deposits. Transportation firms reported stable activity, while agricultural activity was mixed due to varying rainfall and drought conditions across the District. Residential and commercial real estate activity remained sluggish, though some improvements were noted. Prices were generally flat, and wage pressures were limited outside of several skilled labor positions.\nConsumer Spending\nConsumer spending strengthened, and expectations improved for the months ahead. Retail sales continued to grow solidly, and the majority of contacts expected continued sales growth in coming months. Sales of apparel and seasonal outerwear were noted as particularly strong, while a few contacts characterized sales of high-end appliances and jewelry items as weak. Store inventories leveled out somewhat but were above year-ago levels in most establishments. Auto sales remained solid, with several dealers reporting high demand for mid-size SUVs and fuel efficient vehicles. Expectations for future auto sales were mostly positive, and auto inventories increased slightly over the previous survey. Restaurant sales improved, with further growth expected in coming months. Tourist activity was largely flat, but some contacts were cautiously optimistic about the upcoming winter season.\nManufacturing and Other Business Activity\nDistrict manufacturing activity edged higher from the previous survey, and expectations rebounded after easing somewhat the past few months. Factory orders slowed slightly, but shipments increased and hiring plans remained solid. Plant managers indicated moderate growth in capital spending plans. Transportation firms noted generally stable conditions, but expectations for future activity increased over the previous survey and capital spending plans were positive. The majority of high-tech services firms reported strong growth in sales and expected this trend to continue. Future capital expenditure plans at high-tech firms remained solid.\nReal Estate and Construction\nResidential and commercial real estate activity remained generally sluggish in October and early November. Housing starts dropped from the previous survey, with construction of higher-priced homes particularly weak. Expectations for future homebuilding remained slow, and materials were generally available. Sales at residential construction supply firms improved somewhat, driven in part by an increase in remodeling as more consumers updated existing homes. Home sales picked up slightly but remained weak overall. Expectations for future home sales were more positive than in previous months, and home inventories drifted lower as home prices continued to ease in most areas. Mortgage lending activity was positive and remained above year-ago levels, though some contacts reported continued buyer financing difficulties. Commercial real estate activity edged higher from the previous survey, but remained sluggish overall with little further improvement expected. Vacancy rates dropped slightly, though they were expected to rise somewhat in future months. Office prices and rents increased but remained below year-ago levels, and expectations were flat. One contact in Joplin, Missouri noted considerable building activity as a result of the devastating tornado in that area last spring.\nBanking\nMost bankers reported steady or stronger loan demand, stable or improving loan quality, and increased deposits compared with the previous survey. Overall loan demand increased marginally as demand for commercial and residential real estate loans strengthened, demand for consumer installment loans declined, and demand for commercial and industrial loans weakened slightly. Credit standards remained largely unchanged in all major loan categories, and deposits increased for the seventh straight survey. Bankers generally reported loan quality as steady or improving compared to a year ago, with even more improvement expected for the next six months.\nEnergy\nEnergy activity continued to expand strongly in October and early November. Nearly all contacts reported an increase in drilling activity and were optimistic about the months ahead. Crude oil prices remained favorable for drilling, and one contact noted that overall drilling activity was approaching levels reached before the price collapse in 2008. However, contacts reported that shortages of equipment and labor continued to constrain the rate of increase in exploration to some degree, and one producer said the delay in the Keystone Pipeline project was hindering future growth.\nAgriculture\nAgricultural activity varied across the District in October and early November. Northern portions of the District, which received ample summer precipitation, reported above average corn and soybean yields at harvest and the majority of Nebraska\u2019s wheat crop emerged in good condition. In contrast, drought conditions severely cut crop production in the District\u2019s southern regions, with Kansas and Oklahoma winter wheat crops in fair or poor condition. Robust export demand continued to boost crop and livestock prices. Farm income rose in areas with bumper harvests, while crop insurance was expected to mitigate losses in cases of poor yields or crop failure. Strong farm income boosted farm loan repayment rates and trimmed demand for operating loans. With rising farm income and strong demand from both farmers and non-farm investors, District farmland values posted another record high, with the strongest gains in the northern Plains.\nWages and Prices\nPrice levels were generally stable, and wage pressures remained mostly contained, outside of a few skilled positions. Manufacturing price pressures moderated somewhat, especially for raw materials, and fewer firms planned to raise selling prices. Prices for construction materials stabilized, and retail prices were also flat as fewer firms expected increases. However, transportation firms reported continued high input prices, and restaurants expected higher menu prices due to rising food costs. Wage pressures were still contained in most industries. However, some firms reported difficulties finding skilled workers and were forced to raise wages, particularly in energy and information technology fields. Hiring plans were generally solid for most firms, particularly those in the energy, information technology, and manufacturing sectors.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2011/2011-11-mi

"Beige Book Report: Minneapolis\nNovember 30, 2011\nThe Ninth District economy grew moderately since the last report. Strong growth was reported in the agriculture, energy and mining sectors. Modest to moderate growth was noted in consumer spending, tourism, residential and commercial construction, residential real estate and professional services. Activity in commercial real estate was flat, while manufacturing was mixed. Labor markets showed some signs of tightening, while wage increases remained moderate. Prices generally were level.\nConsumer Spending and Tourism\nConsumer spending grew moderately. A major Minneapolis-based retailer reported that same-store sales in October increased about 3 percent compared with a year earlier. A Minneapolis area mall reported that recent sales were up between 3 percent and 5 percent, as cooler weather inspired shoppers to buy fall goods. According to the University of St. Thomas Holiday Spending Sentiment Survey, Minneapolis-St. Paul households are predicted to spend 3.4 percent more on holiday gifts than last year. Auto sales in the Minneapolis-St. Paul area increased since the last report, according to a domestic auto dealer. However, a Minnesota-based clothing retailer announced plans to close several stores and reduce its workforce. Preliminary results of the Minneapolis Fed's business outlook poll indicated that respondents expect slight increases in consumer spending in their communities and increased sales of their businesses' products and services.\nTourism activity was up from a year ago. According to officials, momentum from a very good summer tourism season in Montana continued into the fall. Occupancy at Minnesota's hotels and motels increased almost 5 percent during the third quarter compared with a year ago.\nConstruction and Real Estate\nCommercial construction activity increased modestly since the last report. Respondents to a November Minneapolis Fed ad hoc survey of commercial construction contacts reported an increase in construction activity for health care facilities and industrial buildings. However, the value of commercial building permits in the Sioux Falls, S.D., area was down slightly in October from October 2010. Residential construction increased from last year. Several multifamily construction projects were announced or are under construction in the Minneapolis-St. Paul area. The number of permitted residential units in Minnesota was up in September from a year ago. However, in the Sioux Falls area, the value of residential building permits in October was level with the same period a year earlier.\nCommercial real estate markets were flat. Respondents to the Minneapolis Fed's ad hoc survey noted flat revenues and profits over the past three months. The commercial real estate sector is still very weak, particularly in office space. \"Very little expansion by companies, so the only activity seems to be companies shopping for lower rates,\" commented a Minneapolis-St. Paul area contact. Residential real estate markets grew. Home sales in October were up significantly from the same period a year ago in the Minneapolis-St. Paul area, while the inventory available for sale shrank.\nServices\nOn balance, professional business services firms expect increased activity. Based on results from the business outlook poll, respondents from the services sector expect to increase sales and capital investment in 2012. \"Things generally are better,\" commented a Montana professional services firm.\nManufacturing\nManufacturing activity was mixed since the last report. An October survey of purchasing managers by Creighton University (Omaha, Neb.) showed that production increased in Minnesota and North Dakota, but unexpectedly contracted slightly in South Dakota. Bank Directors noted that manufacturing was doing well with some equipment backlogs extending throughout 2012. Producers of storage bins for agricultural use reported strong demand. However, a window maker announced that it will lay off workers due to weak home construction. A large printing operation in Minnesota halted expansion plans due to uncertainty about the economy.\nEnergy and Mining\nThe energy and mining sectors saw continued strong growth. Oil exploration activity increased in Montana since the last report, but decreased slightly in North Dakota. In North Dakota, regulators approved plans for a 105-megawatt wind farm, and three other wind energy projects are under review. A short line railroad reported that it saw strong demand growth from the wind energy and oil drilling sectors. District mines continued to operate at very high capacity utilization rates.\nAgriculture\nAgricultural conditions remained generally strong. Farm financial conditions were very strong due to high commodity prices. Prices for hogs, cattle, turkeys and eggs increased in October; prices for corn, soybeans and wheat declined, but remain substantially above their year-earlier levels. The harvest went quickly, thanks to recent dry weather. District corn production was roughly even with 2010; however, soybean production was down more than 12 percent. Wheat production was down dramatically in some areas of the District.\nEmployment, Wages, and Prices\nLabor markets showed some signs of tightening. In a recent survey of Minnesota manufacturers, 45 percent of respondents reported that skilled-worker shortages were a moderate or serious problem, particularly for skilled production and IT workers. A Minnesota recreational vehicle manufacturer reported that it isn't running a plant at capacity because of a surprising shortage of workers. A representative of a Minnesota employment services firm noted robust demand for temporary light industrial positions during September and October; demand for permanent positions was volatile. A South Dakota manufacturer reported difficulty finding qualified workers in order to expand operations. In Montana, a job fair indicated that employers were recruiting recent college graduates with engineering, business and computer science majors. According to the business outlook poll, 36 percent of respondents consider securing workers a challenge or serious challenge in 2012, up from 24 percent in last year's poll.\nWage increases were moderate. Members of a South Dakota county highway union recently agreed to a 5 percent pay cut in 2012. The business outlook poll shows that 96 percent of respondents expect wages and salaries in their communities to increase no more than 3 percent. However, some fast food restaurants in western North Dakota were offering wages as high as $15 per hour to attract employees.\nPrices generally remained level, although some exceptions were noted. Minnesota gasoline prices continued to decrease since the last report, but were still 54 cents per gallon higher than a year ago. Meanwhile, a South Dakota manufacturer noted that steel prices have softened recently. According to respondents to the business outlook poll, 41 percent expect to increase prices for their businesses' products and services in 2012, up from 35 percent last year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"